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| ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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American Depositary Shares of 20 340 ⁄399 pence each |
IHG
IHG
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New York Stock Exchange
New York Stock Exchange*
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Ordinary Shares of 20 340 ⁄399 pence each |
172,256,766 |
| Large accelerated filer | ☑ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☐ | Emerging growth company | ☐ | |||
US GAAP ☐ |
International Financial Reporting Standards as issued by
the International Accounting Standards Board ☑
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Other ☐ |
| Auditor Firm Id: 876 | Auditor Name: PricewaterhouseCoopers LLP | Auditor Location: London, United Kingdom |
True Hospitality for Good Annual Report and Form 20-F
Welcome Our purpose is to provide True Hospitality for Good. It brings our brands to life, shapes our culture and represents a commitment to make a difference to our people, guests and communities, and to protect the world around us. With strong stakeholder engagement, together we work towards common goals that help create shared value for all. Holiday Inn Resort, Phuket, Surin Beach, Thailand
Strategic Report 2023 in review Demand continued to grow during 2023 as people’s appetite for travel shone through. Significant investments in our enterprise platform, including our brands, loyalty, digital offer and sustainability initiatives, saw us enrich the guest experience, grow our estate and drive returns. a Definitions for key performance measures can be found in the use of key performance measures and non-GAAP measures section, which can be found on pages 84 to 88. b Use of Non-GAAP measures: In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described IFRS or are adjusted as Non-GAAP) IFRS figures. are presented Further that explanation are used in internally relation by to these management measures as can key be measures found on to pages assess 84 performance. to 88, and reconciliations Non-GAAP measures to IFRS figures, are either where not defined they have under been adjusted, are on pages 226 to 231. c 2023 operating profit shown after $19m System Fund and reimbursable reported profit and $28m net exceptional gain. See page 154 for details. d 2022 share buyback completed in January 2023.
Our focus on building a stronger business for guests and owners, coupled with increasing demand, led to strong trading and shareholder returns delivered via our cash-generative business model.
• Total dividend of 152.3c proposed and $750m share buyback completed. New $800m programme approved for 2024
• Americas RevPAR +7.0% vs 2022; EMEAA +23.7%; Greater China +71.7%
• Surpassed 6,300 open hotels; +3.8% net system size growth
• Signings +26% YOY*; grew conversions – represented 37% of openings and signings combined
• Fee marginb 59.3%, 3.4%pts ahead of 2022
• $1,019m operating profit from reportable segmentsb, up 23% vs 2022
• Net cash from operating activities of $893m (2022: $646m), adjusted free cash flowb of $819m (2022: $565m)
• Adjusted EPSb grew 33% to 375.7¢
• Elie Maalouf appointed Group CEO
• Michael Glover appointed Group CFO
• Refreshed corporate strategy to drive growth and long-term shareholder value
* Excluding Iberostar Beachfront Resorts
Owners choose to work with IHG based on trust in our brands, our ability to drive returns and the strength of our enterprise – underpinned by a focus on the cost to build, open and operate our hotels.
• Enterprise contribution of ~80% of total room revenue (vs 72% three years ago), boosted by technology and channels enhancements
• Launched new midscale conversion brand Garner
• Guest How You Guest masterbrand campaign lifted awareness and brand favourability measures
• Enhanced design, service and F&B
• Launched new procurement programmes to reduce costs across hotel lifecycle
• Guest Reservation System now enabling attribute upsell to drive revenue across estate; pilots launched for new revenue management system
• IHG LIFT launched in US and Canada to support historically under-represented groups and further diversify owner base
We focus on ensuring the services, technology and experiences we provide meet evolving expectations, increase consumer preference and loyalty, and drive bookings.
• Guest Satisfaction Index continued to maintain a four-year high
• Grew loyalty members to over 130m, with record enrolments and ~20% increase in Reward Nights vs 2022
• New partnerships providing access to music festivals and sporting events
• Revenue driven by mobile app up 38% and downloads up 60% YOY
• Websites covering 92% of open hotels redesigned and relaunched
• Updated guest room and public space designs, F&B and service
• Strengthened artificial intelligence capabilities to improve self-service guest offer
• Over 60% increase in new co-brand credit card accounts YOY
high-performance culture and focus on providing the tools, technology and working environment we need to succeed as individuals and as a business.
• Employee engagement 87% (+1%pt on 2022). A Kincentric Global Best Employer
• Rated 2nd on Financial Times Europe’s Diversity Leaders 2024 list; recognised as a top company for women by Forbes
• Employee Resource Groups expanded to foster diverse and inclusive culture
• Strengthened partnerships with US Historically Black Colleges to enhance early careers pipeline
• IHG University launched to support development and drive performance
• Extended conscious inclusion training to hotel colleagues
• Launched Leading for Growth Executive Development Programme
We aim to improve millions of lives within our communities by supporting disaster relief, tackling food poverty and providing skills training to help drive social and economic change.
• More than 39,000 colleagues volunteered over 121,000 hours to support their local communities
• Supported charities providing aid following 15 natural disasters
• Expanded supplier diversity programme to build inclusion through supply chain
• More than 30,000 participants received free access to skills and training through our IHG Academy offerings
• Launched IHG Community Tracker to measure Journey to Tomorrow progress
• Supported Global FoodBanking Network, which operates in nearly 50 countries
We are committed to reducing carbon, waste and water usage so we can operate and grow with our owners in ways that minimise our impact on the planet.
• 3.8% reduction in carbon emissions per occupied room since 2019; 1.9% absolute reduction against baseline
• Introduced new energy conservation measures as brand standards
• Expanded Community Solar to give more US hotels access to renewable energy
• Launched collaborations with certification programmes so hotels can showcase their sustainability credentials to guests and corporate clients
• Over 1,600 hotels accessed food waste training, with over 37,000 courses completed by managed and franchised colleagues
• Launched Meeting for Good to provide more sustainable events
Strategic Report Chair’s statement in Significant recent years investment across every enterprise aspect platform of IHG’s has our competitive strengthened guests edge and and offer owners. for ” Deanna Oppenheimer Non-Executive Chair his has been another important year Tof progress for IHG Hotels & Resorts, characterised not only by excellent financial performance underpinned by strong guest demand and further growth with our owners, but also a smooth evolution of leadership and strategy that positions the business for an exciting next chapter. The backdrop to these achievements was one of travel demand ahead of 2019 in many markets and strong recovery in others, while the attractiveness of our brand portfolio saw the continued expansion of our footprint in high-value markets and segments. This has been achieved thanks to significant investment in recent years across every aspect of IHG’s enterprise platform to strengthen our competitive edge and offer for guests and owners. In what was my first full year as Chair, I have been impressed in my conversations with senior leadership, wider colleagues and on market visits with how the business works together to make this happen, with guests and owners central to every plan. I have also valued time spent meeting many owners who clearly appreciate this commitment to continuous improvement and delivering strong returns.
| Leadership changes Elie Maalouf became Group CEO on 1 July 2023, succeeding Keith Barr, who stepped down following more than 30 years with the business, including six as CEO. I would like to thank Keith for his outstanding contribution and leadership, which included growing IHG’s brand portfolio, strengthening its enterprise, embarking on a 10-year responsible business plan and helping the business navigate the Covid-19 pandemic with such agility, clarity and care.
We place great value on succession planning and talent development, and Elie brings significant industry experience and an excellent track record within the business. Having successfully led IHG’s Americas operations for eight years, where he oversaw record profits, growth of the region’s estate and the launch of new brands and formats, the Board was unanimous in its assessment that Elie was the best candidate for the job.
This was one of several leadership changes in 2023 that underlines the depth of talent at IHG, with Michael Glover replacing Paul Edgecliffe-Johnson as Chief Financial Officer, Jolyon Bulley becoming Americas CEO and Heather Balsley replacing Claire Bennett as Global Chief Customer Officer. Each individual brings industry expertise, a track record of excellent results and a deep understanding of IHG and its business, and I have great confidence in the leadership team delivering success on the next stage of IHG’s growth journey.
Importance of strategy Elie is already instilling great passion and energy for using the strong enterprise platform established in recent years to realise the full growth potential of the Company. Central to this progress is having a clear ambition and effective strategy, and Elie has introduced refreshed versions of both to the business in 2023 to sharpen our focus on growth, succeed in a competitive marketplace and prioritise long-term value for all stakeholders.
The hotel industry brings joy like no other – connecting people and helping communities thrive. IHG and our hotels have a central role to play, united by a purpose of providing True Hospitality for Good for the benefit of all stakeholders. This purpose is embedded within our brands and culture and is therefore unchanged within our refreshed strategy. It also underpins our Journey to Tomorrow programme, which ensures our commitment to operate and grow responsibly across the environmental, social and governance (ESG) agenda is woven into the fabric of the business. |
The Board fully supports the evolution of our strategy. It stays informed of how colleagues are engaging with business priorities and IHG’s wider culture through feedback forums, including the work of our designated Voice of the Employee Non-Executive Director and IHG’s Colleague HeartBeat survey.
Our purpose, ambition, strategy and behaviours are all being applied to an asset-light, fee-based, largely franchised business model. This remains a great strength of IHG, with a regional approach enabling flexibility by market, and high cash generation supporting enterprise investments across brands, loyalty and technology that enhance performance and drive growth, and also create surplus funds to return to shareholders.
During the year, important strategic progress was made on several fronts. Enhancements to IHG® One Rewards strengthened loyalty, we introduced new capabilities to our mobile app to enhance the guest experience and drive owner returns, and the launch of Garner™ added a 19th brand to our portfolio in a midscale segment with significant growth potential. A cornerstone of how we work with owners is helping them run an efficient business and new procurement programmes and brand prototypes were among key updates to strengthen operational and commercial support alongside close collaboration with the IHG Owners Association. Further steps were also taken towards our Journey to Tomorrow commitments across our people, communities and planet agenda.
The role of the Board Amid a shifting global macro-economic landscape, the role of the Board has been to support and constructively challenge the Executive Committee (EC) around how we prioritise, manage risk, grow and generate future value. Focus areas spanned our approach to cybersecurity risk management – including emerging risks, such as the rise of artificial intelligence – how we optimise owner returns, and growth plans in the context of a competitive landscape.
To support IHG’s operations and growth aspirations, I place great importance on ensuring our Board represents a rich blend of backgrounds, expertise and experience that reflects the focus of the business and the evolving corporate landscape.
As part of clear succession plans, several Board changes took place during the year. Jo Harlow retired following nine years of excellent service, and we welcomed two new Independent Non-Executive Directors. Angie Risley joined in September, bringing a wealth of board and senior management experience from a career in HR spanning executive roles across sectors including hospitality, retail and banking. |
Angie has succeeded Jo as Chair of the Remuneration Committee and joins the Responsible Business and Nomination Committees. Sir Ron Kalifa joined in January 2024, bringing many years of technology industry experience across strategy, sales, marketing and operations, and joins the Audit and Remuneration Committees.
Shareholder returns Following a strong financial performance this year, I am pleased to announce the Board is recommending a final dividend of 104 cents per ordinary share, an increase of 10% on the final dividend for 2022. An interim dividend of 48.3 cents was paid in October 2023, taking the total dividend for the year to 152.3 cents, representing an increase of 10% on 2022. An additional $750m was also returned to shareholders through a share buyback programme (completed in December 2023), taking the total returns for the year to $1bn, and the Board has approved a further share buyback of $800m for 2024. The Board expects IHG’s business model to continue its strong long-term track record of generating substantial capacity to enable investment plans that drive growth, fund a sustainably growing ordinary dividend, and allow surplus capital to be returned to our shareholders.
Looking ahead, as a global business, we must remain alive to potential challenges created by political instability and conflict in parts of the world, but the industry has proven its resilience over many years and its future is a bright one. An expanding middle class in emerging markets, rising GDP, and consumer appetite to travel and stay in branded hotels all remain fundamental drivers of industry demand and future supply growth. With strong leadership, talented teams and a refreshed strategy focused on capitalising on the powerful enterprise we have created in recent years, I am confident in IHG’s ability to drive performance, growth and shareholder value.
There is real momentum in the business for the year ahead, and I’d like to thank all our colleagues for their hard work and dedication, and our owners for their continued confidence in IHG.
Deanna Oppenheimer Non-Executive Chair |
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| Chair’s statement | IHG | Annual Report and Form 20-F 2023 | 5 |
Strategic Report Chief Executive Officer’s review Q&A We talk to Elie Maalouf, Chief Executive Officer, about the Company’s performance and outlook Elie Maalouf Chief Executive Officer Q What have been the highlights since becoming Group CEO in July 2023? A It is an honour to lead this iconic company and one of many highlights so far has been getting even closer to our markets. I’ve really valued time spent meeting colleagues, owners and shareholders on visits across the world, seeing the relationships we have built, hearing first-hand what we are doing well, where we need to go further and how we can best work together to achieve shared success. IHG has enormous growth potential and I’m inspired by the passion of our teams and the power of their collaboration to drive performance and returns using the strong enterprise platform we have built in recent years. My predecessor, Keith Barr, played a major role in laying the foundation for an exciting chapter ahead, and I would like to take the opportunity to thank him on behalf of everyone at IHG. Q How did the Company perform in 2023? A Testament to the strength and scale of our brands and wider enterprise platform, I am proud to say we delivered an excellent financial performance alongside strong system size and pipeline growth. Very healthy average daily rate and occupancy pushed global RevPAR ahead of both 2022 and 2019 levels, with leisure leading
| the way, and business travel and group activity improving steadily. The Americas continued its upward trajectory with RevPAR up 7.0% year-on-year, EMEAA was up by +23.7% following a strong performance in Continental Europe and the reopening of Japan, and Greater China increased by 71.7%, reflecting a strong rebound in demand following the lifting of pandemic restrictions.
That performance, coupled with fee margin growth and disciplined cost management, helped drive operating profit to more than $1bn for the first time. We returned $1bn to shareholders through ordinary dividend payments and a $750m share buyback programme, and a new $800m share buyback programme for 2024 has been approved.
Our brands continued to grow around the world, too. We opened 275 hotels, contributing to net system size growth of 3.8%, and signed another 556 properties into our global pipeline, which now stands at 2,016 hotels – or 32% of today’s system size. Notably, our openings and signings performance in Q4 was one of our biggest ever for development activity.
We can be proud of this performance alongside all we have done to strengthen our business further on multiple fronts for guests and owners. On behalf of the Executive Committee, I would like to thank all our hotel and corporate teams for delivering this excellent performance, and our owners for their continued commitment to IHG.
Q How has IHG’s strategy changed since you became Group CEO?
A Our strategy needs to constantly evolve in this dynamic industry. Having added eight brands to our portfolio in the past six years and made big investments in the enterprise platform that supports them, it was important to reassess how IHG capitalises on what we have built to unlock and drive growth in a competitive landscape.
Our purpose of True Hospitality for Good remains unchanged and is something that resonates strongly across the organisation, in our communities and with those we work with. However, our strategy has evolved, starting with a simpler ambition that sharpens our focus on what is central to accelerating growth: being the hotel company of choice for guests and owners. We have also refreshed our strategic pillars and looked carefully at the behaviours we need to deliver them successfully. Relentless Focus on Growth establishes a targeted approach to expanding our brands in high-value markets; Brands Guests and Owners Love shows our explicit intention to deliver for both; Leading Commercial Engine recognises the importance of investing in the technology and tools that |
drive commercial success and make the biggest difference to guests, owners and hotel teams; and Care for our People, Communities and Planet remains unchanged and in step with our Journey to Tomorrow plan. These elements combined are designed to drive us further and faster towards realising IHG’s full growth potential.
Q What strategic progress was made in 2023?
A We advanced on multiple fronts, strengthening our ability to capture guest demand, deepening loyalty, and driving returns and new growth opportunities with our owners.
Our Holiday Inn Brand Family’s enduring appeal saw it generate 38% of openings and signings in the year. We continued to diversify our exposure to different segments, with our Luxury & Lifestyle brands now representing 14% of our system size and 22% of our pipeline – around twice the size it was five years ago. Almost a quarter of signings globally were in this high-fee segment, and flagship openings included the Regent® Hotels Carlton Cannes and Shanghai on The Bund.
We also continued to expand our offer in other areas where we see strong demand and growth opportunities. We launched our conversion brand Garner in the midscale segment – worth $14bn today in the US alone. Our first two hotel openings and seven signings were achieved within months of launch in the US, and the brand is already now heading for Japan and Mexico. All our newer brands are gaining traction, with the seven launched or acquired in recent years – not including Garner or our commercial agreement with Iberostar – now accounting for 16% of our pipeline. Conversions also remain an important focus for us across all segments, reaching record levels of 37% of openings and signings combined.
Looking across the enterprise more broadly, IHG One Rewards members booked more than 55% of our room nights globally in 2023, and in what was a record year for enrolments, the programme has now grown to more than 130 million members. Our mobile app generated 38% more revenue in 2023 on the back of fresh updates to personalise the guest experience and grew downloads by 60% year-on-year. Collectively, the impact of these investments and more are creating increasing value for our owners, with enterprise contribution rising from 72% to almost 80% in the past three years. At the same time, we have kept guest satisfaction at a four-year high and we remain focused on working closely with our owners to reduce the cost to build, open and operate our hotels. |
As we strengthen the business, it is important we do so responsibly for our people and the world around us. Maintaining an inclusive, engaging culture is vital to our success, so seeing IHG once again named a Kincentric Global Best Employer was a special moment. We continued to support our communities by responding to natural disasters, creating opportunities for people to learn new skills in our industry, and making a positive difference to thousands of people during Giving for Good month. We also took further steps to reduce our environmental impact in several areas, including incorporating more energy conservation measures into brand standards, educating colleagues on food waste and delivering more sustainable events for corporate clients.
Q How do you see the future of the hotel industry?
A The long-term prospects for our industry are very attractive when you consider global population growth, rising middle classes and prosperity in emerging markets, and people’s inherent desire to travel. Oxford Economics is forecasting the number of global hotel room nights consumed to grow annually at an average rate of +4.0% from 2023 through to 2033.
In the Americas, the world’s biggest tourism market, where IHG has almost 4,500 hotels, industry forecasts expect room nights to increase from 2.3 billion to 3.0 billion by 2033. In Greater China, where we strengthened our position as the leading international hotel company this year with the opening of our 700th hotel, an extra 660 million room nights are forecast over the same period. Meanwhile, across EMEAA, there is growing travel demand across key markets, from Asia and the Middle East to Europe. This landscape underpins global net new supply growth for our industry. Over the past decade, supply has grown annually at an average rate of 2.4% and it is expected to continue at a similar rate into the future.
These fundamentals and the outlook have remained strong through varying economic cycles, and so while as a global business we must always remain agile in an evolving macro-economic landscape, we look forward to an important next chapter of growth for IHG and value creation for our owners and shareholders.
Elie Maalouf Chief Executive Officer |
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| Chief Executive Officer’s review | IHG | Annual Report and Form 20-F 2023 | 7 |
Strategic Report Industry overview We operate in an industry with high growth potential, underpinned by strong long-term fundamentals. he global hotel industry continued Tto strengthen in 2023, benefitting from further consumer appetite for leisure stays and a robust return of business demand, which together drove record RevPAR levels. The $700 billion hotel industry has compelling structural growth drivers, underpinned by factors including the inherent needs and desires to travel for business and leisure purposes, population growth, and an expanding middle class in emerging markets with increasing disposable incomes. Spend on travel continues to be among the most resilient of discretionary areas for consumers, while demand for business travel remains robust, with hotels adapting to support flexible working trends in the post-Covid-19 environment. Although there are uncertainties within the wider economic outlook, we anticipate a number of tailwinds persisting through 2024, including further progress in returning to pre-Covid-19 levels of demand for group travel to meetings and events, as well as the ongoing recovery of travel demand to and from Greater China as international flight capacity continues to increase. In what is a relatively fragmented sector, with 56% of rooms affiliated with a global or regional chain, competitor pressures in the branded space remain intense as all major players pursue growth strategies through a combination of organic growth, partnership arrangements and acquisitions. Branded hotel penetration has steadily increased as a long-term trend, with this expected to continue to grow as consumers look to trusted brands to meet their evolving expectations, particularly when it comes to state-of-the-art technology and the skills, scale and resources required to provide guests with enjoyable, effective and sustainable stays. While there have been short-term challenges impacting the completion and opening of new-build hotels, primarily driven by the cost and availability of financing, there remains a long-term need for new hotel supply to satisfy the demand drivers previously mentioned. Global hotel room net new supply increased at a CAGR of 2.4% over the 10 years from 2013 to 2023, with industry forecasts showing a similar rate across the next five years. Cost remains a significant barrier to building a scale position in the global hotel industry, whether that’s due to investment to build and maintain the properties, establish strong loyalty programmes and technology platforms, or to develop and market leading brands. Hotel owners affiliated with a major global brand and enterprise system also tend to generate higher returns. The hotel industry is cyclical: long-term fluctuations in RevPAR tend to reflect the interplay between industry demand, supply and the macro-economic environment. At a local level, political and economic factors, as well as those such as terrorism, oil market conditions and significant weather events, can also impact demand and supply. While the potential for macro-economic challenges from factors such as persistent inflation, higher borrowing costs and geopolitical flashpoints create some ongoing uncertainty in 2024, the attractive industry fundamentals that led to the sector outpacing global economic growth in 19 out of 24 years between 2000 and 2023 remain very firmly in place for the long term. As a global business, with a footprint in over 100 countries, operating in the midst of change and uncertainty is something IHG is very used to and it continues to be one of our greatest strengths. Our strategy of developing a strong brand portfolio and an industry-leading loyalty programme, together with our fee-based income streams and prevalent midscale positioning, means we remain resilient through varying economic cycles. The hotel industry has attractive tailwinds… US disposable personal income grew on average by 1.6% per annum between 2000 and 2023 Source: Federal Reserve Economic Data (FRED) Globally, middle income consumers spent $44tn in 2020, with this expected to increase to $62tn by 2030 Source: The Brookings Institution Global hotel room net new supply grew 2.4% per annum between 2013 and 2023 Source: STR The top five hotel groupsa have increased their market share Share of top five branded hotel groups as % of global rooms supply
a Includes IHG, Marriott International, Inc., Wyndham Hilton Worldwide Hotels & Holdings Resorts Inc. Inc.,, Accor S.A. Source: STR
With share expected to further expand
Branded share of global industry supply and share of global industry active pipeline
Source: STR
Consumers value loyalty membership, which requires a large-scale enterprise to deliver
76%
Of consumers are more likely to recommend brands with good loyalty programmes
Source: Bond, in partnership with Visa
81%
Of consumers are more likely to use a brand if they are members of its loyalty programme
Source: Bond, in partnership with Visa
Global hotel revenues have outpaced GDP growth, and are now ahead of pre-Covid-19 levels
Global industry revenue vs global GDP, indexed to 1999
Branded hotel business models
There are two principal business models:
Asset-heavy models generate returns on the real estate and centralise control over operations. Asset-light models typically enable faster growth and generate higher returns. This model tends to present lower risk to fluctuations in the economy.
Strategic Report
Our business model
We predominantly franchise our brands and manage hotels on behalf of third-party hotel owners. While we will continue to have a weighting towards Essentials, our pipeline shows an increasing proportion of growth in the Premium and Luxury & Lifestyle segments, as well as a more even geographical spread.
a Includes Iberostar Beachfront Resorts, which joined IHG’s system and pipeline as part of a long-term commercial agreement.
he growth of our business relies Ton two fundamental drivers: increasing revenue per available room (RevPAR) and expanding the number of rooms in our system. RevPAR indicates the value guests ascribe to a given hotel, brand or market, and grows when they stay more often or pay higher rates. Room supply also reflects capturing structural growth drivers of increasing demand to travel and experience, as well as how attractive the hotel industry is as an investment from an owner’s perspective.
To drive growth, we have a portfolio of 19 brands across more than 100 countries in the Luxury & Lifestyle, Premium, Essentials, Suites and Exclusive Partners categories. Supported by a leading loyalty programme and powerful technology, our brands meet clear guest needs and generate strong returns for our owners, which in turn attracts further hotel investment and grows our system size. IHG is an asset-light business, and our focus is on growing fee revenues and fee margins, which we can do with limited capital requirements. This enables us to grow and invest in our business while generating high returns on invested capital and strong cash flow.
We generally franchise or manage hotels, with the decision largely driven by market maturity, owner preference and, in certain cases, the particular brand. Hotels in the Essentials category tend to be franchised, while Luxury & Lifestyle hotels are predominantly managed.
Our broad geographic spread and weighting towards essential business and domestic leisure has driven comparative resilience during times of economic downturn. Although this continues to be a core component of our business, we have made excellent progress in expanding our presence in the Luxury & Lifestyle segment, which generally generates higher fees per room. This category is currently 14% of IHG’s system size, though comprises 22% of the future growth pipeline.
Our asset-light business model means we do not employ colleagues in franchise hotels, nor do we control their day-to-day operations, policies or procedures. That being said, IHG and our franchise hotels are committed to delivering a consistent brand experience, conducting business responsibly and sustainably so that we deliver our purpose of providing True Hospitality for Good.
How we generate revenue Owned, leased and Third-party owners pay managed lease hotels Fees to IHG in relation to the licensing Assessments and contributions For the small number of hotels of our brands and, if applicable, hotel that are collected for specific use (representing <1% of our system size) management services. within the System Fund, as well as that we own or lease, we record the reimbursable revenues. entire revenue and profit of the hotel in our financial statements. System Fund and IHG fee revenue reimbursable revenues 2023: 2023: $2,164m $2,460m Franchised hotels System Fund We receive a fixed percentage of rooms IHG manages a System Fund for the revenue when a guest stays at one of benefit of hotels within the IHG system our hotels. This is our fee revenue. and their third-party owners, who pay contributions into it. This includes a RevPAR X Rooms X Royalty rate marketing and reservation assessment Managed hotels and a loyalty assessment. We generate revenue through base The System Fund also benefits from management fees and incentive proceeds from the sale of IHG One management fees. Rewards points under third-party Fixed % of total hotel revenue as a co-branding arrangements. management fee and typically a share Given the significant scale of the of hotel gross operating profit after System Fund, IHG can make substantial deduction of management fees investments in marketing brands, Exclusive partners creating a leading loyalty programme We receive marketing, distribution, and powerful technology, including technology and other fees for providing revenue management systems, thereby access to our enterprise platform. strengthening the IHG enterprise. Fee streams similar to our The System Fund is not managed to asset-light model a profit or loss for IHG over the longer term, but for the benefit of hotels in the Revenue attributable to IHG comprises: IHG system, and comprises: • Fee business revenue from • Assessments and contributions paid reportable segments: by hotels. – Franchise fees • Revenue recognised on consumption – Management fees of IHG One Rewards loyalty points. – Commercial agreement fees Reimbursable revenues – Central revenue (principally In a managed property, the Group technology fee income) typically acts as employer of the general manager and, in some cases, • All revenue from owned, leased and other employees at the hotel, and is managed lease hotels. entitled to reimbursement of these See page 85 for more information. costs. The performance obligation is satisfied over time as the employees perform their duties, consistent with when reimbursement is received. See page 66 for more information. Our business model IHG | Annual Report and Form 20-F 2023 11
Strategic Report
Our business model continued
| How we drive operating profit
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| Our asset-light business model requires a limited increase in IHG’s own operating expenditure to support our revenue growth, which delivers operating profit and fee margin growth.
The benefit of operational efficiencies, along with brands and markets becoming more mature, supported fee margin expansion of around 130bps a year between 2009 and 2019 in total for IHG.
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For franchised hotels, the flow through of revenue to operating profit is higher than it is at managed hotels, given the fee model and our well-invested scale platform where limited resources are required to support the addition of an incremental hotel. This is most evident in our Americas region, where fee margins are the highest, reflecting our scale and over 90% of our hotels operating under our franchised model.
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Across our managed hotels, the flow through of revenue to profit can be lower, given higher operating expenditure on operations teams supporting the hotel network. |
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a Use of Non-GAAP measures: In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on page 84 to 88 and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 231.
Our owned, leased and managed lease hotels tend to have significantly lower margins than our fee business. This is because we not only record the entire revenue of the hotel, but also the entire cost base, which includes staff and maintenance of the hotel.
Capital allocation and dividend policy
Consistent uses of generated cash |
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| Our priorities for the uses of cash are consistent with previous years and comprise three pillars:
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1 Invest in the business to drive growth We look to strategically drive growth, while maintaining strict control on investments and our day-to-day capital expenditures. |
2 Target sustainable growth in the ordinary dividend IHG has a dividend policy where we would look to grow the ordinary dividend each year, while balancing all our stakeholder interests and ensuring our long-term success. |
3 Return surplus capital to shareholders The Board expects our asset-light model to provide the opportunity to routinely return additional capital to shareholders such as through share buybacks. |
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| 12 | IHG | Annual Report and Form 20-F 2023 |
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Capital expenditure Spend incurred by IHG can be summarised as follows:
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Type
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What is it?
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Recent examples
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| Maintenance capital expenditure and key money | Maintenance capital expenditure is devoted to the maintenance of our systems and corporate offices, along with our owned, leased and managed lease hotels.
Key money is expenditure used to access strategic opportunities, particularly in high-quality and sought-after locations, when returns are financially and/or strategically attractive. |
Examples of maintenance spend include investment in corporate technology and software, as well as office refurbishment and maintenance. Across our owned, leased, and managed lease hotels we invest in refurbishment of public spaces and guest rooms.
Examples of key money include investments to secure representation for our brands in prime locations. |
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Recyclable investments to drive the growth of our brands and our expansion in priority markets |
Recyclable investments are capital used to acquire real estate or investment through joint ventures, equity capital, or loans to facilitate third-party ownership of hotel assets. This expenditure is strategic to help build brand presence.
We would look to divest these investments at an appropriate time and reinvest the proceeds across the business. |
Examples of recyclable investments in prior years include our EVEN Hotels brand, where we used our capital to develop three hotel properties in the US to showcase the concept. These hotels were subsequently sold and now operate under a franchise agreement. More recently, recyclable investments have included the initial purchasing of sites for the Six Senses brand to be developed in key markets in the US. |
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System Fund capital investments for strategic investment to drive growth at hotel level |
The development of tools and systems that hotels use to drive performance. This is charged back to the System Fund over the life of the asset. |
We continue to invest in a range of upgraded technology solutions, including the ongoing development of IHG’s mobile app and IHG One Rewards loyalty evolution. |
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| Dividend policy and shareholder returns The Board consistently reviews the Group’s approach to capital allocation and seeks to maintain an efficient balance sheet and investment-grade credit rating. IHG has an excellent track record of returning funds to shareholders through ordinary and special dividends, and share buybacks. The ordinary dividend paid to shareholders increased at an 11% CAGR between 2004 and 2019, and at a 10% CAGR after resuming dividend payments at the end of 2021.
Our asset-light business model is highly cash generative through the cycle and enables us to invest in our brands and strengthen our enterprise. When reviewing dividend recommendations, the Board looks to ensure that any recommendation does not harm the sustainable success of the Company and that there are sufficient distributable reserves to pay any recommended dividend. The Board assesses the Group’s |
ability to pay a dividend bearing in mind its responsibilities to its stakeholders and its objective of maintaining an investment-grade credit rating. One of the measures we use to monitor this is net debt:adjusted EBITDA and we aim for a ratio of 2.5-3.0x.
$500m of surplus capital was returned via a buyback programme announced in August 2022 and then a further $750m via a subsequent programme over the course of 2023. The highly cash-generative nature of our business model means we expect to have substantial ongoing capacity to return further surplus capital to shareholders, such as through share buybacks, as we look to move leverage into our target range over time.
The Board intends to continue sustainably growing the ordinary dividend and to typically pay dividends weighted approximately one-third to the interim and two-thirds to the final payment.
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In February 2023, IHG’s Board proposed a final dividend of 94.5¢ in respect of 2022, representing growth of 10% on that for 2021. The proposal was subsequently approved at the AGM and paid to shareholders on 16 May 2023.
In August 2023, IHG’s Board declared an interim dividend of 48.3¢ per share, representing growth of 10% on 2022’s interim dividend. This was paid to shareholders on 5 October 2023.
The Board is proposing a final dividend of 104.0¢ in respect of 2023, representing growth of 10% on that for 2022. The proposed total dividend for the year is therefore 152.3¢. Further, the Board have approved a share buyback programme to return an additional $800m of surplus capital in 2024. Given expectations for growth and EBITDA in 2024, leverage is expected to be around the lower end of our target range of 2.5-3.0x.
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| Our business model | IHG | Annual Report and Form 20-F 2023 | 13 |
Strategic Report
Trends shaping our industry
Over the past few years, the travel and tourism industry has demonstrated its enduring importance for millions globally. Despite the backdrop of short-term macro pressures and uncertainty, consumers continue to value and feel passionately about travel, with surveys indicating it to be among the most resilient of discretionary spending areas. As we look to 2024 and beyond, we are seeing the evolution of several trends and travel habits that are likely to strengthen in our industry over the coming years.
The rebound in business travel has reignited another trend – blended travel, where business and leisure are combined into one stay, by either taking the time to explore the local destination during a business or work trip, or by adding a holiday onto the beginning or end of a business trip or conference.
A shift to remote working in recent years is contributing to the rise in popularity of blended travel. According to a 2023 survey by the Global Business Travel Association (GBTA), business travellers are blending business and personal travel more frequently than they did in 2019. Additionally, guests are increasingly extending their trips, with 42% of travellers adding leisure stays to their business trips in 2023 and 79% staying at the same accommodation for business and leisure portions of their trip. Blended travel is set to become more popular in the coming years, with Euromonitor forecasting that global spend by travellers combining business and leisure will more than double by 2027 compared with 2021.
Alongside blended travel, the growth in popularity of co-working can provide an opportunity for hotels to reimagine under-used spaces and appeal to new guests, particularly younger generations, and attract the local population.
Our responses include:
• Continuing to roll out the innovative Open Lobby for Holiday Inn® in new markets, which gives guests and visitors a welcoming space to relax, work or socialise.
• Launching new concepts such as Meetings Without Boundaries for Crowne Plaza® Hotels & Resorts to capitalise on the rising demand for flexible meetings and gatherings.
• Expanding our portfolio of extended stay properties across our Suites collection, including Candlewood Suites® and Staybridge Suites®, to offer guests an unparalleled extended stay experience.
2 Increasing focus on sustainability 3 Technology enhancing guest experiences Guests and organisations are increasingly focused on the environmental impact of their travel. A study by the World Travel and Tourism Council (WTTC) revealed that 75% of travellers are looking to choose sustainable travel in the future, while 59% have chosen some form in recent years. Business customers are also increasingly paying closer attention to sustainability, with 92% of business travel professionals stating it is a priority for their organisation, according to a recent survey by GBTA. This trend is set to strengthen, with increased public scrutiny, more media coverage, and stricter reporting rules leading to more companies reporting on their GHG emissions. As sustainability concerns grow, guests are expected to choose companies prioritising sustainable practices. However, according to a Boston Consulting Group (BCG) study, 10% of consumers currently prioritise sustainability as a top driver of choice when making travel purchasing decisions. Travel companies must continue collaborating to establish shared frameworks that enable guests to easily access and act on sustainability information – for example, improving booking tools to display relevant sustainability details across the travel ecosystem. Technology is redefining the travel experience, from helping inspire guests for their next trip to customising their in-room stay experience. Guests increasingly rely on digital technology, such as social media, web searches and online reviews, for inspiration and information. In fact, 75% of travellers say they have been inspired to travel to a specific destination by social media, while 48% want to travel to destinations that will allow them to ‘show off on social media’, according to a survey by American Express Travel. According to Deloitte research, hotels are among the most popular categories of personalisation among customers (47%) and many customers are willing to pay more for a customised product or service. This includes booking a room with a view or more space or being able to stream content from their devices to their in-room TV. Hotel companies are also continuing to leverage advances in artificial intelligence (AI), machine learning (ML) and analytics to create more personalised and targeted experiences for guests, and to help inform marketing, customer service and revenue forecasting. Our responses include: • Progressing towards our Science-Based Target (SBT) through initiatives such as driving energy efficiency across our existing hotels, facilitating access to renewable energy opportunities and developing plans for new-build hotels that operate at low carbon. • Supporting hotels with the launch of the new Meeting for Good sustainable meetings programme and by facilitating access to leading third-party sustainability certification programmes. • Playing an active role in cross-industry conversations focused on driving visibility, alignment and clarity in sustainability initiatives relevant to travellers, including corporate customers. See pages 33 to 35, and 52 to 59, for more information. See our Responsible Business Report (RBR) ihgplc.com/responsible-business/reporting Our responses include: • Launching IHG® Wi-Fi Auto Connect to allow members to connect to the hotel’s wi-fi automatically, seamlessly and securely upon arrival. • Launching a next-generation IHG mobile app to give our guests more choice and unlock the benefits of our transformed IHG One Rewards loyalty programme. • Rolling out the ability to upsell unique room attributes across the estate, enabling a more seamless and personalised booking experience. ® See pages 22 to 23, 26 to 27, and 36, for more information.
Strategic Report
A for brand everyone
Our focus on having a diverse selection of brands has transformed our portfolio, enabling us to meet the needs of a broader range of guests and owners, while growing our estate to more than 6,300 hotels globally.
The demand for branded players continues to drive fresh opportunities to reach scale in high-growth markets, as guests seek new experiences and owners look for more ways to grow with us. This year, we launched our 19th brand, Garner. Designed for the midscale conversion space and complementing our new-build brand avid™, its arrival signals our intent to establish an industry-leading presence in midscale, just as we have in upper midscale with our iconic Holiday Inn Express® and Holiday Inn brands.
Accounting for 37% of openings and signings combined globally in 2023, conversions continue to grow in importance and Garner strengthens our offer by giving owners quick access to IHG’s scale, enterprise platform and loyalty programme.
We also continue to diversify the mix of our estate, with our Luxury & Lifestyle brands increasing our exposure to high-fee income segments. IHG is now one of the industry’s biggest players in this segment, with Luxury
& Lifestyle collectively representing 22% of our pipeline – around twice the size it was five years ago.
To support the growth of all our brands, we continue to invest in our enterprise, including our digital channels, a transformed IHG One Rewards loyalty programme and a powerful marketing campaign behind our IHG Hotels
& Resorts masterbrand to grow awareness of our brands and drive demand to our hotels.
MASTERBRAND AND LOYALTY LUXURY & LIFESTYLE 25 open 10 open 222 open 11 open 78 open 153 open 42 pipeline 11 pipeline 100 pipeline 18 pipeline 54 pipeline 132 pipeline PREMIUM 62 open 20 open 408 open 26 open 74 pipeline 25 pipeline 126 pipeline 33 pipeline ESSENTIALS 3,171 open 1,202 open 2 open 67 open 632 pipeline 246 pipeline 5 pipeline 141 pipeline SUITES 2 open 325 open 30 open 376 open 41 pipeline 164 pipeline 2 pipeline 151 pipeline EXCLUSIVE PARTNERS 49 open 5 pipeline IHG system size includes 124 other and unbranded hotels, of which eight will be rebranded to voco and five will be rebranded to Vignette Collection. IHG pipeline includes 14 other and unbranded hotels. A brand for everyone IHG | Annual Report and Form 20-F 2023 17
Strategic Report Our strategy In 2023, to further strengthen our ability to drive future growth, we evolved key elements of our strategy, including our ambition, strategic pillars and growth behaviours. hese changes build on the investments we have made to transform our business Tin recent years, where we have expanded Our strategy our portfolio from 11 to 19 brands and significantly strengthened our enterprise. This includes a transformed IHG One Rewards loyalty programme, refreshed masterbrand, new partnerships and WHAT WE DO an enhanced web and mobile offer, as well as Provide True Hospitality for Good embarking on our Journey to Tomorrow to invest in our people, bring positive change in our communities and deliver more sustainable hotels. WHY WE DO IT Our purpose of True Hospitality for Good remains at the To be the hotel company of choice heart of our brands and culture and is therefore unchanged, but as an organisation, we have simplified our ambition for guests and owners to focus on what is central to accelerating growth: being the hotel company of choice for guests and owners. To make it happen, we have fine-tuned our strategic HOW WE MAKE IT HAPPEN pillars and introduced new behaviours to sharpen our mindset for success and accelerate our growth by capitalising on what we have built. Over the long term, with disciplined execution, our strategy drives the growth of our brands in high-value markets. RELENTLESS BRANDS GUESTS It creates value for all our stakeholders and delivers FOCUS ON GROWTH AND OWNERS LOVE sustained growth in cash flows and profits, which can be reinvested in our business and returned to shareholders. LEADING CARE FOR COMMERCIAL OUR PEOPLE, ENGINE COMMUNITIES AND PLANET OUR GROWTH BEHAVIOURS AMBITIOUS DEDICATED COURAGEOUS CARING
Strategic overview Relentless focus Brands guests on growth and owners love We are accelerating the global growth of our brands We are focused on delivering tailored services and on the back of a transformed portfolio that’s giving solutions to meet the expectations of guests and owners. our guests and owners more choice across segments. In 2023, this included strengthening guest benefits for In 2023, we launched our midscale conversion brand IHG One Rewards, building awareness of our masterbrand Garner, grew and strengthened both new and existing and reducing costs for owners. brands, and extended our presence in Luxury & Lifestyle. See pages 22 to 25. See pages 20 to 21. 275 4 Hotels opened in 2023 Our Guest Satisfaction Index continued to maintain a four-year high Leading Care for our people, commercial engine communities and planet We invest in the tools, technology and solutions that make With more than 6,300 hotels in our global estate, it’s vital the biggest difference for guests and owners. In 2023, the that as we grow, we do so responsibly and sustainably growth of IHG One Rewards membership at a record rate for our communities, the environment and the long-term and strengthened enterprise contribution were among key success of our business. In 2023, we made significant strategic highlights. progress in investing in our people and culture, bringing positive change to our communities and delivering more See pages 26 to 27. sustainable hotels. See pages 28 to 35. ~80% >30,000 Participants received free access to skills and training through Enterprise contribution, up from 72% three years earlier our IHG Academy
Strategic Report Our strategy continued PRIORITY: e have grown our portfolio from 11 to 19 brands in just six years Walongside significantly investing Relentless in the quality of our existing ones to fuel demand from owners and guests globally. This transformed portfolio is increasing the focus on breadth of our offer across every segment. Supporting our brands is a sharper, stronger enterprise, including our award-winning IHG One Rewards loyalty programme, growth masterbrand and a transformed web and mobile experience. Our focus is on using what we have built to grow our brands at pace in high-value markets and segments around the world. 2023 AT A GLANCE What we achieved in 2023 Surpassed We opened 275 hotels in 2023 to surpass 2,016 6,300 globally and signed another 556 to 6,300 our pipeline, taking it to 2,016 hotels. Our Q4 Pipeline hotels, equivalent openings and signings performance was one Open hotels globally to 32% of today’s system size of our biggest-ever quarters for development activity, while across the year we saw 31 hotel openings represent a debut in a new country >40% 37% for a particular IHG brand. The enduring appeal of our heritage brands Of global pipeline Of openings and was seen in Essentials, where our Holiday under construction signings combined Inn Brand Family generated 38% of hotel were conversions openings and signings globally, and in Premium, where Crowne Plaza reached 534 open and pipeline hotels, supported Garner becomes Hotel openings by a modernised Americas estate and IHG’s 19th brand 31representing a debut growth in markets such as Greater China, in a new country for where it is the leading upscale brand. a particular IHG brand To unlock the growth potential of what is already one of the industry’s biggest Luxury & Lifestyle portfolios, we made organisational
| changes to ensure central support teams and regional colleagues work together to create offers tailored to local market priorities. We reached 150 openings and signings in this segment in 2023, including the first Vignette™ Collection in the Americas and the return of InterContinental® Hotels & Resorts to Rome – one of 37 openings and signings for the brand as its pipeline reached 100 hotels for the first time. With properties secured in more than 20 countries, the rapid global expansion of Kimpton® Hotels & Restaurants continued, including a debut signing in Saudi Arabia. The iconic Regent Carlton Cannes was among several halo properties showcasing key brand hallmarks in what was a strong year for the brand, where other flagship openings included Shanghai on The Bund. Six Senses® Hotels, Resorts & Spas reached a landmark 25th property, with the opening of the Southern Dunes, The Red Sea in Saudi Arabia, while a debut opening in Sydney was among 42 openings and signings for Hotel Indigo®.
Underlining the pace and scale of our progress, our six Luxury & Lifestyle brands now collectively represent 22% of our rooms pipeline – around twice the size of five years ago. In November, 31 Luxury & Lifestyle properties were awarded Condé Nast Traveler’s Readers’ Choice Awards – 10 more than the previous year.
Our strategic focus on accelerating conversion deals continued to drive growth. They reached record levels in 2023, comprising 37% of openings and signings combined, thanks to our work to increase the breadth of our portfolio and strengthen our enterprise for owners looking for fast access to our scale and systems.
To further accelerate our growth, we launched our new Essentials midscale conversion brand, Garner, to complement our new-build avid hotels brand in the space. Garner gives guests one-of-a-kind trusted stays at a lower price point and serves demand from hotel owners to convert to an IHG brand and quickly benefit from access to our enterprise platform, including our revenue-generating systems, distribution channels and loyalty programme that support performance, increase efficiencies and drive returns. Since becoming franchise-ready in the US in September, Garner rapidly achieved its first seven signings and two openings by the end of the year. The brand will also head to other markets in 2024, including Mexico and Japan. We expect Garner to reach an estate of over 500 hotels over the next 10 years and 1,000 hotels over the next 20 years. |
Strong progress with newer brands continued. Celebrating its fifth birthday, avid reached 67 open hotels, including its first in New York, while Atwell Suites™ grew its pipeline to 41. To support demand in the US, we are educating lenders about the performance, revenue opportunities and return on investment of these two brands and have provided owners with ground-break incentives to speed up building time. Also continuing its growth trajectory, Vignette Collection has now secured 29 Luxury & Lifestyle properties in two years since launch, while fast-growing Premium brand voco™ hotels achieved debut openings in Japan and Vietnam on the way to reaching 136 open and pipeline hotels. In our Exclusive Partners category, 49 out of up to 70 Iberostar Beachfront Resorts properties were added to IHG’s system to capitalise on the growing demand for resort and all-inclusive stays.
Specifically in Greater China, we surpassed 700 open hotels in 2023. The pace of development activity has increased since we introduced our franchising model a few years ago as part of a shift away from a more managed estate. This model is now available across Holiday Inn Express, Holiday Inn, Crowne Plaza, EVEN™ Hotels and voco, and by the end of 2023 had contributed to 38% of our open estate and more than 50% of our pipeline in the region.
What’s to come
We have grown our development pipeline to more than 2,000 hotels, the equivalent of 32% of today’s system size. This, coupled with key investments in our enterprise, sets the stage for sustainable system size growth in the years ahead. |
Crowne Plaza Utrecht – Central Station, the Netherlands
Our focus areas include extending the leadership of our Essentials brands, such as Holiday Inn and Holiday Inn Express, in major markets by building on our work to optimise the cost to build, open and operate.
We will speed up conversion deals to capitalise on owner demand and growth opportunities, including taking Garner to scale quickly in the midscale segment. We will also work closely with owners to continue expanding other newer brands, such as avid and Atwell Suites, as part of a more comprehensive owner engagement strategy designed to accelerate building and ramp-up for new hotels across our estate.
In Luxury & Lifestyle, we will focus on asserting our leadership of this higher-fee space by embedding our growth strategy and new operational approach, as well as expanding our branded residences offer. |
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The first Garner Hotel officially opened in Auburn, Washington in the US on 18 December, 2023
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| Our strategy | Relentless focus on growth | IHG | Annual Report and Form 20-F 2023 | 21 |
Strategic Report Our strategy continued PRIORITY: Brands guests and ur success relies on putting our guests and owners at the heart Oof everything we do to ensure our business and brands stand out as owners love the preferred choice for exceptional experiences and strong returns. What we achieved in 2023 2023 AT A GLANCE With strong demand around the world pushing RevPAR 16% ahead of 2022 levels and almost 11% up on 2019, we are greeting Extended reach of New procurement guests with fresh experiences, enhanced Guest How You Guest programmes service and the latest technology to meet campaign, lifting enabling owners evolving expectations. awareness and brand to benefit from Our IHG One Rewards programme plays favourability measures IHG’s scale a key role in capturing guest demand. Since transforming our loyalty offer in 2022, we have scaled its benefits, making Food Guest Satisfaction Index & Beverage Rewards redeemable at more maintained at than 5,900 hotels globally and increasing a four-year high Reward Nights by around 40% since 2019. The programme continues to gain notable IHG One Rewards loyalty industry recognition, too, including winning programme members seven Freddie Awards in 2023, the most have grown to Advocated for our owners prestigious member-generated awards in and industry through the travel loyalty industry. collaboration with >130m governments and Our mobile app supports access to IHG One trade bodies Rewards and this year we have continued to enhance its capabilities alongside creating easier-to-navigate brand websites. These are at the heart of a smoother, richer customer
| booking journey that features several stay enhancements, including the upsell of unique room attributes, where guests can seamlessly select add-ons and tailor their stays.
Our technology continues to improve customer service, with innovations being made through artificial intelligence (AI) that are providing a more intuitive guest experience for our Digital Concierge chatbot service. Speech AI is dealing with reservation conversations, we continue to roll out IHG Voice to automatically handle calls in hotels to reduce the burden on busy teams and our 24/7 asynchronous service is enabling guests to resolve their queries with reservations and customer care agents via chat. With the growth in AI capabilities and IHG’s scale investment, we have already increased end-to-end AI-led customer self-service by 53% in 2023 compared with a year earlier, with the potential for this to continue growing and driving additional cost-efficiency and effectiveness for our owners, as well as further increases in guest satisfaction.
We have also introduced further enhancements on property. This includes a next-generation payments system speeding up check-in and reducing fees for owners at more than 3,800 hotels in the US and Canada and the rollout of IHG Wi-Fi Auto Connect to connect IHG One Rewards members to hotel wi-fi automatically.
Key updates to our brands included an upgraded breakfast for Holiday Inn in the US and Canada with streamlined labour costs, a vibrant new service culture for InterContinental to drive performance and growth, and improved breakfast and design for Holiday Inn Express in Greater China.
The work we are doing in collaboration with our owners and hotel teams is making a difference for guests, with our Guest Satisfaction Index, which measures our outperformance against peers, continuing to maintain a four-year high.
For corporate guests, we are supporting organisations in how they are bringing their teams together in today’s hybrid world. We launched Meeting for Good to provide more sustainable meetings and events and a new programme for Crowne Plaza in Greater China that blends social areas and work spaces to meet demand for combined business and leisure travel.
For our hotel owners, we remain focused on providing the operational and commercial support they need to strengthen performance and capture demand. IHG One Rewards is playing a central role, having grown to more |
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voco Brussels City North, Belgium
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| than 130 million members in 2023. Supporting it in attracting consumer attention and driving revenue to our hotels is our masterbrand strategy, which is putting IHG Hotels & Resorts in more places, more often, to lift awareness and brand favourability measures. At the heart of this approach is our Guest How You Guest global marketing campaign, which extended its reach across markets, channels and events to increase IHG’s appeal with key demographics, supported by targeted regional promotions and brand marketing campaigns – including our largest ever for Hotel Indigo.
We continue to engage closely with our hotel teams and owners on how we can best drive performance – connecting with General Managers on regular calls and at regional conferences, and with owners through webinars, meetings and our first-ever IHG Americas Premium Investors & Leadership Conference in 2023.
During the year, we introduced more efficient design prototypes for renovations and new-builds across several of our brands and expanded our procurement solutions to create more resilient supply chains that benefit from IHG’s scale. This includes the rollout of our new Hotel Purchasing Services programme for our Essentials and Suites brands in the Americas and select markets throughout EMEAA, providing end-to-end support to speed up renovations and openings. Our Group Purchasing Organization agreements now cover more than 100,000 items and our Procure-to-Pay platform in Europe, Greater China and the Middle East also allows hotels to purchase products collectively to reduce costs.
Developing sustainable solutions is crucial to the long-term success of IHG, our owners’ businesses and the industry, and this year we have made progress while at the same time strengthening owner returns. For example, we have expanded our Community Solar
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We continue to engage closely with our hotel teams and owners on how we can best drive performance.”
initiative to provide access to renewable energy in several US states, helping reduce hotel energy bills; our turnkey financing solution is simplifying the installation of energy conservation measures; and our collaboration with certification programmes is enabling owners to showcase their sustainability credentials to guests and corporate clients to increase bookings and drive revenue.
Important work continues on supporting the industry on a broader scale, as we collaborate with governments, peers and trade bodies on a range of issues. We also launched IHG LIFT in 2023 to create more hotel development support in the US and Canada for historically under-represented groups within the hospitality industry and to further diversify our owner community.
Award-winning 7 Freddie Awards won by our IHG One Rewards loyalty programme |
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| Our strategy | Brands guests and owners love | IHG | Annual Report and Form 20-F 2023 | 23 |
| Strategic Report
Our strategy continued Brands guests and owners love continued |
| What’s to come
We are focused on making the IHG Hotels & Resorts masterbrand a household name that continues to drive awareness of our brands. We will do this by showcasing the strength of our offer across segments through dedicated marketing support, global brand campaigns and strategic partnerships.
The quality and consistency of the guest experience also remains a key focus – from loyalty recognition to property condition – and we will deliver training, data insights and property improvement plans to support hotels. Enhanced loyalty benefits, service and digital products will help create even richer and more rewarding guest experiences in 2024. |
For our owners, we will continue to reduce the cost to build, open and operate our hotels, from delivering cost-effective brand formats to creating efficiencies in furniture, fixtures and equipment. Supporting this, we will bring our new Hotel Purchasing Services programme to scale to ensure a more seamless opening process for more of our owners, while tailored supply chain solutions will support further rapid growth of our newer brands and Luxury & Lifestyle portfolio.
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Hotel Indigo Galapagos, Ecuador
| 24 | IHG | Annual Report and Form 20-F 2023 |
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Why hotel owners choose to work with IHG
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Hotel owners choose to work with IHG because of the trust they have in our brands and our track record in delivering strong returns. |
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Why hotel owners choose to work with IHG Hotel owners choose to work with IHG because of the trust they have in our brands and our track record in delivering strong returns. Strength of brands A portfolio of brands across industry segments, designed to drive owner returns Global sales organisation Strong loyalty We have developed programme and a global sales enterprise enterprise contribution to drive higher-quality, Almost 80% of room lower-cost revenue to revenue delivered to our hotels hotels by IHG’s managed channels and sources Sustainability Commercial engine tools and expertise We have invested in We have developed our cloud-based IHG tools, training and ConcertoTM platform, programmes to including our Guest support hotels and Reservation System provide better data and our digital and insights to enable channels, to enhance them to reduce their the guest experience energy, waste and and strengthen water consumption owner returns Procurement Investment in hotel lifecycle We use our scale to reduce management and operations costs for owners, with We have invested in technology, procurement programmes systems and processes to for hotel goods, services support performance, increase and construction efficiencies and drive returns for our owners
| Our strategy | Brands guests and owners love | IHG | Annual Report and Form 20-F 2023 | 25 |
Strategic Report Our strategy continued PRIORITY: nvestments in our loyalty programme, technology platforms, data and analytics, Leading Iand partnerships are raising the bar on the guest experience and driving commercial performance for IHG. Every solution and tool we are developing is firmly focused commercial on gaining competitive advantage for our brands, business and owners. What we achieved in 2023 engine Illustrating the success of our commercial engine across our technology platforms, sales and distribution channels, in 2023 2023 AT A GLANCE we saw enterprise contribution from IHG-managed channels and sources reach Loyalty penetration increased, almost 80%, up from 72% three years ago. with members now responsible for Our ability to provide hotel owners with 50% higher-value customers at a lower cost of customer acquisition in this way is key Increase in loyalty enrolments >55% to the attractiveness and proven success year-on-year – a record rise of our entire enterprise. of room nights globally Our transformed loyalty programme is playing an important role in our progress. Members spend approximately 20% more in hotels than non-members and are around ~80% 38% 10 times more likely to book direct. In 2023, Enterprise contribution Increase in revenue we achieved a record year for enrolments, from IHG-managed driven by app which were up 50% on 2022 and 24% ahead channels and sources year-on-year of 2019, taking us to more than 130 million – up from 72% three years ago members. Loyalty penetration also increased, with members responsible for over 55% of room nights globally during the year. We know that recognised members are also >60% >6,000 20% more likely to return to a property, so we are working closely with our hotel teams Increase in new US co-brand Hotels now featuring attribute to embed a culture of loyalty. This includes credit card accounts upsell, enabling guests to setting up a taskforce providing materials, year-on-year personalise their stays job aids and training for colleagues, and 26 IHG | Annual Report and Form 20-F 2023
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introducing incentives like Food & Beverage Rewards for guests to drive repeat bookings in a way that minimises impact on the bottom line for owners.
Following the update of US co-brand credit cards alongside the relaunch of our loyalty programme, the number of new accounts have continued to increase very strongly and, in 2023, were up more than 60% year-on-year and over 80% on 2019 levels. There has also been continued growth in average card spend, both on a year-on-year basis and vs 2019.
Further deepening our relationships with guests and driving more business to our hotels, we have expanded our strategic partnerships to enable IHG One Rewards members to redeem points in exchange for more unique experiences at sporting events and music festivals, as well as exclusive member privileges with other leading brands.
As the gateway to IHG One Rewards, our mobile app is also playing an integral role in driving loyalty contribution, direct bookings and incremental spend during stays. Since relaunching it in 2022, we have made thousands of enhancements to further improve the guest experience and drive revenue to our hotels. It has achieved strong user ratings in the App and Google Play stores and the IHG mobile app and other mobile channels now account for 58% of all digital bookings. The number of downloads were up 60% year-on-year, too, with revenue driven by the app increasing 38%.
In Greater China, we continue to enhance our capabilities on WeChat – the region’s popular messaging, social media and mobile payment app. Updates to the IHG WeChat channel contributed to an 8% increase in booking conversion rates year-on-year and it generated nearly twice as much revenue.
Our mobile app is part of a wider transformation of the booking journey. By the end of 2023, refreshed brand websites covering 92% of open hotels had been redesigned and relaunched. Linked to this, the upsell of unique room attributes on IHG’s Guest Reservation System (GRS) is now available in over 6,000 hotels, enabling guests to seamlessly select add-ons when making reservations, and owners to generate maximum value from their hotel’s unique attributes. Guests who select an upsell on our digital booking channels drive an average nightly room revenue increase of $18 across our Essentials and Suites brands, and $40 for Luxury & Lifestyle. Our GRS capabilities also enable more effective |
cross-sell of guest stay extras, such as F&B credits, lounge access, additional in-room welcome amenities and parking, as part of the redesigned booking flow.
What’s to come
We will continue to accelerate the impact of IHG One Rewards by scaling benefits and improving the on-property experience. This will involve data-driven marketing across our booking channels, while in our hotels we will provide further training and use innovative approaches to inspire colleagues to deliver even more consistent guest experiences. This includes IHG Climb – a new interactive gaming-based platform that engages hotel teams to help drive and enhance performance towards their hotel loyalty metrics. So far, it has been rolled out across the US and parts of Canada, where we are already seeing high levels of engagement and improved performance.
Continuing our focus on providing best-in-class platforms, IHG’s revenue management system employs a new cloud-based platform |
that incorporates leading data science and forecasting tools to deliver advanced insights and recommendations to owners as part of our enhanced revenue management services. Already in pilot, the rollout is targeting approximately 4,000 hotels in 2024.
Work will also begin on our next-generation property management system to create greater value for owners – where a single cloud-based view across properties will enable us to deploy fast, efficient enhancements at scale.
We will continue to integrate the Iberostar Beachfront Resorts brand into our systems and booking channels. This strengthens our all-inclusive and resort offer and lays the foundation for growing our Exclusive Partners collection by underlining the value of our commercial engine.
Building on the success of our relaunched co-brand credit cards, we will focus on the continued growth of our existing programmes and explore opportunities globally to better serve our growing loyalty base in key markets.
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| Our strategy | Leading commercial engine |
IHG | Annual Report and Form 20-F 2023 | 27 |
Strategic Report Our strategy continued PRIORITY: Care for our people, e recognise that profit and growth are intrinsically linked Wto doing the right thing and caring for our people, the communities communities in which we operate, and the world around us has been at the heart of our business for many years. Guiding our actions is Journey to Tomorrow, and planet our responsible business plan consisting of a series of commitments to 2030. This is underpinned by our strategic priority to care for our people, communities and planet, and aligned with the UN Sustainable Development 2023 AT A GLANCE Goals and IHG’s purpose of providing True Hospitality for Good. 87% >89,000 Progress against our commitments, which include creating a more inclusive workplace, Overall employee Hours collectively supporting our communities and reducing engagement +1%pt on 2022, dedicated by colleagues our carbon, waste and water usage, are with IHG named a Global Best in 2023 during IHG’s monitored and measured by the Board’s Employer by Kincentric Giving for Good month Responsible Business Committee. Not only are our actions crucial to the world around us, they are increasingly important to our guests, owners and investors, too, 3.8% 15 and are therefore critical for our reputation Reduction in carbon The number of relief and growth. Reflecting a changing world, emissions per occupied efforts we responded to each commitment focuses on areas where room since 2019 around the globe alongside we can make the biggest impact, so that our charity partners IHG continues to grow responsibly. See key matters discussed by the Board on page 101 to 103 and the Responsible Business Committee Report on pages 112 and 113. See our Responsible Business Report at Giving for Good month made a positive difference ihgplc.com/responsible-business/reporting to the lives of over 248,000 people globally 28 IHG | Annual Report and Form 20-F 2023
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Our people are fundamental to IHG achieving its purpose and strategic goals. IHG’s business model means that we do not employ all colleagues. We directly employ individuals in our corporate offices, certain reservation centres, and managed, owned, leased and managed lease hotels. However, not all individuals in managed, owned, leased and managed lease hotels are directly employed and, in general, we do not employ any individuals in franchised hotels (nor do we control their day-to-day operations, policies or procedures). |
What we achieved in 2023
People engagement We have numerous forums available for employees to share their thoughts, including Employee Resource Groups (ERGs), a designated Non-Executive Director for workforce engagement, and Colleague HeartBeat, our employee engagement survey, which allows people to express their views on key aspects of working at IHG.
In our 2023 survey, our overall employee engagement stood at 87%, a 1%pt improvement on last year, which once again saw IHG accredited as a Kincentric Global Best Employer. The survey also highlighted areas that we can strengthen further, including enabling infrastructure, rapid and high-quality decision making, and rewarding and recognising strong performers. Ensuring consistent experiences across all aspects of work was identified as a key driver for future performance. Actions taken during 2023 on talent and staffing saw a significant improvement in perceptions in these areas.
Developing and retaining talent To achieve our growth ambitions, we invest in attracting and retaining a diverse and talented workforce through our employer brand, which includes our promise to support employees throughout their career by giving them Room to Belong, Room to Grow and Room to Make a Difference. |
Each promise is supported by programmes designed to enable employees to thrive both within the workplace and outside.
For example, this year we piloted a new corporate onboarding programme in the US, UK, India and the Philippines aimed at embedding IHG’s culture with new employees. We celebrated each of our employer brand promises with a week of learning events. This enabled the business to spend time focusing on creating an inclusive culture where everyone can thrive, supporting employees in developing their careers and helping make a difference to the world around them.
We provide learning programmes, masterclasses, resources and toolkits to ensure colleagues have the capability to support IHG’s performance and development processes. Particular focus is placed on having meaningful career conversations and helping managers and employees support career development.
Managers have continued to hold quarterly check-ins with their teams as part of our performance management process, providing feedback and guidance on goals, behaviours and development to ensure everyone is focused on the right priorities. |
| Our strategy | Care for our people, communities and planet |
IHG | Annual Report and Form 20-F 2023 | 29 |
Strategic Report
Our strategy continued
Care for our people, communities and planet continued
| IHG’s reward strategy aims to attract, retain, motivate and engage top talent. It is supported by a robust governance approach that ensures our reward and recognition practices are fair and consistent across our employee and colleague population, regardless of gender and other aspects of diversity, and there is alignment between the wider direct workforce and executive remuneration. Further details between the alignment of the wider workforce and executive remuneration can be found in the Directors’ Remuneration Report on pages 116 to 140.
For our hotels, Journey to GM (our General Manager talent acceleration programme) continues to build a pipeline of talent to meet both our growth ambitions as a business and the aspirations of employees seeking rewarding careers at IHG. Following our first cohort in 2021, we have seen 65% of participants either move into their first GM role or receive a substantial promotion in our EMEAA and Americas regions. For our Luxury & Lifestyle GMs, we delivered brand immersion sessions to bring each of our brands to life. We also continued to develop our hotel talent management practices during 2023 so we can see critical gaps we need to fill.
Investing in HR technology and Global Learning In 2023, we continued to evolve our HR system by adding a new helpdesk and digital assistant, in-sourcing our HR Shared Service team and enhancing our support section within Our People Tools HR platform. We have transitioned from legacy payroll systems within the UK and US.
Our Global Learning strategy is designed to ensure that we all have the tools and resources we need to perform at our best, meet the needs of our stakeholders and develop personally as part of our Room to Grow commitment.
This year, our learning platform provided 345,000 users across our corporate offices, franchised and managed hotels with access to flexible training so they could personalise their learning experience to address specific needs and strengthen opportunities for career development.
A key element of our offer is IHG University, which was launched in 2023. There are four schools to support corporate employees, frontline colleagues in our hotels, GMs and hotel department leaders, and owners. The university champions individual learning, career development, talent acceleration and best practices. |
IHG University received the Brandon Hall Group Bronze award for excellence within the category of Best Advance in Custom Content, as well as awards for Digital Learning Best Practice and Best Digital Learning Team by Online-Edu.
Attracting talent To help attract the talent we need to fulfil our growth ambitions, we have invested in a comprehensive suite of channels and platforms. Our IHG careers website had over 2.46 million visitors in 2023, while there has also been a 51% rise in visitors to our new digital channels, which include Instagram, YouTube and TikTok. This has generated 9.32 million views of our employer brand content globally over the past year, which we are boosting with paid sponsorship of key job opportunities to drive thousands of applications for frontline roles in our hotels.
To help tackle the industry shortage of talented and experienced Luxury & Lifestyle GMs, our dedicated Luxury & Lifestyle team has implemented a specialised recruitment strategy to address this gap and build further trust with our owners.
We also continue to invest in tools and guides to ensure a transparent, equitable, inclusive and efficient hiring process to elevate the recruitment experience for the corporate and hotel candidates who apply to IHG each year.
Recognising the importance of attracting and developing talent whatever their backgrounds, circumstances, or abilities, we expanded the number of organisations we’re working with in the US to attract students to our 10-week paid internships. This will enable us to further diversify our early careers pipeline. Our work continues with Historically Black Colleges and Universities in the US, and the Leonard Cheshire and 10,000 Black Interns Foundation charities in the UK. While in Greater China, we have established partnerships with five special education schools to nurture talent among people with disabilities.
Championing a diverse culture where everyone can thrive A cornerstone of our culture is our passion for inclusion, and our Global DE&I Board and regional DE&I councils help shape actions across our markets that are aligned to our Journey to Tomorrow commitments.
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| Driving gender balance across our leadership Globally, 35% of our leaders working at VP level and above are female (vs an ambition of 39% by 2025), and we are one of the few large global organisations to have a gender-balanced employee population, of which 52% is female.
A key focus is attracting more women into functions that have been historically less gender-balanced, such as Commercial, Operations, Technology and Development. We’re also identifying and removing barriers to increase the number of female GMs across our estate, including establishing an alumni network for graduates of our Rise mentoring programme, which empowers our female colleagues in our hotels. Overall, more than 200 women have graduated from the programme so far, and this year we welcomed an additional 162 participants. We were delighted to see Forbes recognise IHG as one of the world’s top companies for women, and proud to be officially certified in the US as a Great Place to Work for parents, as well as featuring in the 100 Best Places to Work for Women.
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| As at 31 December 2023 | Male | Female | Total | |||||||||||||||
| Directors | 5 | 6 | 11 | |||||||||||||||
| Executive Committee | 6 | 3 | 9 | |||||||||||||||
| Executive Committee direct reports | 30 | 24 | 54 | |||||||||||||||
| Senior managers (including subsidiary directors) |
70 | 31 | 101 | |||||||||||||||
| All employees (whose costs were borne by the Group or the System Fund) |
5,546 | 7,916 | 13,462 | |||||||||||||||
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Doubling under-represented groups among our leaders We remain committed to having leaders who represent the diverse global nature of our business. Thanks to the self-disclosure of employees, we know that 22% of our global leaders working at VP level and above are racially or ethnically diverse and represent 16 nationalities.
We have identified the UK and US – where we have our largest populations of corporate colleagues – as markets in which we want to increase ethnic representation. We have set targets for the percentage of leaders working at VP level and above that are ethnically diverse in each market – 26% by 2025 in the US and 20% by 2027 in the UK, with an overall global target of 26% by 2025. |
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| 30 | IHG | Annual Report and Form 20-F 2023 |
As part of these plans, we continue to focus on strengthening our approach to talent planning, including embedding our diverse talent programmes (Ascend in the US and The Network of Networks’ (TNON) Ethnically Diverse Programme, and Women in Hospitality, Travel & Leisure’s (WiHTL) Ethnic Future Leaders Programme in the UK) to develop the next generation of talent through our early career programmes and inclusive hiring practices. Furthermore, we are building relationships and collaborating across our markets to support people with disabilities. As at 31 December 2023 Ethnically Diverse Total Executive Committee 2 9 Global VPs and above 53 238 UK VPs and above 5 58 US VPs and above 24 133 Creating a culture of inclusion for our colleagues, owners and suppliers All EC members have a DE&I-related goal and, having rolled out conscious inclusion training for GMs and corporate employees in key markets in 2021, this year we made the training available to more than 16,000 colleagues in our franchised hotels. Insights from our Inclusion Index are also among the ways we are tracking progress. In 2023, the Index showed that nine out of 10 employees considered IHG to have an inclusive culture. We were proud to have been ranked second out of 850 companies on the Financial Times Europe’s Diversity Leaders 2024 list. InterContinental Fujairah Resort, UAE This year, we have seen significant growth of our ERGs and now have 4,000 members across 29 chapters. Playing a key role in underlining the value of inclusion, they brought employees together for moments such as the International Day of Persons with Disabilities, International Women’s Day and Pride Month. We are also continuing to drive inclusion within our hotel owner communities in the US and Canada by introducing IHG LIFT – an owner growth programme focused on creating more hotel development support for historically under-represented groups within the industry. InterContinental Marseille – Hotel Dieu, France To help drive inclusion in our supply chain, our Engaging Partnerships through Inclusion and Collaboration (EPIC) supplier diversity programme expanded to the UK during the year, representing the first international market outside North America. We also recognised the diversity programmes run by our key suppliers, and through our EPIC Allies initiative they are now working with us to identify diverse suppliers in their respective supply chains. We launched our Supplier Diversity Tier 2 programme, too, inviting key suppliers who share our values to report their diverse spend, so that IHG can influence further how our supply chain creates value for communities across the globe. Working with advocacy groups is critical to our success in diversifying our supply chain. Collaborating in this way offers a bridge between IHG and diverse businesses to support our supply chain inclusion, market capability influence and economic impact goals. As a result of collective action in 2023, IHG’s total spend among diverse suppliers was $111 million across North America, the UK and Tier 2 reporting. Supporting colleagues to prioritise their wellbeing and that of others In 2023, we achieved a 2%pt increase in our Wellbeing Index score (to 89%) for our hotel colleagues. Supporting our overall approach to colleague wellbeing, we also launched a UK network of mental health first-aiders, helping to ensure the right support is in place for everyone to feel at their best, and we made enhancements to our UK healthcare plan. Our strategy | Care for our people, communities and planet IHG | Annual Report and Form 20-F 2023 31
Strategic Report
Our strategy continued
Care for our people, communities and planet continued
With more than 6,300 hotels spanning over 100 countries, we are proud to be at the heart of thousands of communities around the world, as we strive to make a difference every day by delivering our purpose of True Hospitality for Good. Through providing skills training, supporting relief efforts following natural disasters, and fighting food poverty, we aim to improve the lives of 30 million people. In addition to direct funding and working with expert organisations, our colleagues contribute their time, skills and passion to address social needs within their communities.
To ensure that we measure our impact and maintain focus on areas where we can make the greatest difference, we adhere to the global standard for managing corporate community impact as members of Business for Societal Impact (B4SI).
What we achieved in 2023
Skills training and innovation
Our IHG Academy programme is aimed at increasing social mobility and building hospitality skills for the future. In 2023, our IHG Academy offerings saw more than 30,000 participants gain valuable employment and life skills, as the programme has grown to provide work experience, internships, apprenticeships and free online learning through our IHG Skills Academy to users all around the world. This year, we expanded our offer to include cognitive assessments, which enabled users to complete personality profiles and skills mapping assessments to help them identify their ideal roles.
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To learn more about the impact of our IHG Academy programmes, see our 2023 Responsible Business Report. |
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Colleagues from our Shanghai office volunteered their time at a coffee shop, which employs individuals with disabilities
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| Number of people participating
Local action and Giving for Good month We recognise that being in the heart of our communities, our hotels are best placed to assess local needs and provide tailored support where it is needed most, so we encourage the development of local collaborations in line with our policy and strategy for community impact.
Each year we come together as a company during September for IHG’s Giving for Good month, which sees colleagues volunteer and make a positive difference in their communities. In 2023, we worked with over 1,400 charities across events spanning nearly 80 countries. Colleagues collectively contributed more than 89,000 volunteering hours to communities, causes and charities, adding to a total of more than 121,000 volunteering hours during the year. Efforts throughout the month made a positive difference to the lives of over 248,000 people globally. Activities included giving clothes to housing shelters in Canada, raising money to provide clean water in |
Egypt and providing meals to low-income hospital patients in Mexico. More than 270 projects focused on protecting the planet too, from beach and city clean-ups to replanting green spaces. This year, we also launched a tracker to help us better understand and celebrate the way hotels support their communities year-round.
Supporting our communities when disasters strike We are proud of being there for our communities in times of need and continued working with a range of humanitarian aid organisations around the world to assist in their critical relief and recovery efforts.
In 2023, we supported 15 global relief efforts, which included responding to several natural disasters, from the earthquake in Turkey and Syria to the hurricanes in Mexico, working closely with charity relief experts CARE International and the American Red Cross.
We also activated the IHG Colleague Disaster Relief Assistance Fund on several occasions to support colleagues with immediate relief, including those affected by typhoon Mawar on the island of Guam. |
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| 32 | IHG | Annual Report and Form 20-F 2023 | |
Collaborating to aid those facing food poverty
Our commitment to supporting local charities across various markets is a vital means of addressing food security for those in need. This year, we expanded our work with local organisations, including Windsor Foodshare near our Global Headquarters, as well as KiwiHarvest and UK Harvest. This expansion helps support society’s most vulnerable and reduce food waste.
Our existing collaborations continued to thrive. We’re now in our fifth year of working with OzHarvest, a food rescue organisation in Australia, and we continue to build our relationship with JapanHarvest and VietHarvest. We also supported the Global FoodBanking Network, which operates in nearly 50 countries. This included expanding our work with Green Food Bank, the official branch of the network in China.
Our guests are also given the opportunity to show their support, and in 2023, nearly 35 million points redeemed by our IHG One Rewards members were donated to benefit the efforts of the global charities we work alongside.
| Planet |
The actions we take to deliver our Journey to Tomorrow plan help protect our planet and support the ongoing creation of more sustainable guest stays. We provide tools and information as well as work across the industry to help set standards to enable our hotels to reduce carbon emissions, manage waste and conserve natural resources. To do this, we continue to collaborate with hotel owners, suppliers, industry peers and governments.
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See our TCFD, Responsible Business Committee Report and GHG emissions disclosures on pages 52 to 59, 112 and 113 and 238 to 240. |
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See our Responsible Business Report at ihgplc.com/responsible-business/reporting |
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Energy and carbon
Working closely with our hotel owners, we aim to help them reduce costs while decarbonising and future-proofing their assets.
We have set a target to reach a 46% absolute reduction in GHG emissions from our franchised, managed, owned, leased and managed lease hotels, from a 2019 baseline. This target has received validation from the Science Based Targets initiative (SBTi), aligning with climate science and the UN Paris Agreement.
While there was an increase in year-on-year emissions in 2023 due to the recovery in occupancy and growth in the size of the estate, we continued to drive energy efficiency with a 3.8% reduction in carbon emissions per occupied room from 2019, and a 1.9% absolute reduction against the baseline. |
Given our business model and the dependencies for achieving our ambitious target, we have worked closely with our colleagues, owners and partners to devise a decarbonisation strategy focused on three key areas: decarbonising existing hotels, sourcing renewable energy, and developing new-build hotels that operate at very low/ zero carbon emissions.
In 2023, we moved to a more regionalised approach to ensure the measures we introduce at hotels take into account varying regional factors and still provide a good return on investment for our hotel owners.
We continued to update our brand standards and are integrating various Energy Conservation Measures (ECMs) into the expectations of hotels that work with us. All ECMs integrated into hotel brand standards are carefully considered, taking into account costs and impact. In 2022, we established our first set of energy efficiency global brand standards, and this year introduced further ECMs into our new-build hotel brand standards globally, as well as for our existing Essentials & Suites estate in the Americas. Standards include measures for lighting controls, occupancy-sensing thermostats and heat pumps. We will continue working on implementing additional brand standards tailored to each region and segment.
These ECMs will further drive energy reduction across our hotels and form part of our new ESG measure for the 2023/25 cycle of the Long Term Incentive Plan for Executive Directors and other senior leaders. |
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The solar farm in Illinois, US, where our hotels can access our Community Solar programme
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| Our strategy | Care for our people, communities and planet | IHG | Annual Report and Form 20-F 2023 | 33 |
Strategic Report
Our strategy continued
Care for our people, communities and planet continued
| Being part of IHG ensures hotel owners receive the support, knowledge and resources necessary to help reduce their energy consumption and carbon emissions. One key example of this is our Hotel Energy Reduction Opportunities (HERO) tool, which guides hotels on effective actions tailored to specific buildings. It provides indicative capital costs, energy savings and payback periods based on the hotel’s facilities, climate and energy use. In addition, we are actively working to ensure that owners can access government incentives for sustainability measures requiring greater investment.
We are developing plans for hotels that operate with very low/zero carbon emissions. This includes a low-carbon hotel programme, focused primarily on the operational aspects of new-build hotels, to support delivery of our carbon and energy goals. We expect to launch this programme in 2024.
With the majority of our hotels operating through franchise agreements, we cannot directly procure renewable energy for most of the properties in our estate. However, we seek to help all our owners secure access to renewable energy, and have been exploring which options would be suitable for scaling across our estate.
One example of how we have been able to support our hotels is through our Community Solar programme, which is available in select markets across the US and requires no capital expenditure. It is currently active for IHG hotels across four states, with more to follow soon, where legislation supports the initiative and there is available capacity. Our commitment also extends to procuring renewable electricity for six of our global offices, including our Global Headquarters in Windsor in the UK and our Americas Headquarters in Atlanta in the US, as well as more than a quarter of our managed estate in Europe. |
| Waste
Our overarching objective is to embrace circularity by encouraging reuse or recycling of resources. This involves initiatives such as integrating recycled materials into new product manufacturing or ensuring that items at the end of hotel use find meaningful applications elsewhere. We also have processes and tools in place to assess the environmental sustainability of our suppliers and advise our hotels accordingly (refer to page 41 for updates on our responsible procurement progress).
In 2019, we became the first global hotel group to commit to replacing bathroom miniatures with full-size amenities, which has been implemented into brand standards across all our hotels globally. We have also committed to eliminating single-use items, transitioning to reusable or recyclable alternatives throughout the guest stay by 2030. |
To further assist our hotels, we have developed a bespoke Single Use Items Toolkit for our hotel operators. Initially launched in EMEAA, in 2023 we made it available globally. It provides hotels with additional support and best-practice approach to reducing, reusing, replacing and recycling single-use items. Our updated sustainability credentials for our guest supplies, encompassing items like toothbrushes and razors, have been successfully implemented by many of our hotels this year in EMEAA.
Food waste is a key issue for the hospitality industry and we use a ‘prevent, donate, divert’ plan to minimise landfill contributions. At the industry level, we collaborate with peers to ensure a unified approach to collecting, measuring and reporting waste. All our hotels have access to food waste training as part of the GM training programme, which encourages hotels to track food waste and take action. Since its launch in 2022, the training has been accessed by more than 1,600 hotels and over 37,000 courses have been completed by managed and franchised colleagues.
We also use a range of technology to address the challenge – whether that’s an app that connects hotels with customers or communities when they have unsold surplus food or analytics to pinpoint areas of waste and provide chefs with real-time information. |
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| 34 | IHG | Annual Report and Form 20-F 2023 |
Water Conserve water and help secure water access in those areas at greatest risk Our 2030 commitments • Implement tools to reduce the water footprint of our hotels. • Mitigate water risk through stakeholder collaboration to deliver water stewardship at basin level. • Collaborate to ensure adequate water, sanitation and hygiene (WASH) conditions for our operating communities. With insufficient global water resources to meet everyone’s needs compounded by the escalating frequency of extreme weather events and droughts, it is important that we identify hotels in areas of high or very high water stress. This insight is crucial for tailoring our business strategy effectively, providing targeted support to these hotels, and implementing water-saving measures. We have been part of the United Nations (UN) CEO Water Mandate since 2019, which represents a pledge to six core commitments that mobilise business leaders on water, sanitation and the UN Sustainable Development Goals (SDGs). We are also members of the Water Resilience Coalition, which aims to raise global water stress to the top of the corporate agenda and preserve the world’s freshwater resources through collective action and ambitious, quantifiable commitments. Our membership has helped to inform our work to identify and manage water supply, so that we can build on the six water stewardship pilot projects we have carried out in recent years. Acknowledging the challenges in sustaining a reduction in water use in the coming years, we mandate reporting on water usage in our hotels through the IHG Green Engage™ system and have integrated water reduction measures into our brand standards globally. These standards require hotels to implement high-efficiency, low-flow aerated shower heads and taps by the end of 2025. On average, these initiatives reduce water consumption by 11 litres per minute and three litres per minute respectively. Collaborating with water specialists is crucial when aiming to maximise impact and bring about positive change in water-related issues. When a devastating earthquake struck Turkey and Syria in 2023, IHG donated to CARE International to help it deliver essential WASH items to those seeking refuge. The hygiene kits provided included items that are crucial to improving sanitation for vulnerable communities and preventing disease, such as soap and towels. What’s to come People We will continue to support our employees throughout their career journey, providing tools and resources to ensure everyone has Room to Grow, Belong and Make a Difference. We will focus on building line manager capability and enabling a high-performance culture. We will continue to invest in talent management to enhance our approach to recruitment, alongside building on our successful 2022 campaign to strengthen our General Manager pipeline in support of our growth aspirations, particularly in the Luxury & Lifestyle segment. We will also enhance our learning curriculum for this population, centred around the key luxury capabilities we know we need to build for the future. We will continue embedding our inclusive culture and working towards clear commitments to make IHG a place where everyone can thrive at all levels within the business. Communities We are committed to ongoing collaboration with expert charities to assist those in greatest need globally. We will actively seek new opportunities within our communities to further strengthen our collective impact and engage our guests, employees and colleagues. To ensure our hotels make the biggest possible positive impact within their communities, we will support them in establishing local collaborations to help those who need it most. To encourage further engagement, we will use our new Community Tracker to measure the impact of actions and celebrate success by continuing a monthly recognition programme. We will continue to expand our IHG Academy, including providing more work experience opportunities in our hotels and more learning resources on the IHG Skills Academy virtual learning platform. Planet Work has begun upgrading our IHG Green Engage system so that it is more user-friendly and makes greater use of analytics to provide hotels with even richer insights across energy, water and waste. Pilots were completed during the year, resulting in positive feedback from hotel teams, and our improved environmental management platform will be launched in 2024. To support the delivery of our carbon and energy goals, we will also be launching a low-carbon hotel programme, which is primarily focused on new-build hotels that operate with a very low/zero carbon footprint. Collaboration remains crucial to meeting our goals, and we will continue to use our scale and standing when engaging with peers, trade bodies and governments to help shape policy relating to our owners and the sector more broadly, as well as secure government incentives for introducing sustainability measures. Our strategy | Care for our people, communities and planet IHG | Annual Report and Form 20-F 2023 35
Strategic Report Our stakeholders takeholder engagement at all levels of the business is of the utmost importance to IHG. Various methods of engagement Sare used based on experience and developing best practice, including face-to-face meetings, feedback and performance reviews, employee forums and training. We adjust our engagement methods as required to ensure they remain effective for all our stakeholders and IHG. IHG measures the effectiveness of our engagement methods through a range of metrics, including our KPIs (such as signings and pipeline), performance, ability to attract and retain talent, employee engagement survey results, adherence to the policies covered by our Code of Conduct and AGM results. The views and interests of other stakeholders, such as regulators and industry bodies, are also taken into consideration. They help provide a framework against which we measure ourselves, protect our reputation and develop our commercial and social awareness. Stakeholders Guests Our ability to offer a wide selection of brands, with quality stay experiences, plenty of choices, great value and loyalty rewards, are key to attracting and building trust with IHG’s guests, while continuing to drive commercial performance and revenue. What impacted them in 2023 • Increased desire to travel and for access to a broader range of locations and experiences. • Rising cost of living and effect of inflation. • Significant interest in the ESG profiles of companies. • Continued desire to book and stay seamlessly. Engagement • Teamed up with major events to allow IHG One Rewards members to redeem points in exchange for unique experiences. • Continued improvement to next-generation mobile app. • Guest satisfaction surveys. • Expanded choice of locations for our Luxury & Lifestyle brands. • New public space and guest room designs. Outcomes • Rollout of IHG Wi-Fi Auto Connect. • Continuous improvement to IHG One Rewards, providing more ways to earn and redeem points. • Expanded our portfolio to 19 brands with the addition of Garner. • Enhanced digital customer service support, including automation to speed up response time and direction to the right team. • Continued enhancement of meetings offered for corporate clients. • Launched Meeting for Good to provide more sustainable meetings and events. See our Guest Love KPI on page 62 and how the Board had regard for guests as part of its consideration of strategic and operational matters on pages 102 to 103. Shareholders and investors Our ability to maintain strong relationships with shareholders and institutional investors is fundamental to our ability to access capital markets and ensure IHG’s long-term success. • The impact of geopolitical unrest on the hospitality sector in certain regions, which could affect IHG’s trading performance and financial results or influence its capital allocation policy. • Executive remuneration policies, including the potential use of discretion, alignment with workforce pay and talent retention. • Concerns about climate change and wider sustainability issues. • CEO succession and Board composition. • Regular roadshow investor meetings and participation at investor conferences by Executive Directors, senior leadership and the Investor Relations team. • Extensive consultations between the Chair of the Remuneration Committee and institutional investors and proxy vote advisers. • Meetings with the Chair, IHG’s Chief Sustainability Officer and the Investor Relations team to discuss governance, sustainability and workforce practices. • Continued investor confidence in IHG’s performance, long-term viability and leadership, as demonstrated through feedback received and across AGM results. • Enhanced understanding of shareholder and investor focus areas, including in relation to remuneration policy and ESG matters. • Continued investor confidence in the composition of IHG’s Board. See also a description of our dividend policy on page 13, our KPIs on pages 60 to 63, key matters discussed by the Board on pages 102 and 103 and engagement with shareholders relating to Executive Director remuneration on pages 116 to 117 and 125. Visit ihgplc.com/investors for further information. Suppliers Responsible supplier relationships are vital for IHG in driving efficiency and effectiveness throughout our supply chains. • Ongoing uncertainty and disruption in supply chains. • Increased focus on sustainability and integrity within supply chains. • Increased consumer desire for sustainable goods and services. • Engaged with high–performing suppliers in sustainability and the circular economy that provide key goods and services to our hotels and corporate functions. • Following the introduction of Ecovadis, a supply chain due diligence tool, in 2023 IHG became a founding member of the Hospitality Alliance for Responsible Procurement (HARP). Identified alternative solutions with suppliers where supply was impacted across our corporate and hotel estate. Remained agile by adjusting our approach to goods and services sourced from affected regions. Increased collaboration opportunities with sustainable suppliers and for sustainable goods in alignment with our Journey to Tomorrow ambitions. Further information about how the Board considered supply chain and procurement is on pages 102 and 103, and our business relationships, including our statement of business relationships with suppliers, customers and others, is on page 237. Visit ihgplc.com/responsible-business for further information about our approach to responsible procurement.
Stakeholders Hotel owners IHG’s success relies on hotel owners investing in our brands. To remain attractive, we focus on the breadth of our brand portfolio and the effectiveness of our IHG One Rewards loyalty programme and wider enterprise. What impacted them in 2023 • Increased operating costs, including energy, food and beverage. • Labour shortages, supply chain challenges and financial and operational constraints caused by global macro-economic factors. • Ability to capture and drive demand for their hotels. • Evolving brand standards. Engagement • Direct meetings with CEO and Regional CEOs. • IHG Owners Association collaboration. • Owners and investors conferences. • Portfolio and individual hotel reviews covering operational, strategic and industry trend updates. • Conferences, training, webinars, regular newsletters and bulletins. • Hotel lifecycle and finance team support. • Collaboration with governments and industry to support recovery. Outcomes • Continued focus on IHG One Rewards loyalty programme. • Expanded brand portfolio with Garner. • Streamlined operations, including removed and relaxed brand standards. • Tailored marketing and promotions, supported by new data-driven resources and services that help hotels quickly identify and act on revenue opportunities. • Procurement programmes to drive savings for owners. • Increased training, guidance and recruitment support for hotel teams. • Next-generation formats for Holiday Inn, Holiday Inn Express, Candlewood Suites and Staybridge Suites. See our net rooms supply, signings, gross revenue and enterprise contribution KPIs on pages 60 to 63 and how the Board had regard for hotel owners as part of its consideration of strategic and operational matters on pages 102 to 103. Visit owners.org for further information about the IHG Owners Association. People Delivery of our purpose to provide True Hospitality for Good and the strategic priorities that drive future success rely on our people and our ability to maintain and evolve an engaged, diverse and inclusive culture where careers can grow. • Attracting the talent we need to fulfil our growth ambitions. • Employees wishing to grow and develop their careers at IHG. • IHG’s approach to diversity and inclusion. • Evolution of our core HR and learning technology platforms. • Employee engagement survey. • Pilot launch of Corporate onboarding programme in the US, UK, India and the Philippines. • Continued Voice of the Employee feedback sessions with the Board. • Addition of new helpdesk, digital assistant and insourced HR Shared Services team. • Significantly grown ERG memberships, increasing Inclusion Index scores and driving gender and ethnic leadership representation. • Celebrated Room to Grow Week with a series of events and resources to outline how to grow your career at IHG. Dedicated L&L hiring team to address the shortage of GMs. Recognised as a leader in DE&I by the FT Europe’s Diversity Leaders list and rated by Fortune as one of the Best Large Workplaces for Women. Overall employee engagement score of 87%, as IHG continued to be named as a Kincentric Global Best Employer. 2%pt increase in Wellbeing Index score for hotel colleagues. Launched network of mental health first-aiders in UK Corporate offices. Launched IHG University to support career development. See our employee engagement KPI on page 63, how the Board had regard for people in Board and remuneration decisions on pages 117, 118, 123, 124 and 127, Voice of the Employee disclosure on page 113, and our statement on employee engagement on page 236. Communities The communities we are a part of support, and benefit from, our responsible business approach and the commitments we have made to achieve a better and more sustainable future for everyone through our Journey to Tomorrow programme. • Access to business skills development and local employment. • Cost-of-living challenges and food poverty, including from geopolitical unrest. • Modern slavery and human rights issues. • Climate change and other wider environmental challenges. • Natural disasters, from the earthquake in Turkey and Syria to the hurricanes in Mexico. • Collaboration with local education providers and community organisations, as part of our focus on offering skills building and training opportunities. • Giving for Good month: a programme of activities and employee volunteering days. • Industry collaboration on human rights and labour conditions in specific markets. • Continued close collaboration with international and local charities and NGOs, such as CARE International and American Red Cross. • Support for 15 relief efforts around the globe and for our colleagues and their families through the IHG Colleague Disaster Relief Assistance Fund. • Support of the Global FoodBanking Network, which operates in nearly 50 countries. • 30,000+ people trained and mentored through our IHG Academy offerings in 2023. • More than 89,000 hours of colleague volunteering dedicated to communities during Giving for Good month. See our IHG Academy KPI on page 62, and Responsible Business Committee Report on pages 112 and 113. Visit ihgplc.com/responsible-business for further information on our community commitments. Our stakeholders IHG | Annual Report and Form 20-F 2023 37
Strategic Report operate Our culture responsibly – how we Our culture shapes our conduct and sets the tone for how we operate responsibly, driving forward our purpose of providing True Hospitality for Good. OUR VALUES Led by the Board and Executive Committee our values underpin our behaviours and business ethics, and guide how we deliver our strategy, make decisions and live our purpose. Do the right thing Show we care Aim higher Celebrate difference Work better together he long-term success of IHG Tis shaped by a number of interdependent factors, including our purpose, the effectiveness of our strategy and the resilience of our business model. Underlying all of these is our strong workplace culture, which is aligned with our reputation as a trusted and ethical company that is well governed. Our culture is driven by our approach to business, including our structure and governance, risk appetite, controls and systems, workplace environment, behaviours, values and policies (including our Code of Conduct). Therefore, understanding these aspects of our business is critical to understanding how we deliver on our strategic priorities, risk management and KPIs. Our structure and governance The overall responsibility for ensuring that our culture and ways of working are aligned with our purpose and strategy sits with the IHG Board. Throughout the year, the Board and its Committees receive updates and presentations, and review metrics, reports and scorecards, on the delivery of our strategic priorities, all with the appropriate governance lens and in the context of our culture. The Board challenges and supports the Group’s senior leaders, particularly where there is a need to adopt or amend policies and initiatives to ensure the continued alignment of strategy and culture. The Board delegates day-to-day responsibility for setting and embedding Company culture to the CEO who, together with the Executive Committee (EC), sets the tone from the top in relation to attitudes and behaviours to create an open and honest workplace environment, empowering employees to give feedback and freely ask questions about matters that concern them. The EC is responsible for executing the Group’s strategy, and keeping the Board informed of the Group’s operations and workplace culture. IHG’s hotel development and operations are organised on a regional basis (Americas, EMEAA and Greater China) and are supported by global functions in the key areas of Marketing, Commercial & Technology, Finance, Human Resources, Corporate Affairs, and Business Reputation and Responsibility. Management of the regional and global teams is organised into leadership teams, who are responsible for executing IHG’s strategic priorities in a manner that aligns with the Group’s culture and values. Decisions on hotel developments and capital expenditure go through the appropriate deal approval and expenditure committees in line with the Group’s Global Delegation of Authority Policy (DOA).
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The DOA sets out financial commitment and expenditure approval controls. For those commitments over specified thresholds or for certain types of proposals, approval is required from the Group’s Capital Committee, which reports into the Executive Committee. |
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| The Group’s corporate legal structure is comprised of around 370 subsidiaries worldwide. These entities provide the legal framework required to support the Group in making individual contracts and commitments. | ||
| g |
Information on the Board’s monitoring and assessment of our culture is included on page 103. |
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| Risk appetite, controls and systems | ||
| Although our strategy does not consciously expose the business to inappropriately heightened risk, our risk appetite and tolerance are continuously reviewed by the Board in relation to the Group’s pursuit of our strategic and operational objectives and the expectations of our stakeholders. The Board reviews the portfolio of uncertainties that we inherently face as a fast-moving business, operating in a highly competitive market, and considers whether the choices we make achieve an appropriate and balanced response overall to opportunities and threats. As part of its review, the Board considers the impact of macro-external factors, including, but not limited to, ongoing geopolitical tensions and conflicts and macro-economic pressures such as inflation, as well as increasing expectations from stakeholders on our response to ESG issues such as climate change. | ||
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Our risk appetite is cascaded through our values and behaviours, our Code of Conduct, DOA and other global policies, and how we set our goals and targets, and is further reinforced by frequent leadership communications to guide decisions and set priorities, including the EC’s recent refresh of our strategic ambitions and behaviours.
We are committed to a framework of monitoring and assurance processes in relation to our initiatives and policies, reviewing whether they have operated within acceptable risk tolerances where priorities have shifted or additional actions were required. Board and Committee agenda topics allow the Board to identify and discuss the nature and extent of principal (and emerging) risks, and how risk management arrangements have been adapted where required. |
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| g |
See our Governance pages 100, 108 and 109. |
| Workplace environment | ||
| As part of our employer brand commitment to provide employees with Room to Belong, we have taken steps to create more flexible workspaces that bring to life the benefits of hybrid working. We have leveraged modern | ||
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office spaces and the latest technology to bring colleagues together for global learning events, town halls and workshops while also continuing to support our teams in finding a balance between remote and office working. |
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| In 2023 we delivered cybersecurity awareness training to hotel colleagues and corporate employees, emphasising the importance of staying vigilant to protect our company against evolving cyber threats. Topics ranged from social engineering awareness and phishing prevention best practices, to the ways that generative AI introduces new information security risks to IHG. While we continue to implement measures to safeguard the integrity, confidentiality and availability of IHG data, our employees remain the most important layer in our control framework. | ||
| g |
See our people disclosures on pages 28 to 31, and key matters discussed by the Board on page 102. |
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| Human rights | ||
| An integral part of our global approach to responsible business is to drive respect for and advance human rights in accordance with internationally recognised standards.
Our Human Rights Policy sets out our commitment to respect the human rights of all individuals impacted by our business activities – our guests, our colleagues, workers in our supply chain and the communities in which we operate – and our expectation that those with whom we do business – including our suppliers, owners, and franchisees – uphold similar standards. We seek to advance human rights by working with others to strengthen our practices and address common industry challenges. |
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IHG is a member of the United Nations Global Compact (UNGC) and is committed to aligning IHG’s operations, culture, and strategies with the UNGC’s 10 universally accepted principles in relation to human rights, labour, environment and anti-corruption.
To continue to enhance our human rights programme, a global human rights risk assessment was conducted this year to update our understanding of salient issues and how they are being addressed. Teams across our business are working together to develop and implement action plans in response to findings from this assessment. |
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| In 2023, we remained focused on addressing risks related to migrant workers by further embedding our Responsible Labour Requirements across our managed, owned, leased and managed lease estate. | ||
| This year we also strengthened our approach to human rights due diligence in the supply chain, commencing with a review of policies and our approach to risk assessment when contracting with new suppliers. | ||
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g |
For further details on our human rights progress, please see pages 20 and 21 of our Responsible Business Report and our Modern Slavery Statement. |
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| Our behaviours | ||
| By demonstrating our growth behaviours, our leaders and employees create an environment that encourages high performance, while operating responsibly in a way that helps us achieve our strategic priorities and purpose. Our policies, communications, learning programmes and performance management processes reflect these behaviours, ensuring they act as a compass for how we do things and help us create an inclusive culture for all. | ||
| Code of Conduct and related policies | ||
| IHG’s Code of Conduct (Code) sets the standard for how we do business at IHG, and underpins our commitment to providing True Hospitality for Good. | ||
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The Code seeks to enable colleagues to make the right decisions, in compliance with the law and IHG’s expectations about conduct.
The Board, EC and all colleagues working in IHG corporate offices, reservation centres, managed, owned, leased and managed lease hotels must comply with the Code. We expect those we do business with, including our franchisees, to uphold similar principles and standards. |
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| The Code is reviewed and approved by the Board on an annual basis, and is supported by annual e-learning requirements. We continue to enhance our engagement and measurement approaches. We monitor and assess how our values are being embedded into our culture through a variety of methods, such as through direct engagement, employee engagement surveys, tracking of e-learning completion and our confidential reporting hotline. | ||
| The Code contains an overview of our values and Group-level policies, including those relating to human rights, respect in the workplace, DE&I and equal opportunities, accurate reporting, information security, anti-bribery and corruption and the environment. It also provides guidance on how colleagues can raise concerns or seek further help. | ||
| Additional detail regarding other areas of the Code, such as our DE&I, human rights and modern slavery commitments, are outlined on pages 30 and 39. Initiatives to respond to legal, regulatory, ethical and compliance risks are on page 47. | ||
| g |
IHG’s Code of Conduct is available in 14 languages on the Company’s intranet and at ihgplc.com/en/investors/corporate-governance/code-of-conduct |
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| Our culture – how we operate responsibly | IHG | Annual Report and Form 20-F 2023 | 39 |
Strategic Report
Our culture – how we
operate responsibly continued
| Speaking up |
| A core component of our people culture is respect in the workplace. IHG has zero tolerance to any form of discrimination, harassment or bullying, in line with our Respect in the Workplace Policy. While we uphold our responsibility to behave ethically and protect IHG’s reputation, it is possible that in limited instances, a colleague may act in a way that conflicts with the principles set out in the Code. Guidance is given to report concerns directly to line managers, supervisors or local HR representatives. A confidential reporting hotline and online reporting facility are available and globally advertised. Concerns can also be reported to the Head of Risk and Assurance or the General Counsel and Company Secretary. The Board routinely reviews summaries of reported concerns and ensures processes are in place for investigations and follow-up. |
| Safety and security |
| IHG is committed to providing a safe, secure and healthy environment for all colleagues, guests and visitors. All operations must comply with all applicable health, safety and security laws. Beyond compliance with the law, IHG works to identify further improvements to the way safety and security risks are managed, and has mandatory Brand Safety Standards in place for all hotels globally to drive consistency in this area. Initiatives to respond to safety and security risks are on page 48. |
| Bribery and corruption |
| IHG is committed to operating with integrity. Colleagues are not permitted to engage in bribery or any form of financial crime, including fraud, money laundering, violations or circumvention of economic and trade sanctions and tax evasion or the facilitation of tax evasion. This standard also applies to agents, consultants and other service providers who do work on our behalf. |
| Our Anti-Bribery Policy sets out our zero tolerance approach and is applicable to all Directors, Executive Committee members, employees and colleagues in managed, owned, leased and managed lease hotels. It is accompanied by anti-bribery content in our mandatory Code of Conduct e-learning module. Our Gifts and Entertainment Policy and guidance further support our approach in this area. |
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IHG is a member of Transparency International UK’s Business Integrity Forum and participates in its Corporate Anti-Corruption Benchmark. The results from this benchmark help to measure the effectiveness of our anti-bribery and corruption programme and identify areas for continuous improvement.
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| Handling information responsibly We are committed to ensuring that guests, loyalty programme members, colleagues, shareholders, owners and other stakeholders trust the way we manage data. As part of our privacy and information security programmes, we have standards, policies and procedures in place to manage how personal data can be used and should be protected. Our e-learning training for employees on handling information responsibly is a mandatory annual requirement and covers topics such as password and email security, using personal data in accordance with our policies and privacy commitments, how to work with vendors and transferring data securely. |
In addition to the cybersecurity awareness training mentioned on the previous page, this year we held tabletop exercises to practise our ability to detect and respond to potential security events, such as ransomware attacks. We continue to develop our privacy and security programmes to address evolving requirements and take account of developing best practice. The Board regards cybersecurity as a critical business discipline and it regularly receives updates on the Group’s cybersecurity risk management and control arrangements.
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Section 172 statement Details of how the Directors have had regard to the matters set forth in Section 172(1)(a) to (f) of the Companies Act 2006 is provided in the Section 172 statement on pages 102 to 103.
Further details can be found throughout the Strategic and Governance Reports, including in our key stakeholder engagement disclosures on pages 36 and 37.
Non-financial and sustainability information statement Non-financial and sustainability information, produced to comply with sections 414CA and 414CB of the Companies Act 2006, including a description of policies, due diligence processes, outcomes and risks and opportunities can be found as set out below. Internal verification and disclosure controls apply to all information covered in these areas. |
• Impact of the Company’s activities on the environment on pages 33 to 35, 52 to 59, and 238 to 240.
• Social matters on pages 32 and 33.
• Anti-corruption and anti-bribery matters on page 40.
• Employee matters on pages 29 to 31, 103, 117, 118, 123, 124 and 127.
• Respect for human rights on page 39.
• A description of the Group’s business model on pages 10 to 13.
• The Group’s principal risks on pages 42 to 49.
• The Group’s KPIs on pages 60 to 63.
g See our relevant policies at ihgplc.com/responsible-business
Climate-related financial disclosures In accordance with Sections 414CB of the UK Companies Act 2006, the required climate-related financial information disclosures can be found integrated throughout the Strategic Report, primarily in the TCFD report on pages 52 to 59. |
| Reporting requirements | ||||||||
| Page | ||||||||
| a) | Group’s governance for assessing and managing climate-related risks and opportunities | 52 and 53 | ||||||
| b) | How climate-related risks and opportunities are identified, assessed and managed | 54 to 56 | ||||||
| c) | How processes for identifying, assessing, and managing climate-related risks are integrated into the overall Group Risk Management | 59 | ||||||
| d) | Description of climate-related risks and opportunities, and time periods over which they are assessed | 54-56 | ||||||
| e) | Impact of the climate-related risks and opportunities on the Group’s business model and strategy | 54-56 | ||||||
| f) | Analysis of the resilience of the Group’s business model and strategy (climate-related scenarios) | 54 | ||||||
| g) | Targets used by the Group to manage climate-related risks and to realise climate-related opportunities | 59 | ||||||
| h) | Key performance indicators (including basis of calculating) used to assess progress against targets identified under (g) | 63, 238 and 239 | ||||||
| 40 | IHG | Annual Report and Form 20-F 2023 |
Responsible procurement
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rowing our business innovatively and sustainably, while working to the highest standards of business conduct, plays a crucial role in |
our supplier selection processes and in how we continue to work with our existing suppliers. We are committed to working with suppliers who not only meet our minimum ethical standards but also share the values of our responsible business plan – Journey to Tomorrow.
What we do already
Our supply chains are split between hotel and corporate spend. Hotel procurement predominantly occurs at the local level because our hotels are primarily owned by independent third-party franchisees responsible for managing their own supply chains. In some key markets, the IHG Procurement team has created procurement programmes for certain goods and services related to building, opening, renovating and operating a hotel, which hotels and owners can leverage. Our corporate supply chain covers expenditure areas such as technology, office buildings and facilities management, marketing and professional services.
To help manage and monitor our corporate supply chain, an enterprise-wide procurement system is in place to govern and oversee third-party corporate expenditure. We are also continuing to roll out procure-to-pay systems to support managed hotels. Several global technology and outsourcing providers have been identified as strategic supplier relationships given the nature of their services. IHG engages with these suppliers to harness innovation, provide customer service, manage risk, and promote value realisation. We annually review this list of strategic suppliers and their delivery of our business objectives.
We continue to integrate ESG pre-contract criteria in our supply chain due diligence activities. To ensure that suppliers operate with the same integrity and respect as we do, IHG requires new corporate suppliers to confirm their acceptance of the IHG Supplier Code of Conduct (Supplier Code) at the onboarding stage or demonstrate that they have equivalent policies in place. It is also a contractual requirement for centrally-negotiated programmes from which our hotels can purchase. Recommended guidance is additionally provided to managed and franchised hotels when purchasing locally. At the end of 2023, 100% of new suppliers had signed the Supplier Code.
Our spend intelligence tool is enriched with additional data feeds to provide a broader view of the supplier, including better visibility of IHG’s focus areas such as labour practices, supplier diversity, sustainability (including emissions), and financial risks.
IHG continues to comply with the statutory reporting duties on payment practices and performance.
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Corporate and hotel supply activities are driven by our Procurement strategy and guided by our responsible business agenda, with oversight from IHG’s Responsible Business Committee and Audit Committee. In 2023, we continued to build our risk programmes with further resourcing and refreshed risk profiles based on IHG’s material supply chain risks. Recognising that global supply chain risks go beyond Procurement, we continue cross-functional collaboration through the Supply Chain Risk Council.
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What we achieved in 2023
In 2023, we revised our Procurement Policy. Key updates included expanding its scope to cover above-property hotel deals, revised criteria on when to engage Procurement, supplier due diligence checks required in support of our Journey to Tomorrow ambition, and updated our standard payment terms.
Informed by a benchmarking exercise, we also revised our Supplier Code and translated it into 11 new languages. Some of the most significant evolutions were a refresh to environmental criteria, reflecting IHG’s Journey to Tomorrow commitments, and strengthening alignment with international human rights standards. With the additional translations of the Supplier Code, we have increased our ability to introduce it further across our supply chains.
Following the 2022 introduction of EcoVadis, a supply chain due diligence tool, in 2023 IHG became a founding member of the Hospitality Alliance for Responsible Procurement (HARP). The Alliance aims to improve supplier sustainability by fostering close collaboration with trading partners to build transparency and scale positive impact across the industry’s value chains while operating with the appropriate governance and compliance controls.
To date, we have requested 123 suppliers globally to participate in the EcoVadis ESG risk assessment and, where applicable, it has become part of our new supplier selection processes in 2023. Insights from the scorecards are used to understand supplier performance, identify ESG risks in our supply chain and work with suppliers to improve their sustainability performance.
With the use of a new digital solution, we made the first step towards segmenting our suppliers based on carbon emissions profiles. By mapping our carbon emissions from Purchased Goods and Services where we have data available, we gained visibility of the highest emitting categories.
Textiles are a substantial supply chain commodity in the hospitality industry and are integral to the operation of a hotel. In 2021, we partnered with CARE International UK and a key textile supplier to complete a workplace gender analysis. This year, CARE hosted two workshops to understand the supplier’s gender equality priorities, developed a gender action plan, and supported this with implementation guidance. Looking ahead, we will monitor all progress made by the supplier and provide support if required.
What’s to come
We will continue our goal to increase the consideration of sustainable, diverse and resilient suppliers and explore how EcoVadis can be further incorporated into our due diligence processes. Throughout 2024, the ongoing deployment of integrated procure-to-pay systems in managed hotels across various regions will enhance responsible procurement oversight. This will be achieved through group-configured systems, data management, streamlined processes, and enhanced controls. Working in partnership with our key suppliers, we will continue our supply chain mapping activities next year.
We will also continue to support the implementation of sustainable solutions to advance the progress of our Journey to Tomorrow commitments and build hotel supply chain solutions for energy conservation measures. Additionally, as part of our supplier decarbonisation initiative, we will begin to monitor and collaborate with key suppliers to minimise carbon emissions associated with the goods and services we procure.
| Our culture – how we operate responsibly | IHG | Annual Report and Form 20-F 2023 | 41 |
Strategic Report
Our risk management
| The Board’s role – constantly evolving our resilience in a volatile environment The Board is ultimately accountable for establishing a framework of prudent and effective controls, that enable risk to be assessed and managed. It is supported in this by the Audit Committee, the Executive Committee and delegated committees. Our governance framework and committee agendas enable Board members to request and receive information on risk from the Executive Committee and senior leaders, together with other internal and external sources. New Board members are fully briefed on risk discussions as part of their induction.
The delivery of IHG’s refreshed individual strategic objectives and overall ambition requires us to continuously balance opportunities for strategic advantage or efficiency with the need to remain resilient and agile in the short and longer term. The Board considers and defines its risk appetite and tolerance as an active part of determining our strategic priorities. We describe the Board’s approach to risk appetite on page 39, and management teams have also considered their attitudes to risk during 2023. We recognise the trade-offs inevitably required to achieve our growth ambitions between responding to individual uncertainties and the need to balance interests of multiple stakeholders. We have again faced significant individual |
and accumulated uncertainties during the year from external events and IHG initiatives, which management has reacted to accordingly and built in to management processes. In order to enhance our risk management processes, we routinely look to apply learnings to continuously enhance our future resilience.
The description of the 2023 focus areas and activities for the Board and its delegated committees (see pages 90 to 142) demonstrates active ongoing consideration of emerging and evolving uncertainties across a wide range of topics and timeframes. The Audit Committee reviews the principal risks and the appropriateness of our risk management system, and considers risk and control implications of strategic topics, for example, supply chain risk management and future assurance requirements for ESG targets. Across the year, this discussion of risk, supported by the Risk and Assurance team, allows for review of the overall level of risk within the business, our resilience to individual and aggregated uncertainties and implications for strategic decision-making.
Further detail on formal risk appetite and tolerance is provided in this report. For example, our appetite for financial risk is described in note 24 to the Group Financial Statements.
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How we think about and anticipate risk in relation to our strategic objectives Like many companies, we continue to face a hugely dynamic and uncertain environment in 2024, which includes multiple realities from outside IHG and other inherent execution risks relating to our own internal initiatives (for example, the delivery of complex technology innovation, such as the evolution of our revenue management solutions and property management systems – see page 23 – and integrating Iberostar within our portfolio of brands and commercial platforms – see page 27). In this context, during 2023, we continued to keep the focus and balance of our principal risk profile under review with management teams to further reinforce ownership and enhance discussion of attitudes to risk and uncertainty within key decisions. The uncertainties we articulate as our principal risks often present both opportunity and threat at the same time and require considered decision-making to achieve the best overall outcome for our various stakeholders. The graphic below illustrates the relationship between these realities and our principal risks.
The headlines for our principal risks are materially unchanged, other than further clarifying the contributing factors and key elements of resilience. These were discussed with management teams during the year and when reviewing the rearticulated strategy with |
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| 42 | IHG | Annual Report and Form 20-F 2023 |
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teams in late 2023. Delivering our strategic objectives actively creates highly dynamic uncertainties with potentially fast impact. We continue to review trends carefully to evaluate the current behaviour of these risks relative to each other, and to discuss with management teams whether these trends create a need for a specific individual or portfolio-level response, including how leadership teams allocate their attention and the level of reporting visibility and assurance that may be required in 2024.
To extend our insight on how risks are evolving, we also completed a survey of key expert contributors to risk profiles across IHG. They were asked to evaluate potential trends for each risk as we move from 2023 into 2024, with the desired outcome to drive discussion by management on potential responses. Each Principal Risk scored an above-average risk rating, which suggests they are all trending upwards in the view of the survey participants.
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How we consider emerging risks Our business model and the long term nature of our relationships with our hotel owners mean that we must remain vigilant to emerging risks capable of impacting the achievement of our strategic priorities and also our longer-term growth, competitiveness, viability and sustainability.
We think about emerging risks as:
• new risks, or existing risks in a new context, when the nature and value of the impact is not yet fully known or understood; and
• factors with an increasing impact and probability over a longer time horizon.
As in previous years, there are emerging elements in many of our principal risks. These include continuing shifts in international and domestic real estate ownership, the increasing reach of regulations, consumer travel patterns and evolving demands, including the use of data and technology across all areas of the guest journey and the workplace implications of advances in Generative AI.
As part of our annual senior leaders meeting, IHG management review emerging and evolving megatrends with potential future relevance for IHG’s strategic ambitions, including society, technology and economic factors. Groups have been established to focus on key emerging topics, including |
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All principal risks are considered material in absolute terms. The graphic below shows an assessment of risk trending into 2024-26. We consider trending of inherent uncertainty levels (impact and/or likelihood) and velocity (potential speed of effect on IHG’s objectives). Further detail for each risk is provided on the following pages.
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a Generative AI steering committee. We also have an ongoing focus on the risks of climate change through our TCFD governance structures, including the development of scenarios to help model and plan for future resilience.
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| g See also pages 14 to 15 for more detailed discussion of trends impacting our industry. |
| How we identify, discuss and escalate risks, including emerging factors |
| Management teams across IHG are aware of the challenges our current industry context creates, and that our ambition and strategic priorities inevitably expose us to uncertainty in the short, medium and longer term.
Our confidence in achieving our priorities is reviewed regularly: |
| • at the Executive Committee (see pages 97 to 100 for more detail of their remit);
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| • by first-line management teams with day-to-day responsibility for identifying and managing risk within key decisions, programmes and transactions and escalating where appropriate; and
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| • by second-line management functions, which provide specialist expertise, support, monitoring and challenges to decision-makers on risk-related matters.
The Risk and Assurance team works with first- and second-line teams to maintain and evolve risk profiles. During 2023, we observed extended discussions of existing and known risks, certain trends that are growing in focus and emerging risk factors that may impact us over the next 3-5+ years and which are being considered by various teams and external bodies. |
| Discussions also consider how risk trends, shifts in risk appetite or tolerance and/or changes to management’s assessment of levels of preparedness may impact future decision-making, and whether any other leadership interventions may be required. This enables teams to identify interdependencies across IHG, for example, the consideration of supply chain-related factors within other risk profiles. Consolidated insights are reviewed by the Executive Committee and the Audit Committee every six months, and we consider risk continuously as part of key decisions. |
| How senior management and the Board obtain assurance in our risk management and resilience The Governance section outlines focus areas and activities that enable the Board and its delegated committees to receive management updates on risks within key decisions. In addition, pages 45 to 49 explain how senior management and the Board are able to source ongoing assurance on our risk management and internal control system during the year and how actions may impact future risk levels. |
| Our risk management | IHG | Annual Report and Form 20-F 2023 | 43 |
Strategic Report
Our risk management continued
| The external Auditors and the Risk and Assurance team continue to monitor and engage the Audit Committee in relation to corporate governance developments. The Audit Committee will continue to consider its approach to sourcing assurance, for example, from direct reporting or attestations provided by first- and second- line management teams on risk and control matters. The third-line Internal Audit plan identifies where independent assurance may be valuable, taking into account the |
maturity of management’s own reporting, and acceptable risk tolerances. Internal Audit also monitors the confidential disclosure channel to identify any emerging trends requiring management and/or Board intervention.
The Audit Committee considers future assurance needs within the Internal Audit planning process, and has also debated potential assurance considerations for non-financial data disclosures, with |
incoming regulations in many territories. An assurance roadmap has been developed for carbon data, including where assurance can be obtained internally on controls and when external independent input may be necessary in the coming years.
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Strategic Report Our risk management continued The external Auditors and the Risk and Assurance team continue to monitor and engage the Audit Committee in relation to corporate governance developments. The Audit Committee will continue to consider its approach to sourcing assurance, for example, from direct reporting or attestations provided by first- and second- line management teams on risk and control matters. The third-line Internal Audit plan identifies where independent assurance may be valuable, taking into account the How we think about our risk management ‘system’ The risk management system remains fully integrated with the way we run the business, including how the Executive Committee reinforces key principles of culture and leadership (including ‘tone from the top’), how we adapt key processes and controls, and how monitoring and reporting is used to update on status and inform decision-making. Overall management have not made any material changes or repositioning of risk management and controls strategies, although several teams have reprioritised or bolstered maturity of management’s own reporting, and acceptable risk tolerances. Internal Audit also monitors the confidential disclosure channel to identify any emerging trends requiring management and/or Board intervention. The Audit Committee considers future assurance needs within the Internal Audit planning process, and has also debated potential assurance considerations for non-financial data disclosures, with activities in response to complexities of current work (for example, integration of partners and response to data regulation and geopolitical factors), and fast-paced technology initiatives (including HR and Finance system changes). During 2023, we also commissioned an external review of the maturity of IHG’s enterprise risk management arrangements, which has enabled us to identify opportunities to further enhance the design and consistent application of risk management activities in the coming years. incoming regulations in many territories. An assurance roadmap has been developed for carbon data, including where assurance can be obtained internally on controls and when external independent input may be necessary in the coming years. [This section should be read together with the rest of the Strategic Report, Governance on pages 90 to 142, the going concern statement on page 241 and Risk Factors on pages 243 to 248.] The identified areas of focus in the graphic below provide mitigation for many of the risks shown on the following pages. These should be read in conjunction with detail elsewhere in the Strategic Report, which helps to position IHG to respond to future opportunities and risks in delivering our ambitions, including strengthening our organisation through key strategic investments (pages 16 to 35), engaging proactively with stakeholders (pages 36 and 37) and by reinforcing our strong workplace culture (pages 38 to 40). We made adjustments and clarifications to several policies which articulate risk appetite and tolerance. Changes were made to delegated authority levels, supplier code of conduct, procurement, information security, anti-bribery, sanctions and gifts and entertainment policies. Our annual Code of Conduct training was relaunched and new corporate onboarding and executive leadership training introduced. All corporate colleagues received communications on topics such as human rights, handling information responsibly (including phishing training), DE&I, wellbeing and sustainability. Several teams evolved governance accountabilities and arrangements, including for supply chain risk oversight, fraud risk management and regional decarbonisation plans. We keep our processes and controls under review and in 2023, we undertook risk assessments for several targeted topics. This included initial privacy impacts within projects to leverage customer data for enhanced personalisation, human rights due diligence and the maturity of our fraud risk management framework in advance of upcoming UK legislation. Teams have implemented specific enhancements to process and control arrangements in relation to new country entry protocols for development teams, threat management for physical security risks, formalising and documenting privacy risk assessment processes and reviewing protocols for investigations arising from our confidential reporting hotline. The use of data and technology to enable risk management and control is a key focus. Several teams have evolved and enhanced monitoring and reporting arrangements (including cyber, safety, supply chain, loyalty, privacy, channels teams), for example, presenting refreshed key risk indicators. We have also developed technology tools and capabilities to support management of privacy, supply chain risk monitoring, human rights, financial governance, resilience and climate change risks. While risk management and internal control arrangements are designed to provide appropriate response to the risks we face, we also need to be prepared for fast-moving disruptions and crises. We do not need to be fully prepared for every ‘unknown’, but we need to harness our collective knowledge and insights to deliver an appropriate IHG response overall. We have continued to maintain our overall incident and crisis management framework, reviewing learnings from our response to the war in Ukraine and the unauthorised systems access experienced in 2022, and applying these to management teams’ response to conflict in the Middle East. Risk and Assurance and Commercial & Technology leadership have collaborated to conduct tabletop exercises for cyber incidents and to undertake business impact analysis of processes and dependencies for key booking channels and develop playbooks in relation to evolving data legislation.
| 44 | IHG | Annual Report and Form 20-F 2023 |
| In pursuing our ambition, we face inherent uncertainties relating to: |
Why these uncertainties are important to the achievement of our strategic objectives over the next 2-3 years |
How senior management and the Board obtained assurance in our risk management and resilience in 2023 |
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| Guest preferences for branded hotel experiences and loyalty
Executive Risk Sponsor: Global Chief Customer Officer
Link to strategy:
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In a highly competitive industry with increasing demands for personalisation, we must at all times anticipate and respond to evolving guest expectations, preferences and loyalty, while strengthening returns for the owners of our hotels through the services, technology platforms and experiences our brands provide, including ever increasing digitalisation of the guest journey.
Our strategic objectives and ambition mean we actively pursue opportunities for effective investment to support our new brands, our loyalty programme, new exclusive partners, our Luxury & Lifestyle ambitions and our digital platforms. We also aim to carefully deliver on fundamental expectations of our individual and corporate guests, underpinning their trust in, and loyalty for, our brands, for example, for cleanliness and safety, or in relation to our response to climate change and our brands’ impact on the environment.
We are very conscious that the macroeconomic environment remains highly uncertain and that customer sensitivity to price also remains heightened. There are also inherent uncertainties due to the way our business model operates and is evolving. As our franchised hotels operate as independent businesses, we are limited in our ability to control delivery on the ground in these properties and must introduce and implement guest experience initiatives effectively to support our owners.
If we are unable to manage this uncertainty effectively it could impact our competitive positioning, our growth ambitions and our guests’ and owners’ trust in and preference for our brands.
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The Board considers reporting and insight from management, including on:
• individual and brand category, loyalty and responsible business strategies and investments;
• discussions led by regional CEOs of operational and strategic plans, including identified risks;
• new brand projects and potential opportunities to pursue exclusive partners and adjacencies;
• global sales strategies; and
• analysis of competitor activities.
External insight is obtained where valuable (for example, on responsible business strategies).
The Executive Committee also reviews these areas frequently, including analysis of specific trends (for example, business travel and commercial platforms) and has obtained insights on key brand strategies and performance and loyalty. The Executive Committee also remains focused on regional quality mechanisms to support guest experience and how we update standards. A global Guest Experience team and programme provides oversight of specific initiatives including Luxury & Lifestyle.
The Internal Audit plan also provides independent assurance on the execution of key initiatives (including loyalty, brand integration and responsible business), guest survey data integrity and hotel compliance management.
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Owner preferences for or ability to invest in our brands
Executive Risk Sponsor: Global Chief Customer Officer and Regional CEOs
Link to strategy:
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Our growth ambitions require us to take calculated risks to attract owners while continuing to drive returns for our existing and potential owners. Our owners’ choice to work with IHG is dependent on our ability to build a portfolio of loved and trusted brands with a track record in delivering returns, while also continuing to invest in our commercial engine, brands guests and owners love, and care for our people, communities and planet.
Continuing macroeconomic uncertainty and inflation create significant pressures on owners’ financial capacity that must be considered carefully as we pursue opportunities to drive brand preference and focus on relentless growth. Our owners have increasing choices in how they invest in a highly competitive market, and we need to move fast to pursue opportunities in relation to hotel building, hotel conversions, renovations and hotel opening projects, while evolving and enhancing our brand portfolio and continuing to drive loyalty delivery across our open hotels.
These opportunities need to be balanced with the risks associated with increasingly complex deal structures with owners and other possibilities for new strategic relationships, uncertainties as we expand into new markets and a need to risk our own capital to pursue inorganic growth or to incentivise deals in key locations for key brands. We also recognise our responsibilities as a franchisor or manager of our brands (including our role in hotel safety and security, ethical and social matters, and increasing expectations in relation to decarbonisation).
If we fail to respond effectively to this risk, we will lose competitiveness and may not realise the opportunities to grow our brand footprint.
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The Board considers reporting and insight from management on:
• individual and brand category performance and market prioritisation strategies;
• opportunities for new brands, exclusive partners and adjacencies and analysis of the competitor landscape;
• performance of existing exclusive partners and commercial agreements;
• responsible business strategies and investments;
• impacts of macro events (including conflicts in the Middle East) and impacts on specific markets;
• performance and prospects for key areas of capital investment, including controls over growth decision-making and post-project reviews of investment effectiveness; and
• external insight where valuable (for example, on investor perceptions).
The Executive Committee also reviews these areas frequently and obtains reports on loyalty and brand performance and initiatives, including implementation of owner-facing technology and revenue management systems, and specific market strategic considerations.
The Internal Audit plan provides independent assurance on initiatives supporting owner returns, for example key owner-facing systems, initiatives such as loyalty programme enhancement and key processes including talent management for Luxury & Lifestyle GMs. |
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Relentless focus on growth |
Leading commercial engine |
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Brands guests and owners love |
Care for our people, communities and planet |
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| Our risk management | IHG | Annual Report and Form 20-F 2023 | 45 |
Strategic Report
Our risk management continued
| In pursuing our ambition, we face inherent uncertainties relating to: |
Why these uncertainties are important to the achievement of our strategic objectives over the next 2-3 years |
How senior management and the Board obtained assurance in our risk management and resilience in 2023 |
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| Our ability to attract and retain talent and capability
Executive Risk Sponsor: Chief Human Resources Officer
Link to strategy:
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Our growth ambitions are dependent on high-quality talent across our hotels, reservations offices and corporate functions. We continue to face a competitive market and uncertainties in relation to the availability, recruitment and retention of sufficient quality, quantity and diversity of talent, for example, next-generation hotel GMs to support our Luxury & Lifestyle growth and a robust pipeline of leadership succession talent.
Our priority to care for our people, communities and planet also means that we need to balance short- and longer-term growth risks and opportunities with our broader responsibilities and commitments. This requires us to enable colleague development and growth, to look out for our colleagues’ wellbeing during the current cost of living crisis in many locations we operate within, and to maintain productivity, collaboration and appropriate labour relations. This also necessitates continued adaptation and innovation of our operational procedures and remuneration structures to be agile to the changing interests of our stakeholders.
IHG has the ability to manage talent and retention risks directly in relation to IHG employees but relies on owners and third-party suppliers to manage these risks within their businesses. Our Procurement, Legal and Risk teams also consider indirect workforce risks.
If we do not anticipate and respond appropriately to this uncertainty, it could impact our ability to operate and grow hotels, the effectiveness and efficiency of our key corporate functions and executive leadership, and it could heighten risks of exposure to non-compliance or litigation.
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The Board considers reporting and insight from management, including on:
• overall HR and talent strategy;
• remuneration and incentive strategy and policy, including directors and executive management and wider structures for all colleagues, supported by external advisers;
• specific talent and succession planning;
• DE&I updates; and
• direct employee feedback via the Voice of the Employee programme.
The Executive Committee directly reviews talent (both as a group and through individual talent reviews with the CEO) and receives regular updates on colleague engagement and broader culture and behaviours. The HR team also has a dedicated Talent & Leadership steering committee. Regular all-employee calls are held with the Chief Executive Officer, and there are ongoing leadership communications and virtual team meetings at regional and functional levels.
The 2023 Internal Audit plan has provided independent assurance on employee relations management, recruitment of critical GM talent and implementation and data integrity checks within a strategic HR system transformation. |
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Data and information usage, storage, security and transfer
Executive Risk Sponsor: Chief Commercial and Technology Officer, Chief Customer Officer and Executive Vice President General Counsel and Company Secretary
Link to strategy:
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By its nature, our business involves the management of large volumes of data globally and our stakeholders (including guests, loyalty members, colleagues, owners and external authorities) expect that this will be done safely and responsibly.
Our strategic objectives continue to transform how we use our commercial and marketing data to improve and personalise the customer experience, grow loyalty and empower our owners to make better decisions. This involves a roadmap engaging many IHG teams in many initiatives, including increasing use of cloud-based applications, storage and partnering with third-party specialists, as well as exploiting technology advancements and innovation, involving the use of personal data and artificial intelligence. Our growth strategies, including new business partnerships, also increase the complexity of data flows.
The opportunities presented by this ambition are consciously balanced with the inherent exposures our digital footprint presents to data, information security and privacy-related threats, including threat actors (e.g. criminals, third parties and inherent colleague risk), and the need to demonstrate to stakeholders that we are using data appropriately. This includes an evolving global and local regulatory environment and requirements for localisation of data in certain territories. Our ability to deliver our strategies confidently is based on investments in recent years in cybersecurity and information governance and the maturing of our risk management system.
If we fail to respond to this risk effectively, we face operational, financial and reputational impacts to the range of high-value assets we are responsible for, or we may miss chances to capitalise on the opportunities that effective use of data can bring, including to our guests, owners and loyalty members. In addition, if the data we use is not accurate, this may impair decision-making and/or lead to lack of trust or satisfaction by our guests, loyalty members or owners.
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The Board considers reporting and insight from management, including:
• governance over developments in cross-border data transfer arrangements to respond to evolving regulation;
• direct presentations from the Chief Information Security Officer, including third-party expertise on risk assessments, progress on the information security roadmap and advice on specific topics;
• within the wider roadmap, specific lessons learned and initiatives to further enhance security posture following the criminal unauthorised system access event in 2022 and to respond to the ongoing dynamic cybersecurity threat environment;
• information on emerging risks and opportunities of generative artificial intelligence, how management teams are considering these risks and how they relate to the broader assessment of principal risks;
• updates on the cyber insurance renewal strategy;
• second-line reporting on our privacy programme and policies for handling information responsibly; and
• updates on metric integrity, including review of ESG data principles and future assurance arrangements, supported by third-party experts.
The Executive Committee reviews specific areas of digital strategy, for example in relation to Greater China, and receives briefings from the Chief Information Security Officer on emerging risks during the year.
The Internal Audit plan includes independent focus on governance of both cybersecurity and data and information, assurance on foundational controls at both corporate and hotel levels and, for example, in relation to data transfers within our loyalty programme, third parties and cloud environments.
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| 46 | IHG | Annual Report and Form 20-F 2023 |
| In pursuing our ambition, we face inherent uncertainties relating to: |
Why these uncertainties are important to the achievement of our strategic objectives over the next 2-3 years |
How senior management and the Board obtained assurance in our risk management and resilience in 2023 |
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| Ethical and social expectations
Executive Risk Sponsor: Executive Vice President General Counsel and Company Secretary, Executive Vice President Global Corporate Affairs and Chief Human Resources Officer
Link to strategy:
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As IHG operates in more than 100 countries and continues to explore new opportunities for growth, we are continually exposed to evolving expectations from our stakeholders in relation to ethical and responsible business conduct, extending beyond compliance with laws. We are committed to monitoring, reinforcing and communicating the continued effectiveness of our human rights approach, our social responsibility and environmental performance, and recognise that expectations are increasing for us to manage and drive ethical and responsible business through our supply chains and across our wider business, which involves extensive engagement with our franchisees around the world.
Our stated priority to care for our people, communities and planet creates risks and opportunities in relation to our growth ambitions, including how we build brands which guests and owners love while also considering our wider stakeholder responsibilities, including to our colleagues, guests, workers in our supply chains and our local communities in a challenging operating environment in many markets. We manage these risks carefully so as to operate responsibly and with integrity, and to guide decision-making across IHG’s corporate and hotel operations.
If we fail to effectively respond to this risk, it has the potential to impact our performance and growth in key markets as well as cause reputational damage with respect to key stakeholder and investor expectations. |
The Board considers reporting and insight from management, including:
• requests for Board approval of the Code of Conduct, the Supplier Code of Conduct, the Communities Policy and the Human Rights Policy;
• second-line reports on ethics and compliance strategy, including external benchmarking where appropriate (e.g. Transparency International UK’s Corporate Anti-Corruption Benchmark);
• reports from Internal Audit on confidential reporting arrangements and updates from our Voice of the Employee programme;
• updates provided and awareness raising from the external Auditor on ESG and climate-related reporting and from external specialist advisers; and
• further second-line function reports on our communities, human rights and responsible procurement programmes and key disclosures including the Modern Slavery Statement.
The Executive Committee monitors our ambition and commitments to our people, communities and planet, including the progress of set initiatives and how these objectives interrelate to our growth strategy.
The Internal Audit plan includes independent focus on ethics and compliance, including consideration of management and external assessments of maturity, controls relating to marketing and commercial campaigns, due diligence controls and broader ESG-related programme governance.
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Legal and regulatory complexity or litigation trends
Executive Risk Sponsor: Executive Vice President General Counsel and Company Secretary
Link to strategy:
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The global business regulatory and contractual environment continues to evolve rapidly, with ongoing legislative changes in many jurisdictions that will affect the way in which we operate our existing business and where we target growth or digital innovation. This includes the nature of our franchise relationships with hotel owners, our interactions with our suppliers, and our responsibilities to consumers and to colleagues. We consider such exposures carefully as part of our decision-making, drawing on an extensive network of legal advisers.
These changing laws and regulations continue to add complexity and uncertainty to compliance, particularly where there are diverging standards between territories (for example, in relation to increasing protections and conditions on cross-border data transfer). The ongoing use of sanctions and countermeasures as foreign policy tools also continues to present operational challenges and associated legal and regulatory exposures.
We recognise that failing to address this risk effectively, and non-compliance and/or inadequate compliance, could expose us to regulatory breaches, significant monetary and non-monetary penalties, adverse litigation and associated reputational harm which could impact confidence in the IHG brand and our ability to perform in key markets. |
The Board considers reporting and insight from management, including on:
• corporate governance and regulatory developments from the General Counsel and the external Auditor;
• relevant corporate affairs topics, including briefings from external advisers;
• material litigation matters and serious operational safety and security incidents and threats;
• second-line updates on specific regulatory matters, including tax, as well as fraud risk management controls, supported by external insight and benchmarking where appropriate;
• regional trends within Regional CEO updates; and
• management strategies to procure appropriate insurance coverage, including for casualty, property, cyber and directors’ and officers’ liability risks.
The Executive Committee also actively monitors the management of key regulatory and/or litigation risks, including developments in cross-border data transfer regulation.
The Internal Audit plan considers regulatory management and provides independent assurance on the proportionality of controls: for example, due diligence protocols for vendors and owners, third-party guest data management and broader contract management.
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| Our risk management | IHG | Annual Report and Form 20-F 2023 | 47 |
Strategic Report
Our risk management continued
| In pursuing our ambition, we face inherent uncertainties relating to: |
Why these uncertainties are important to the achievement of our strategic objectives over the next 2-3 years |
How senior management and the Board obtained assurance in our risk management and resilience in 2023 |
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| Global and local supply chain efficiency and resilience
Executive Risk Sponsor: Chief Financial Officer, Chief Commercial and Technology Officer and Executive Vice President General Counsel and Company Secretary
Link to strategy:
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In an increasingly interconnected world, our strategic ambitions require us to expand our interdependencies with third parties to access capabilities and innovation and to source cost-efficient products or services from available markets to support our owners. We need to balance these opportunities with early identification and resilience planning for anticipated and unanticipated emerging risks.
Macroeconomic uncertainties, including geopolitical tensions, commodity price shifts and labour disputes, continue to impact supply chains, which may increase costs and limit availability of materials, including to open and operate hotels. Our ability to respond to these uncertainties presents both a threat and a competitive opportunity, and may occasionally require us to consciously expose ourselves to increased risk to secure and safeguard supply chains for our owners.
As we pursue our ambitions as a responsible company, we recognise that the regulatory environment continues to evolve, with increasing demands for transparency across global supply chains, requiring us to scan the horizon for emerging risks to IHG’s objectives. We also need to remain vigilant to threats to information security as we work with an increasing range of third-party suppliers.
If we fail to effectively address the uncertainties that this risk presents, including through closer alignment with our suppliers and across supply chains to enhance our resiliency, this may impact the design, opening and operation of hotels, the ongoing effectiveness of our commercial channels and margins for our owners, as well as fees to IHG.
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The Board considers reporting and insight from management, including:
• presentations by second-line functional leaders on supply chain risk management to the Responsible Business and Audit Committees, including wider third-party risk management and internal control arrangements; and
• clarifications of risk management arrangements within presentations on new business models and relationships.
The Executive Committee reviews our operational risk posture in relation to key digital initiatives, including the transformation of hotel technology arrangements, and has approved a refreshed Procurement policy during 2023.
The Executive Risk Sponsors receive updates from the Chief Procurement Officer on supply chain strategy and risks, supported by a Supply Chain Risk Council, which draws on external insight where appropriate.
The Internal Audit plan provides independent review of third-party and contract risk management as well as control arrangements, for example, relating to technology resilience and data governance, and in relation to due diligence relating to responsible and ethical vendor sourcing. |
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Operational resilience to incidents or disruption or control breakdown (including geopolitical, safety and security, cybersecurity, fraud and health-related)
Executive Risk Sponsor: Executive Vice President General Counsel and Company Secretary, Chief Financial Officer, Chief Commercial and Technology Officer and Regional CEOs
Link to strategy:
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The high growth, fast pace and increasingly complex nature of our global business and our growth ambitions exposes us to a growing range of inherent operational risks and places ever greater importance on the overall resilience of key processes, applications and relationships that we depend upon. We aim to avoid harm to, and enhance the reputation of, IHG and our brands, and to support our people and communities wherever possible.
We recognise that we need to prepare for predictable and unpredictable uncertainties, from macro external to internal disruptions. This preparation includes considering fire, life safety and security threats including from geopolitical volatility, health-related concerns and natural disasters impacting our hotels and corporate locations. We need to be able to respond to disruption to technology and information security from external threats and operational breakdown. We also need to anticipate the potential for breakdowns in our financial management and control systems, including the risk of fraudulent behaviour, which may be heightened in the current challenging economic environment.
The complexity of our evolving global and regional business model and the introduction of different commercial arrangements and adjacencies also include inherent uncertainties, for example, in relation to our ability to control and influence day-to-day operations in our franchised estate, or in our ability to balance ongoing robustness of controls while we actively pursue opportunities for efficiency.
Building resilience not only supports IHG’s long-term viability but also enables us to take advantage of opportunities to drive growth and strengthen returns for our owners. However, if we fail to respond effectively to this risk it could impact IHG’s reputation, lead to financial loss and claims against IHG and undermine our stakeholders’ confidence in our brands.
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The Board considers reporting and insight from management, including:
• second-line reporting to the Audit Committee on operational safety and security arrangements and reported serious incidents and threats;
• ongoing review of incident handling (including ad hoc updates as required and within a broader review of our risk management system), describing how management teams are coordinating efforts;
• reports to Audit Committee from the second-line financial governance team, including control implications for managed hotels and major technology and process changes;
• an annual review by Risk and Assurance of fraud risk management activities; and
• an independent assurance by PwC of SOC1 control reports provided for the benefit of hotel owners.
The Executive Committee is closely involved with emerging incidents to consider the appropriateness of management action plans to deal with disruption. There is also an established Financial Control Steering Committee, which brings together various functions and discusses risks to financial controls, including fraud risk management.
Internal Audit provided an independent review of key functional resilience capabilities, including scenario planning, third-party technology resilience and reports on the governance of service organisation controls. |
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| 48 | IHG | Annual Report and Form 20-F 2023 |
| In pursuing our ambition, we face inherent uncertainties relating to: |
Why these uncertainties are important to the achievement of our strategic objectives over the next 2-3 years |
How senior management and the Board obtained assurance in our risk management and resilience in 2023 |
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| Our ability to deliver technological or digital performance or innovation (at scale, at speed, etc.)
Executive Risk Sponsor: Chief Commercial and Technology Officer and Global Chief Customer Officer
Link to strategy:
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Delivering our portfolio of technology investments effectively and efficiently is a fundamental enabler of our short- and long-term strategic priorities. We continue to pursue opportunities to innovate in booking technology, to maintain and enhance the functionality and resilience of our channel management and technology platforms (including those of third parties, on which we rely directly or indirectly), and to respond to ever-changing stakeholder needs and preferences, which may evolve rapidly in an environment of macroeconomic uncertainty and significant cost and labour pressures.
This context will require us to generate value by defining and implementing new technology-based products or services or by approaching existing products, services or processes in new ways that generate revenue or reduce costs for our owners. We will need to maintain the right balance between disruptive, sustaining and incremental innovation and, in doing this, we will often consciously expose ourselves to uncertainty.
We are pursuing a high paced, multi-year roadmap of significant investments to enhance the performance of our technology, developing our own talent and working with a wide range of suppliers, partners and academic institutions to leverage their insights, while the pace of innovation and competition in digital behaviours in the hospitality industry and wider society continues to accelerate rapidly. This involves leveraging Generative AI to improve guest experiences, generate personalised marketing, expand analytics capabilities and improve effectiveness and efficiency, including in-hotel operations.
If we fail to address this risk, we may not capitalise on opportunities to maintain or increase guest and owner preferences for IHG and its brands and/or reduce our resilience on ageing channel management and technology platforms (including those of third parties, on which we rely directly or indirectly).
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The Board considers reporting and insight from management, including on:
• our China digital strategy and the integration of our commercial and technology platforms within our Iberostar Beachfront Resorts partnership;
• options for technology to support more effective and efficient collation of ESG data across our global estate;
• budget allocation, including funding of key technology products and post-project reviews by finance teams of major capital investments; and
• information security strategy and risk profile.
The Executive Committee considers the pace of innovation and delivery of key technology initiatives relating to mobile, loyalty and booking transformation and hotel technology. This involves identifying critical enablers and prioritising investments. The Global Marketing and Commercial & Technology teams coordinate a joint technology roadmap, and a dedicated Generative AI steering committee monitors opportunities across various IHG processes and teams.
The 2023 Internal Audit plan included focus on programme governance and the effectiveness of controls over expenditure and benefit delivery for various critical functional and guest and owner-facing technology initiatives. This has provided independent assurance in relation to overall programme management, tracking and financial governance controls, and delivery of initiatives at high pace across the hotel estate and within the loyalty transformation programme. The team also continues to support and advise several programme teams in real time, including on HR system changes. |
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The impact of climate change on hospitality (physical and transition risks for IHG)
Executive Risk Sponsor: Chief Financial Officer and Executive Vice President Global Corporate Affairs
Link to strategy:
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As a global business with a portfolio of brands in over 100 countries, IHG faces fast-evolving stakeholder expectations and uncertainties relating to our ability to continue to operate and grow in an environment impacted by physical and transition risks relating to climate change.
Our business model means that we share these threats and opportunities with our owners, including our dependency on their capacity to invest in the short- and long term. We will continue to set ambitious targets, to assess the aggregate impact of climate change and to capitalise on opportunities that the low-carbon transition will bring for the hospitality industry by responding to evolving guest and colleague preferences.
Our TCFD assessment considers both physical and transition risks to IHG, and we will continue to assess the aggregate impact of climate change on our wider stakeholders including our third-party hotel owners.
The potential impact of climate change-related uncertainties is evaluated as an integral part of other principal risks; however, if we fail to react to physical and transition risks effectively overall, then this has the potential to impact IHG’s reputation, performance and growth in key markets. Our management of these risks is also subject to scrutiny from a wide range of stakeholders, including regulators and investor groups, corporate clients, guests and colleagues.
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The Board considers reporting and insight from management, including:
• reporting from corporate responsibility on TCFD disclosures and the embedding of climate considerations into strategy, governance, risk management and performance management, supported by external subject matter expertise; and
• updates from various second-line teams on approaches to ESG data disclosure and future strategies for assurance (including to comply with changing regulatory requirements).
The CEO, CFO, General Counsel and EVP Global Corporate Affairs have executive oversight of our TCFD reporting and the embedding of climate considerations into our wider business growth strategy. Oversight of the Journey to Tomorrow programme is provided by the Executive Responsible Business Governance Committee.
The Head of Internal Audit supports the TCFD programme efforts, including advising on the approach to data collection and data assurance. This group is also advised by external experts. Internal Audit has also reviewed broader ESG programme governance.
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| Our risk management | IHG | Annual Report and Form 20-F 2023 | 49 |
Strategic Report
Viability statement
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Looking forward, the Directors have determined that the three-year period to 31 December 2026 is an appropriate period to be covered by the viability statement. The Group’s annual financial planning process builds a three-year plan. This detailed plan takes into consideration the principal risks, the Group’s strategy and current and emerging market conditions. The plan then forms the basis for strategic actions taken across the business and is used as the basis for longer-range planning. The plan is reviewed annually by the Directors. Once approved, the plan is then cascaded to the business and used to set performance metrics and objectives. Performance against those metrics and objectives is regularly reviewed by the Directors. |
There are a range of possible planning scenarios over the three-year period considered in this review due to macro uncertainties and geopolitical risks affecting markets in each of our regions. In the US and Europe, an uncertain trajectory for interest rates and inflation links to concerns over the strength of consumer spending and broader economic growth and potential impact on travel demand. In Greater China, challenges in the property sector means it is more difficult to accurately predict the pace of further recovery of domestic demand and also international travel of Chinese consumers. In assessing the viability of the Group, the Directors have reviewed a number of scenarios, weighting downside risks that would threaten the business model, future performance, solvency and liquidity of the Group more heavily than opportunities. |
Viability scenarios and assumptions In performing the viability analysis, the Directors have considered a ‘Base Case’ which assumes global RevPAR in 2024 to 2026 continues to grow in line with market expectations in each of our regions. The assumptions applied in the viability assessment are consistent with those used for Group planning purposes, the going concern assessment, for impairment testing and for reviewing recoverability of deferred tax assets (see further detail on page 161).
The Directors have also reviewed a ‘Severe Downside Case’ which is based on a severe but plausible scenario equivalent to the market conditions experienced through the 2008-09 global financial crisis. This assumes that the performance during 2024 starts to worsen and then RevPAR decreases significantly by 17% in 2025 and increases by 5% in 2026. |
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| Principal risks | Scenarios modelled | Related to principal risks | ||||||||
| The relative strength and resilience of the IHG business model to severe shocks has been proven by performance through the Covid-19 pandemic, with positive cash flows being generated through one of the most challenging periods of trading in the history of the industry. In assessing the viability of the Group, the Directors have considered the impact of the principal risks as outlined on pages 42 to 49. The discussion on those pages includes a description of why these risks are important to the achievement of our objectives and how the Group manages these risks.
We have considered which principal risks could have the most significant and direct impact to the viability of the Group during the three-year period of assessment and they are shown below, alongside the scenario that is used to model those risks. |
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Changes in RevPAR Severe Downside Case
This scenario models a prolonged decrease in RevPAR, which may be driven by external or internal factors. |
Operational resilience to incidents or disruption or control breakdown
Guest preferences or loyalty for branded hotel experiences
Talent and capability attraction or retention
Our ability to deliver technological or digital performance or innovation
Owner preferences for or ability to invest in our brands |
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One-off events This scenario models the impact of a specific material incident, which could relate to cybersecurity or an alternative material impact on the cash flow statement. |
Data and information usage, storage and transfer
Legal and regulatory complexity or litigation trends
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| a Definitions for Non-GAAP measures can be found on pages 84 to 88. Reconciliations of these measures to the most directly comparable line items within the Group Financial Statements can be found on pages 226 to 231. |
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| 50 | IHG | Annual Report and Form 20-F 2023 |
| We have considered the potential impact of the severe downside scenario on our net system size growth. We do not believe a change in system size growth would have a material impact on the Group during the period under review.
We have also considered the principal risks that may impact the viability of the Group over a longer period; for example, the impact of climate change on hospitality. The physical and transition climate risks to which IHG is most exposed are discussed in the TCFD statement on pages 52 to 59. Physical risks are not considered material to the long-term viability of the Group, and transition risks present both opportunities and risks. Whilst some transition risks have been assessed as being potentially material to the Group over the next one to five years under a 1.5°C scenario, this scenario is not considered a likely outcome leading to the probability of a material impact on the Group’s viability assessment through 31 December 2026 as low.
Funding |
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Viability assessment At 31 December 2023 the Group had cash and cash equivalents of $1,322m plus an undrawn bank facility of $1,350m.
Under the Base Case and Severe Downside Case the Group is forecast to generate positive free cash flow over the 2024-26 period and the bank facility is undrawn. The principal risks that could be applicable have been considered and are able to be absorbed within the covenant requirements.
Under the Severe Downside scenario, there is also headroom to the covenants over the 2024-26 period to absorb multiple additional risks; for example, additional RevPAR impacts and a widespread cybersecurity incident. The bank facility would remain undrawn.
The Directors reviewed a number of actions that could be taken if required to reduce discretionary spend, creating substantial additional headroom to the covenants. |
The Directors reviewed a reverse stress test scenario to determine what decrease in RevPAR would create a breach of the covenants and the cash reserves that would be available to the Group at that time. The Directors concluded that it was very unlikely that a single risk or combination of the risks considered could create the sustained RevPAR impact required to breach the covenants, except for a significant global event.
None of the scenarios modelled indicates that a covenant amendment would be required but, in the event that it was, the Directors believe it is reasonable to expect that such an amendment could be obtained based on experience of negotiating the waivers and amendments during 2020. The Group also has alternative options to manage this risk, including raising additional funding in the capital markets. We continue to plan to maintain an investment-grade credit rating which provides good access to the debt capital markets. |
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| The Group’s $1,350m revolving credit facility was extended by one year in 2023 and now matures in 2028 (‘the bank facility’).
There are two financial covenants in the bank facility – interest cover and leverage ratio. The interest cover covenant requires a ratio of Covenant EBITDA to Covenant interest payable above 3.5:1 and the leverage ratio requires Covenant net debt to Covenant EBITDA below 4.0:1. In the event a covenant test was failed whilst the bank facility was undrawn, the facility could be cancelled by the lenders but would not trigger a repayment demand on the bonds which threatened the viability of the Group. See note 24 in the Group Financial Statements for further details.
In November 2023 the Group issued a six-year €600m bond. During the assessment period there is a €500m bond maturing in October 2024, a £300m bond maturing in August 2025 and a £350m maturity in August 2026. It has been assumed that the bond maturing in 2024 will be repaid from cash reserves and the 2025 and 2026 bonds will be refinanced up to one year before maturity. |
Conclusion The Directors have assessed the viability of the Group over the three-year period to 31 December 2026, taking account of the Group’s current position, the Group’s strategy and the principal risks documented in the Strategic Report. Based on this assessment, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period to 31 December 2026. |
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| Viability statement | IHG | Annual Report and Form 20-F 2023 | 51 |
Strategic Report
Delivering on the
recommendations of TCFD
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Compliance with Listing Rule 9.8.6(8) We confirm that our disclosures are in line with the UK Listing Rule 9.8.6(8) and are consistent with the TCFD recommendations and the Guidance for All Sectors. We recognise that our disclosures are limited in part by current data availability and are working with our hotel owners to improve our data and underlying assumptions. |
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We have outlined our focus areas for evolving our disclosure to improve consistency with the TCFD recommendations, and will provide an update on our progress against these in the 2024 Annual Report.
We are also continually tracking emerging climate regulations, including specific requirements for the reporting and disclosure of climate change risk, and we will take steps to align to the UK Sustainability Disclosure Requirements, when applicable. |
| TCFD section | Summary of recommended disclosure | Page referencea | Future disclosure actions | |||||||||
| Governance | IHG’s governance around climate-related risks and opportunities. |
52 to 53 |
• Prepare TCFD disclosure for regulatory updates from the UK Sustainability Disclosure Requirements.
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| Strategy | Scenario analysis An overview of the scenario analysis used to assess business resilience against climate risks and identify potentially significant risks and opportunities. This overview provides insights into the outcomes of the analysis and outlines the mitigation actions we are implementing to enhance our business resilience.
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53 to 56 |
• Enhance the quality of data capture to measure risks that have been identified as potentially significant.
• Continue to build business resilience against the identified climate-related risks and opportunities, including physical risks.
• Develop a roadmap to quantify direct and indirect impacts of climate-related risks and opportunities for future disclosure, where material. |
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| Transition plan Our plan to make progress towards our science-based target (SBT) to reduce GHG emissions across our estate by 46% by 2030.
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56 to 58 |
• Evolve our decarbonisation strategy to align with the Transition Plan Taskforce (TPT) best practice guidance on developing an effective transition plan in line with regulatory updates. |
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| Risk management | How IHG identifies, assesses and manages climate-related risks. |
59 |
• Continue to enhance integration of IHG’s climate-related risks and opportunities into our risk management framework and business decision-making processes.
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| Metrics and targets |
The metrics and targets used to assess and manage relevant climate-related risks and opportunities, where such information is material. |
59
KPIs on page 63 |
• Continue to improve data collection to develop and align metrics and targets to the TCFD’s recommended cross-industry metrics and targets, focusing on the management of climate-related risks and opportunities most relevant for IHG.
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| a | Please see individual sections of the TCFD disclosure for further references to supplementary information. |
| Governance and management of climate-related risks and opportunities
Board oversight of climate-related risks and opportunities Our approach to responsible business is driven by a culture of strong governance and supported by robust policies. The Board oversees the Group’s strategy, considering our decarbonisation strategy as an integral component and ensuring effective controls and risk management systems are in place. It holds teams accountable for managing IHG’s climate risks and assessing performance against climate targets.
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The Chairs of the following Board Committees also provide advice to the Board on risk topics within their respective remits, all of which encompass the consideration of climate-related risks:
The Responsible Business Committee The Responsible Business Committee advises the Board on IHG’s responsible business strategy and objectives, which covers climate change within the context of our wider Group Strategy. The Committee provides oversight of our Journey to Tomorrow goals, transition plan and decarbonisation commitments, including recommending and reporting progress on ESG Long Term Incentive Plan (LTIP) measures to the Remuneration Committee.
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The Audit Committee The Audit Committee is responsible on behalf of the Board for reviewing IHG’s climate-related risks and opportunities as identified by management, and ensuring that IHG maintains robust risk management and internal control systems to manage climate impact. The Audit Committee also reviews the integrity of IHG’s financial reporting and the potential impact of climate change, and considers data validation, assurance and controls around non-financial ESG data.
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| 52 | IHG | Annual Report and Form 20-F 2023 |
| The Remuneration Committee The Remuneration Committee determines the Executive Board, Executive Committee and Chair of the Board remuneration and reviews wider workforce remuneration to ensure this is aligned with the interests of shareholders, the UK corporate governance environment, and our environmental and climate-related goals.
To further embed our climate goals across the business and ensure accountability at the senior level, the Remuneration Committee, as advised by the Responsible Business Committee, has incorporated ESG measures, including relating to our carbon commitment, into the LTIP and reports to the Board on progress against these measures.
Management’s governance of climate-related risks and opportunities The management of climate-related risks and opportunities is the responsibility of our Executive Committee, with execution at the operational level overseen by the TCFD Steering Committee and the Regional Decarbonisation Steering Committees (see diagram below). |
The TCFD Steering Committee has responsibilities for identifying and reviewing potential impacts of climate-related risks and opportunities, measuring their impact and integrating climate scenario analysis into our business strategy. We introduced Regional Steering Committees in 2023 to oversee development as well as implementation of regional decarbonisation strategies, reflecting the need for approaches tailored to different geographies.
The Chief Sustainability Officer is responsible for monitoring progress against our carbon reduction commitment and reporting progress to the Executive Committee and the Responsible Business Committee.
Stakeholder engagement The relationships we build with our stakeholders are critical to informing our business decisions and delivering on our purpose of providing True Hospitality for Good. Understanding and balancing the interests of our stakeholders is intrinsic to good governance. It provides a foundation against which we measure ourselves, to protect our reputation and develop our commercial and social awareness.
To guide our work and ensure that we can plan and prioritise our impact, we regularly conduct materiality assessments of ESG issues, which helps us to focus on issues that are the most relevant to society, our industry and the long-term success of IHG.
|
Strategy
The Executive Committee and Board regularly assess the impact of climate change on IHG within their decision-making processes. It is acknowledged not only as one of our 10 principal risks but also as an integral component of our business strategy, aligning with our fourth strategic priority, ‘Care for our people, communities and planet’.
We address climate-related risks through this priority and our Journey to Tomorrow programme, which includes critical elements relating to carbon and energy that form the basis of our transition plan.
This section describes our key climate-related risks and opportunities, their potential impact on our business, and its resilience to such impacts, which has been assessed using scenario analysis.
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| Delivering on the recommendations of TCFD | IHG | Annual Report and Form 20-F 2023 | 53 |
Strategic Report
Delivering on the
recommendations of TCFD continued
| Identifying and assessing IHG’s climate-related risks and opportunities While our principal risks outline uncertainties that might threaten the ability to achieve our objectives throughout our business plan, climate change has the potential to impact IHG’s prospects over a range of future temperature scenarios and time horizons.
With the support of external experts, we have undertaken scenario analysis to identify and assess which climate-related risks and opportunities are most relevant and potentially impactful for IHG over the short, medium and long term. Our analysis focused on the assessment of both transition and physical climate change uncertainties across all hotels in our three regions (Americas, EMEAA and Greater China) under three different temperature scenarios and timeframes, as outlined in the adjacent tables.
Our climate scenario analysis identifies risks as having a ‘potential impact’ on IHG if they could directly impact revenue, costs or IHG’s reputation without mitigation. Our qualitative assessment of climate impacts on IHG’s financial performance considered future revenue growth from our 10-year business plan and aligns with long-term market growth rates projected to 2050.
While scenario analysis is not designed to deliver precise forecasts, we are actively enhancing and refining our data and assumptions to evolve the transparency of our TCFD disclosure to cover both quantitative and qualitative impacts in future. We will look to determine the materiality of climate-related risks and opportunities following the same criteria used to determine the significance of other information in our financial filings.
Our initial analysis was conducted during a period of pronounced variability in the recovery of the hospitality industry following the Covid-19 pandemic. This situation led to limited visibility in forecasting. Our assessment is now based on an assumption of reduced volatility in the medium- and longer-term outlook.
We prioritise climate-related uncertainties that we feel could be most significant to IHG and our stakeholders, building our business’s resilience to climate change by embedding operational decision-making and business processes that appropriately consider and address climate-related risks. Since our 2022 report, we have evolved the framing of our identified climate-related risks and opportunities to consider potential qualitative impacts across all relevant risk categories. We have also begun to assess chronic physical risks in addition to acute
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| ones, and we will review how these and the wider impacts considered on pages 55 and 56 can be factored into future quantification.
Determining the significance of climate-related risks and opportunities to IHG In preparing our 2023 Annual Report, the potential impacts of climate change have been considered. There are no climate-related estimates and assumptions that have a material impact on asset values in the Group Financial Statements (see page 172). While there is currently no material medium-term impact expected from climate change, the risks attached to climate change |
continue to evolve, and these will be assessed against the Group’s judgements and estimates.
We acknowledge the interconnectedness of the specific risks outlined on pages 55 and 56 and the overarching risk posed by climate change to both our hotel owners and IHG. The cumulative impact of climate-related risks has the potential to influence the overall appeal of investments in the industry at a broader scale. In the future, we will assess the aggregate impact on our wider stakeholders, including our hotel owners. |
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| Climate risk time horizons | How IHG defines/reasoning | |||
| Short (1–5 years) |
Our short-term time horizon incorporates our financial going concern and viability statement assessments, along with our budget-setting timeline. Our hotel energy performance targets are also aligned to this timeframe. | |||
| Medium (6–15 years) |
Our medium-term time horizon reflects our 10-year responsible business plan, Journey to Tomorrow, and our climate-related targets. It also reflects our time horizon from a strategic planning perspective. | |||
| Long (16–30 years) |
A long-term time horizon of up to 30 years aligns with national government policy and regulatory timeframes: for example, the UK’s 2050 net-zero target and the Paris Agreement. It also reflects the longer-term nature of the contracts we sign with our owners. | |||
| a To assess potential physical impacts, we have aligned the temperature rise scenarios in our analysis with the Intergovernmental Panel on Climate Change’s (IPCC) 1.5°C, 2°C and 4°C aligned Representative Concentration Pathways (RCPs) 2.6, 4.5 and 8.5, respectively.
b To assess potential transition impacts, we have based our analysis on the International Institute for Applied Systems Analysis’ (IIASA) Shared Socioeconomic Pathways (SSPs) to capture how societal, economic and technological trends could evolve over time and under three selected temperature rise scenarios. |
| 54 | IHG | Annual Report and Form 20-F 2023 |
| However, we believe by taking action to decarbonise, we can drive long-term business value for both our hotel owners and all other IHG stakeholders. We can enhance the IHG Hotels & Resorts masterbrand by reducing our environmental |
impact and supporting our hotel owners to manage increasing operational costs, secure supply chains and reduce exposure to increasing climate risks, regulation and taxes. |
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| Summary of IHG’s most significant climate-related risks and opportunities | ||||||||
| IHG’s risk management and strategic response | ||||||||
| Risk/opportunity descriptiona | Unmitigated potential risks and opportunities |
to build business resilience |
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| Transition risks and opportunitiesb | ||||||||
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IHG’s ability to decarbonise in line with stakeholder expectations
Potential short term (1-5 years) impact under a 1.5°C scenario, if unmitigated
Our key stakeholders have increasing expectations for businesses to influence positive change and deliver on their environmental commitments. This includes increasing questions from corporate clients and regulatory intervention by governments.
Decarbonising our business in line with expectations presents a potential opportunity for IHG to enhance its brand, by supporting owners to decarbonise and capture a greater share of guests seeking more sustainable hotels. Failure to meet expectations could cause reputational damage. |
Reputational: In scenarios projecting global temperature increases of 1.5°C, 2°C and 4°C, our analysis showed a potential reputational impact of IHG not decarbonising in line with stakeholder expectations in the short-term, if unmitigated. Under a 1.5°C scenario, this impact would remain a potential impact in the medium to long term if IHG fell further behind competitors and peers in meeting its carbon target. Alternatively, IHG may outperform peers and enhance the sustainable reputation of the IHG brand. Under a 4°C scenario, the longer-term reputational risk will be lower as most companies and governments will fail to meet their own targets.
Market: If investors’ expectations for businesses to demonstrate a shift towards low-carbon increase, this may influence decision-making and disadvantage companies unable to evidence sufficient progress and advantage those that are.
Should the expectations of hotel owners not align with IHG’s decarbonisation plans, potential challenges and conflicts may arise that inhibit IHG’s ability to influence and deliver on its commitments.
Policy and legal: The speed at which governments align their policies and plans to their climate change commitments will impact the rate at which IHG can decarbonise.
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Our work on decarbonisation supports our overarching corporate aim of ‘Care for our people, communities and planet’ – one of IHG’s four strategic priorities. Our decarbonisation strategy and Transition Plan can be found on page 57.
The dependencies associated with our decarbonisation strategy are outlined on page 58 and the metrics and targets we have developed to measure this risk are detailed on page 59.
Additionally, our approach to stakeholder engagement supports the management of this potential risk or opportunity. This includes developing partnerships and working with governments, trade associations and industry peers to influence policy positively and to present opportunities for IHG hotel owners to decarbonise.
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Changing consumer preferences towards sustainable travel
Potential short term (1-5 years) impact under a 1.5°C scenario, if unmitigated
Increasing appetite to travel sustainably could have a direct positive or negative impact on IHG’s financial performance, depending on IHG’s response and ability to adapt to changing consumer preferences for sustainable travel. |
Market: Under 1.5°C, 2°C and 4°C scenarios, our analysis identified a potential financial impact in the short-term. This impact could be negative if IHG fails to adapt to a potential shift in customer demand favouring sustainable stays. Alternatively, IHG could capitalise on this trend and secure a substantial share of the growing market.
We continue to receive sustainability-related questions from corporate customers, particularly when they seek accommodation providers that can support them with their own ESG ambitions. To enhance our understanding of this risk, we monitor ESG-related questions from corporate customers submitting Requests For Proposals (RFPs). In 2023, we saw more than 70% of customer accounts include ESG questions in RFPs, including requests for environmental data about our hotels. We have also conducted an internal analysis and found that nearly all top strategic global customers’ accounts have their own carbon targets. |
We support our hotels in reducing the impact of their operations and improving their sustainable credentials through the provision of training, tools, and resources, as well as cross-industry collaboration and partnerships that enable hotels to innovate.
Whether our guests are travelling for business or leisure, we see a real opportunity to help them have a more sustainable stay as part of the IHG guest experience. In 2023, we continued to promote our Greener Stay initiative, as well as facilitating hotels’ access to leading third-party sustainability certification programmes and launching IHG’s Meeting for Good sustainable meetings programme, which helps hotels to respond to the growing demand for sustainable meeting offerings, post- pandemic. |
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| a | The terminology used for our climate uncertainties has been adjusted to better align with IHG’s risk management framework: however, the scenario analysis remains unchanged. See last year’s Annual Report for previous wording. |
| b | In our 2022 Annual Report, we identified a decline in aviation as a priority transition risk, however, external forecasts show that aviation is set to increase in the future and leisure and business travel has returned to pre-Covid-19 levels. As a result, we have transferred this risk from one that we actively mitigate and report on, to monitoring as part of our sustainable travel risk. |
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| Delivering on the recommendations of TCFD | IHG | Annual Report and Form 20-F 2023 | 55 |
Strategic Report
Delivering on the
recommendations of TCFD continued
| IHG’s risk management and strategic response | ||||||||
| Risk/opportunity descriptiona | Unmitigated potential risks and opportunities | to build business resilience | ||||||
| Physical risks – acute and chronic | ||||||||
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Increased frequency and severity of extreme weather events
Potential long term (13-30 years) impact under a 2°C and 4°C scenario, if unmitigated
Rising temperatures and in turn increasing likelihood and severity of acute or extreme weather events creates an inherent risk of disruption to IHG hotel operations. Such disruptions could impact revenues and the fee income received by IHG, potentially diminishing the appeal of the hotel industry to owners in specific locations.
IHG also faces potential reputational consequences if it fails to effectively respond to extreme events and provide appropriate support to owners and affected communities.
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Under 2°C and 4°C temperature scenarios, our initial analysis found that acute physical risks could have a potential financial impact to IHG, if unmitigated. However, our tracking of the current impact of natural disasters on IHG’s revenue has shown this is not the case. To date, our asset-light franchise business model and geographical spread have helped to protect IHG’s revenue exposure.
However, we recognise the need to support our hotel teams, guests and the communities in which we operate, and in 2023, we conducted additional analysis on acute physical risks at the hotel level to assess our existing and pipeline hotels’ current and future exposure to 2030 and 2050.
Analysis found the most prominent risks, where we have a significant hotel presence, to be drought risk in countries such as the US, UAE and Saudi Arabia, and severe storms, tropical storms and cyclones in countries such as the US, China, Thailand, Singapore and Malaysia. Countries with the overall highest exposure to acute risks included China, the Caribbean nations, the Philippines and Oman. Acute risks are shown to increase over time, with significant increases in heatwave duration and drought length by 2050 across our existing and pipeline hotel locations. |
Our focus has been on the identification and mapping of our acute physical risks, understanding and monitoring the impact on hotels, and assessing whether this is significant for IHG at the Group level. We are refining our understanding of this risk by continuing to develop our financial modelling. The analysis conducted in 2023, focusing on the physical risk at both existing and pipeline hotel, will help us identify the hotels most exposed. We will take into account their climate adaptive capacity and support hotels in developing mitigation strategies where needed.
We will also use our analysis to further integrate physical climate risks into our business decision-making processes and will explore where IHG mitigation and adaptation strategies might be needed.
At present, we provide support to our hotels and surrounding communities following natural disasters through our humanitarian aid partners, as well as through access to IHG colleague assistance funds and natural disaster guides.
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| Significant changes in long-term weather patterns
Impact to be determined
As temperatures rise, chronic physical risks are expected to intensify. Responding to these risks may lead to heightened operating costs for hotel owners, alterations in customer travel patterns and impacts on hotel resource availability due to population migration and supply chain disruption. These may impact IHG’s financial performance and ability to grow in certain markets. |
In 2023, we conducted analysis with third-party experts to identify geographical locations with high chronic physical risk. This analysis found that IHG’s hotel locations are more exposed to long-term persistent chronic climate risks than to short-term acute shocks, and has therefore informed our decision to transition chronic physical risks from an uncertainty that we monitor to one that we report on and begin to actively manage.
The existing risks found to be most prominent are heat stress in countries such as Thailand, Vietnam, Indonesia, UAE, China and India and water stress in the US, China, Australia, Mexico, India and Saudi Arabia. Extreme temperature, heatwave duration and heavy rainfall are also expected to rise significantly under 4°C scenario (RCP 8.5) to 2030 and 2050. |
IHG will conduct scenario analysis to consider the potential impact of the chronic risks identified to IHG’s financial prospects and performance and seek to update business decision-making processes to consider physical climate risks, where needed.
We will establish which hotels are most exposed, with consideration to the local infrastructure and individual hotels’ capacity to adapt, as well as understanding how hotels are currently being affected by changing weather and what support we can provide moving forward.
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| a | The terminology used for our climate uncertainties has been adjusted to better align with IHG’s risk management framework: however, the scenario analysis remains unchanged. See last year’s Annual Report for previous wording. |
| b | In our 2022 Annual Report, we identified a decline in aviation as a priority transition risk, however, external forecasts show that aviation is set to increase in the future and leisure and business travel has returned strongly to pre-Covid-19 levels. As a result, we have transferred this risk from one that we actively mitigate and report on, to monitoring as part of our sustainable travel risk. |
| Transition plan
We are targeting a 46% absolute reduction in our GHG emissions by 2030 from a 2019 base year (Scope 1 and 2 emissions and Scope 3 from fuel and energy-related activities and franchised hotels energy). The SBTi has validated this target, confirming its alignment with climate science and the Paris Agreement. This validation ensures that the target is designed to prevent the worst impacts of climate change.
Our decarbonisation strategy has a strong governance structure to support our progress towards our ambitions. Regional Steering Committees now help to account for geographical differences and are responsible for developing and executing regional decarbonisation plans which target actions that are most impactful within each |
region, alongside resource requirements. Refer to page 53 for our climate governance structure.
IHG values the Transition Plan Taskforce’s (TPT) guidance on best practice reporting, and actively participated in the consultation period as members of the TPT Sandbox coalition. While awaiting additional sectoral guidance and updates to the regulatory framework, we will work towards alignment with the TPT framework.
We will also look at how we might align our future biodiversity and natural capital work with the Taskforce for Nature Related Financial Disclosures (TNFD) to enhance |
transparency around our nature-related risks, opportunities and mitigation strategies.
Our SBT: To reduce absolute Scope 1, 2 and Scope 3 GHG emissions from FERA and franchised estate energy 46% by 2030 from a 2019 base year.” |
| 56 | IHG | Annual Report and Form 20-F 2023 |
| How we plan to drive towards our 2030 SBT To make progress towards our decarbonisation target while continuing to grow our business, we are acting across three principal levers: decarbonising our existing hotels; supporting our hotels to access renewable energy; and developing new-build hotels that operate at very low/ zero carbon. |
Our decarbonisation model enables us to analyse various scenarios of grid decarbonisation, energy conservation measure implementation and renewable procurement across different periods, geographies and hotel archetypes. Estimated emission reduction potential, costs and return on investment (ROI) for energy reduction initiatives guides decarbonisation efforts. Our modelling also incorporates projected growth across our portfolio in our decarbonisation | estimates, incorporating our long-range plan for system size growth to 2030. Our plan does not include the use of carbon offsets. Instead, we are focused on the absolute reduction of emissions, aligned with SBTi guidance. Our carbon footprint is reported as one of IHG’s KPIs (see page 63). Our transition plan (below) outlines our actions across each of our decarbonisation levers over the short and medium term. |
Our transition plan SHORT-TERM MID-TERM 2019 2030 Primary decarbonisation levers PLAN ACTION Energy efficiency in • Energy and carbon • Rolling out ECMs across all existing estate hotels, focused on those • Continue to increase the existing estate modelling to map measures with a ROI of less than 5 years, supported by brand standards hotel adoption of ECMs. decarbonisation and reflected in corporate remuneration targets. • Partner with pathways. • Continued focus on energy reduction via the hotel energy metric. organisations that can • Integration of • Investing in tools and training, such as the HERO tool and Green Engage, incentivise hotel owners business growth to support our owners with decarbonisation initiatives. to adopt ECMs with plans and external longer payback periods. dependencies into • Expand the number of carbon pathways. new-build hotels in our Target new-build • Analysis of return • Embedding ECMs into our new-build hotels, supported by brand estate that operate at hotels to operate at on investment and standards and reflected in corporate remuneration targets. very low/zero carbon. very low/zero carbon impact of energy • Developing a programme to accelerate the number of new-build hotels • Scale access and emissions by 2030 efficiency that operate at very low/zero carbon adoption of renewable measures, energy as markets incorporating deregulate. regional variations in markets. • Advocate for policy frameworks that • Understanding encourage and support Renewable energy availability of • Transitioning to renewable energy through mechanisms such as green hotel owners to adopt purchases and renewable energy tariffs, community solar and on-site renewable generation, where efficiency measures, on-site generation at scale. commercially viable. move away from fossil • Identifying financial mechanisms to support widespread adoption fuel combustion and of on-site and off-site renewables. access renewable energy. CROSS-CUTTING CONSIDERATIONS Policy frameworks Access to fossil-free energy Further government tax relief Ability of our third-party-owned or financial incentives are hotels to move away from fossil needed to encourage and fuel usage is dependent on support hotel owners to drive both grid decarbonisation and efficiency measures. access to cost-effective renewable energy. Our hotels and Governments Trade bodies owners Engaging with Engaging on Developing tools, governments climate policy training, metrics to advocate through our and incentives for support for memberships that help hotels hotel owners and trade to meet energy to decarbonise. associations. targets and increase customer and regulatory expectations. Peers Using our influence in industry associations to align on standards on sector decarbonisation and highlight common challenges. Behavioural change Decarbonisation is heavily reliant on a sustained change in mindset and behaviour in day-to-day operations by hotel owners, teams and guests. Partnerships Partnering with NGOs to support the wider economy transition and with innovators to help reduce our impact. a Supply chain emissions are not included in our 2030 SBT, as they were not deemed material for inclusion under IHG’s science-based target scope, as per the SBTi criteria. Nevertheless, we engage with our supply chain to support our Journey to Tomorrow commitments and the wider economy transition: see pages 41 to 43 of our 2023 Responsible Business Report and page 46 of the same report for more details on our methodology and scope definitions.
| Delivering on the recommendations of TCFD | IHG | Annual Report and Form 20-F 2023 | 57 |
Strategic Report
Delivering on the
recommendations of TCFD continued
| Transition plan dependencies Given IHG has a predominantly asset-light business model, with the majority of hotels owned by third parties, we’re working closely with our owners and teams across our entire estate in relation to our climate targets.
Unlike company-owned properties, franchised and managed hotels have independent ownership, including decisions related to infrastructure, utilities and carbon |
reduction programmes. While we can provide guidelines and support, the decentralised nature of the franchise system requires a collaborative approach, incentivisation and effective communication to drive sustainability initiatives across the entire network.
There are a number of additional external factors that impact the rate at which IHG hotel owners can decarbonise. Some of these key external dependencies are |
outlined below, and the impacts of these dependencies are considered in how we progress towards our SBT.
We recognise that our role in collaborating with governments, peers and trade bodies will be crucial to supporting owners and the industry in decarbonising successfully.
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| Description | Response |
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| Further government financial incentives are needed to encourage and support hotel owners to drive efficiency measures | ||||
| The combination of high capital investment costs and longer payback periods for many ECMs is a barrier to reducing hotel energy consumption. Further government financial incentives (for example, tax relief) would support IHG hotel owners to prioritise the investment needed to improve the efficiency of their hotels and therefore drive accelerated decarbonisation across hotels operating under IHG brands. |
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| Ability of our third-party owned hotels to move away from fossil fuel use is dependent on several factors |
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| IHG predominantly franchises and manages hotels in more than 100 countries around the world, including many where electricity grids are heavily dependent on fossil fuels. In 2023, managed and franchised hotels consumed over 8 million MWh of electricity, which equates to 76% of our total reported GHG emissions. We anticipate this electricity percentage to grow as hotel owners look to electrify their hotels to reduce their reliance on fossil fuels. In order for these actions to translate into meaningfully lower carbon emissions, there are several inter-related dependencies:
Electricity grids decarbonising in line with the Paris Agreement We are reliant on governments implementing policies and plans that decarbonise electricity grids in line with a 1.5°C trajectory. Government inaction in this area would significantly impact IHG’s ability to meet its targets.
Owners’ ability to access scalable, cost-effective renewable energy A crucial element of our transition plan is to support our franchised and managed hotels (which bear the costs of energy) to access renewable energy at scale. While IHG can influence renewable energy adoption, for example, by negotiating renewable energy tariffs or setting up contracts with approved suppliers for our community solar programme, we have a limited ability to enforce adoption. Large-scale solutions such as virtual Power Purchase Agreements (vPPAs) present unknown long-term financial exposure for IHG due to market price uncertainty, while potential changes to GHG accounting of renewable energy creates further barriers to adoption.
Additionally, the geographic spread of our hotel portfolio means that by 2030, over half of our emissions will be from regulated energy markets such as China, Saudi Arabia and the UAE. IHG is therefore dependent on those markets deregulating and the availability of solutions to enable cost-effective renewable energy to be procured at scale.
The business case for switching from gas to electricity needs to become more financially compelling for hotel owners The price disparity between electricity and gas (in Western and Middle Eastern markets) presents a significant challenge to transitioning energy use to renewable sources. Rebalancing of electricity and gas prices would improve the rate of decarbonisation that could be achieved by hotel electrification. |
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| Decarbonisation is heavily reliant on a sustained change in mindset and behaviour in day-to-day operations by hotel owners, teams and guests | ||||
| Meeting our SBT requires new operational behaviours and mindset shifts to adapt to low-energy products and services. Guests’ expectations will need to evolve to align with more sustainable practices: for example, electrification will require a move away from speciality cooking techniques associated with fossil-fuel-based cooking, such as gas or charcoal – an industry-wide consideration. In addition, operational efficiencies can significantly reduce energy consumption at a hotel level; however, in an environment of high employee turnover across the hospitality industry, ongoing training and industry-wide initiatives are required to embed and sustain new practices. |
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| 58 | IHG | Annual Report and Form 20-F 2023 |
| Risk management
Identification, assessment, management and integration of climate-related risks At IHG, we assess the connections between climate-related risks and opportunities and other key principal risks to ensure climate change is embedded in our risk management processes and addressed through our business strategy. We consider climate change to be a major uncertainty affecting our industry, reflecting this as a principal risk and indicating that it may affect other core areas of our business, including guest and owner preference for our brands. Our business model means that we share threats and opportunities with our owners, including our dependency on their capacity to invest, uphold our brand standards and achieve our commitments.
The Audit Committee provides oversight of the effectiveness of IHG’s risk management and internal control processes, including those relating to climate. To enable our risks to inform business decisions effectively, our risk reviews are conducted by the Board, Executive Committee and management teams to align with the business decision-making cycle. Our Risk and Assurance team conducts regular meetings with IHG leaders and teams responsible for assessing and managing risks. These conversations consider a range of uncertainties, such as the effect of climate change on hospitality, and the steps being taken to reduce IHG’s exposure, which may be relevant to the delivery of teams’ objectives and IHG’s success.
Enhancing awareness and improving understanding of IHG’s principal risks across the business, particularly around the complexities of climate change, helps ensure the consideration of risk factors within decision-making. IHG’s Corporate Responsibility team has developed climate training and tools for our corporate and hotel colleagues, and conducts regular workshops with key business functions to engage them on our decarbonisation and our Journey to Tomorrow programme.
Metrics and targets
To help us manage our climate-related risks and opportunities, we are developing metrics and targets in line with TCFD recommended disclosures. Where metrics and targets are still in progress or we do not consider the category to be relevant to IHG, we have provided details below. |
GHG emissions and progress against SBT Our GHG emissions are measured by our performance against our SBT commitment to reduce Scope 1 and 2 emissions and Scope 3 emissions from our franchised estate energy and FERA by 46% by 2030, from a 2019 base year. Our target is approved by the SBTi and our methodology to calculate our GHG emissions follows the GHG Protocol Corporate Accounting and Reporting Standard methodology. The Scope 3 emissions included within our SBT are material to IHG in accordance with the SBTi criteria and include Category 14 – Franchises and Category 3 – FERA. Other Scope 3 categories are not included in our 2030 SBT, as they were not deemed material for inclusion under IHG’s Science-based target scope, as per the SBTi criteria.
We use our carbon footprint as a metric to track progress against our decarbonisation strategy and we report this within the KPI section on page 63. We also track our year-on-year absolute GHG emissions against our 2019 baseline.
Remuneration To support our decarbonisation strategy and transition opportunities, we have embedded ESG metrics into executive remuneration under the Directors’ Remuneration Policy. The 2023/25 LTIP cycle includes targets relating to the integration of ECMs into brand standards across new-build and existing hotels and the adoption of specific ECMs by owned, leased, managed lease and managed hotels. We track these measures during the cycle and will report on achievement in our Directors’ Remuneration Report at the end of the LTIP cycle. New measures will also be included in future LTIP cycles.
Capital deployment Given the asset-light nature of our business model, we do not consider capital deployment to be a significant lever for managing our climate-related risks and opportunities, or for implementing our transition plan. We may incur operational costs associated with initiatives, such as new software systems, and any capital that is required is included within our typical capital expenditure levels of up to $350m gross per annum. We do not monitor capital expenditure by third-party owners of our franchised hotels. |
Internal carbon pricing Given that a significant portion of our emissions stems from our franchised estate, where our control is limited, we have determined that a conventional internal carbon price would not be the most impactful decarbonisation mechanism. Consequently, our efforts are directed toward more suitable mechanisms, as outlined in our transition plan on page 57.
External carbon price We analysed the IHG Group and individual hotel-level exposure to carbon pricing legislation by applying a projected carbon price to our GHG emissions under a 1.5°C temperature scenario. At the IHG Group level, analysis found that we are largely insulated by our revenue-based fee structure, which mitigates a substantial proportion of costs being passed through to the Group from our hotels. However, we acknowledge that exposure could increase the risk of hotels becoming less profitable or less desirable as an asset class in future. By supporting our hotels in decarbonising, we aim to reduce this risk.
Transition risk and opportunities We track the year-on-year performance of our GHG emissions and other environmental indicators, including energy, renewables and water and waste data, to evaluate progress in mitigating transition risks and optimising opportunities. We use energy reduction metrics and targets, as well as our remuneration target, to drive the uptake of ECMs across our estate.
We will explore further potential metrics that may be relevant for IHG to monitor and manage our climate-related opportunities and will disclose these if and when appropriate.
Physical risks In 2023, we analysed the exposure of IHG’s existing and pipeline estate hotel locations to acute and chronic physical risks. We plan a deeper examination of this data set, conducting further analysis to understand the potential impacts on our hotels. Additionally, we aim to identify and establish metrics for consistently monitoring the most significant risks. The findings will be disclosed in future reporting.
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| Delivering on the recommendations of TCFD | IHG | Annual Report and Form 20-F 2023 | 59 |
Strategic Report
Key performance indicators (KPIs)
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ur KPIs are carefully selected to allow us to monitor the delivery of our strategy and long-term success. They are organised around our strategy, which articulates our purpose, ambition and priorities (see page 18). | |
| KPIs are reviewed annually by senior management to ensure continued alignment to our strategy and are included in internal reporting and regularly monitored. | ||
Measures included are those considered most relevant in assessing the performance of the business and relate to our growth agenda and commitment to our key stakeholders including owners, guests, employees, shareholders and the communities in which we work. KPIs should be read in conjunction with the other sections of the Strategic Report, and where applicable, references to specific relevant topics are noted against each KPI.
| KPIs | 2023 status and 2024 priorities | |||||
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| Net rooms supply Net total number of rooms in the IHG System.
Increasing our rooms supply provides significant advantages of scale, including increasing the value of our loyalty programme. This measure is a key indicator of achievement of our growth agenda (see page 18).
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2023 status Gross system growth of 5.3%, with net system size growth of 3.8%, as removals rate returned to historical average of 1.5%. Total rooms supply 946,203 at 31 December 2023.
Signings of 79,220 rooms (556 hotels) represented a 1.4% decline on the prior year which included 18,467 rooms (48 hotels) under the Iberostar Beachfront Resorts brand. Total pipeline of 296,954 rooms increased by 5.5% compared to 2022, with more than 40% under construction.
• Further growth of the Holiday Inn Brand Family with 18,274 rooms opened and 30,062 rooms signed, representing nearly 40% of our rooms signings.
• Expansion of our Luxury & Lifestyle portfolio with 9,033 rooms opened and a further 18,319 rooms signed.
• 5,098 rooms opened for Iberostar Beachfront Resorts with a further 1,424 rooms signed.
• Continued growth of our recently launched brands with:
– voco growing to 62 hotels open and a further 74 properties in the pipeline across 38 countries.
– 16 Atwell Suites signed, taking the pipeline to 41 properties.
– Vignette Collection growing to 29 hotels secured since its launch in 2021.
– avid hotels adding eight openings and 23 signings taking the estate to 67 hotels open with a further 141 in the pipeline.
– The launch of Garner, our new midscale conversion brand, with seven properties signed and the first two hotels open.
2024 priorities • Continue to focus on delivering strong net system size growth, with well-invested brands in the largest markets and segments.
• Further scale of avid hotels, Atwell Suites and Garner.
• Continue to expand voco and Vignette Collection globally.
• Grow the footprint of our Luxury & Lifestyle brands, including branded residences.
• Continue to explore further opportunities for growth through other commercial agreements. |
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| Signings Gross total number of rooms added to the IHG pipeline.
Continued signings secure the future growth of our system and continued efficiencies of scale. Signings indicate our ability to deliver sustained growth (see page 18). |
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| a | Use of Non-GAAP measures: In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on pages 84 to 88, and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 231. |
| 60 | IHG | Annual Report and Form 20-F 2023 |
| KPIs | 2023 status and 2024 priorities | |||||
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| Global RevPAR growth Revenue per available room: rooms revenue divided by the number of room nights that are available.
RevPAR growth indicates the increased value guests ascribe to our brands in the markets in which we operate and is a key measure widely used in our industry (see page 8). Definition of this key performance measure can be found on page 84. |
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2023 status • Strong trading in 2023 resulted in RevPAR improving year-on-year across all regions with levels exceeding pre-pandemic peaks in all quarters of the year. This was driven by continued strength in leisure and the further return of corporate and group bookings.
• Throughout 2023 we have remained committed to supporting our owners to optimise returns as we:
– Increased IHG One Rewards member enrolments and direct bookings following the investments made in our loyalty programme in the prior year, enabling our owners to benefit from strong member engagement.
– Further enhanced revenue management systems to quickly identify and act on revenue opportunities using business intelligence and data.
– Improved rate negotiations on behalf of our owners using IHG’s centralised RFP processes, with more than 3,000 hotels now using the service.
– Continued to focus on quality, design and innovation to meet evolving needs of guests and drive guest satisfaction while optimising for owner returns.
– Provided owners with end-to-end support to shorten the time taken for renovations and openings with our Hotel Purchasing Services, and achieved up to 30% savings across various goods and services categories.
– Reduced owner costs through collective purchasing with our Group Purchasing Organization agreements across more than 100,000 items.
– Utilised data-driven, targeted campaigns and offers to appeal to our largest, fastest-growing and highest-value segments.
• Enterprise contribution improved to 79% in 2023, with increased adoption and performance of the IHG mobile app since its redesign in 2022. Online conversion rate continued to improve from investments in improving the online guest experience. GDS also increased as corporate demand continued to recover.
• Increased IHG One Rewards member enrolments year-on-year following the transformation of the loyalty programme in 2022. Reward Nights exceeded 2019 levels driving returns for owners, particularly through dynamic pricing.
• Re-launched US co-brand credit cards driving an increase in new accounts by over 60% and double digit percentage spend growth year-on-year, further driving owner returns and customer satisfaction.
2024 priorities • Continue to use data-driven insights, including mobile and AI, to enhance and personalise the guest experience, and to build on revenue-enhancing tools that drive returns for our owners.
• Leverage our GRS capabilities to generate stay enhancements through the cross-sell of extras through for guest stays, maximising revenue generation to owners by leveraging the unique attributes of their inventory.
• Continue to develop our digital-first approach, leveraging cloud-based technology to help owners and hotel colleagues better understand and drive the business.
• Further expand and strengthen our IHG Hotels & Resorts masterbrand to better promote our portfolio of brands.
• Continue to scale and invest in IHG One Rewards to support the growth and engagement of loyalty members.
• Increase contribution from IHG One Rewards members by driving direct booking through our mobile and web channels.
• Further rollout of new cloud-based Revenue Management System (RMS), enabling data and forecasting insights to owners.
• Commence work on the next-generation Property Management System (PMS) offering owners a single platform across properties to enable efficient enhancements. |
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| Growth in underlying fee revenuesa,b Group revenue from reportable segments excluding revenue from insurance activities, revenue from owned, leased and managed lease hotels, significant liquidated damages and current year acquisitions, stated at constant currency.
Underlying fee revenue growth demonstrates the continued attractiveness to owners and guests of IHG’s franchised and managed business (see page 11). |
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| Total gross revenue from hotels in IHG’s System Total rooms revenue from franchised hotels and total hotel revenue from managed, exclusive partner and owned, leased and managed lease hotels. Other than for owned, leased and managed lease hotels, it is not revenue wholly attributable to IHG, as it is mainly derived from hotels owned by third parties.
The growth in gross revenue from IHG’s System illustrates the value of our overall System to our owners (see page 11). Definition of this key performance measure can be found on page 84. |
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| Enterprise contribution to revenue The percentage of room revenue booked through IHG managed channels and sources: direct via our websites, apps and call centres; through our interfaces with Global Distribution Systems (GDS) and agreements with Online Travel Agencies (OTAs); other distribution partners directly connected to our reservation system; and Global Sales Office business or IHG One Reward members that book directly at a hotel.
Enterprise contribution is one indicator of IHG value-add and the success of our technology platforms and our marketing, sales and loyalty distribution channels (see page 26). |
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| a | Use of Non-GAAP measures: In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on pages 84 to 88, and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 231. |
| b | Re-presented to reflect the adoption of IFRS 17 ‘Insurance Contracts’. The 2019 and 2020 figures have not been restated and therefore the 2019, 2020 and 2021 growth figures are excluded from the comparison. |
| Key performance indicators (KPIs) | IHG | Annual Report and Form 20-F 2023 | 61 |
Strategic Report
Key performance indicators (KPIs) continued
| KPIs | 2023 status and 2024 priorities | |||||
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| Guest Love IHG’s guest satisfaction measurement indicator.
Guest satisfaction is fundamental to our continued success and is a key measure to monitor our ability to deliver an experience that meets and exceeds guests’ expectations (see page 22 for details). |
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2023 status • Guest satisfaction of 80.3% improved compared to 2022 reflecting increases in quality and consistency across the guest experience.
• Externally measured Guest Satisfaction Index (GSI) achieved a score over 100, outperforming our competitors, as we focus on guest experience improvements.
• Continued plans to ensure a consistent high-quality experience for each of our brands, including enhancements in food & beverage, hotel condition and service.
• Evolved our mobile app and digital booking to help enhance guest experience.
2024 priorities • Enhance the guest journey and strengthen brands while maintaining a focus on quality and consistency across all aspects, including loyalty recognition, digital experience, food & beverage, service, and property condition.
• Leverage tools such as training and data insights to further increase performance across our estate.
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| Fee margina,b Operating profit as a percentage of revenue, excluding System Fund, reimbursement of costs, revenue and operating profit from owned, leased and managed lease hotels, significant liquidated damages, insurance activities and exceptional items.
Our fee margin progression indicates the profitability of our fee revenue growth and benefit of our asset-light business model (see page 10). |
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2023 status • Fee margin grew by 340bps to 59.3%, driven by continued strength in trading in EMEAA and Greater China.
2024 priorities • Maintain our cost and efficiency focus.
• Leverage technology applications and process enhancements to achieve operational efficiencies.
• Continue to reinvest in the business to drive growth and further expand margin over the long term. |
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| Adjusted free cash flowa Cash flow from operating activities excluding payments of contingent purchase consideration, less purchase of shares by employee share trusts, maintenance capital expenditure and lease payments.
Adjusted free cash flow provides funds to invest in the business, sustainably grow the dividend and return any surplus to shareholders (see page 12). It is a key component in measuring the ongoing viability of our business (see page 50). |
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2023 status • Adjusted free cash flow increased by $254m to $819m due to growth in operating profit from reportable segmentsa and an improvement in the System Fund and reimbursable result, partly offset by increased contract acquisition costs, higher tax payments and lower working capital cash inflow. Closing liquidity was $2,572m.
2024 priorities • Continue to deliver consistent, sustained growth in cash flow.
• Timely management of capital deployment in line with business priorities. |
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| IHG® Academy Number of people participating in one of our in person IHG Academy programmes and the number of registered users on the IHG Skills Academy platform.
Sustained participation indicates the strength of our progress in creating career building opportunities and engagement with the communities in which we operate (see page 12). |
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2023 status • Refreshed the wider IHG Academy offering to hotel and corporate functions.
• Increased internships and work experience placements across hotels and corporate functions, utilising both in-house experiences and virtual solutions.
• Expanded our IHG Skills Academy registrations by over 500%.
• Implemented a new IHG Skills Academy interface to improve user experience.
• Added additional language translations to IHG Skills Academy to increase global reach.
2024 priorities • Launch refreshed IHG Academy offering to hotel and corporate functions to activate within their local communities.
• Introduce updated tracking tool to hotels and upgrade IHG Academy global metrics dashboard.
• Raise awareness of all IHG Academy offerings to increase skills training opportunities and maximise IHG Academy participants.
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| a | Use of Non-GAAP measures: In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on pages 84 to 88, and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 231. |
| b | 2022 and 2021 fee margin re-presented to reflect the adoption of IFRS 17 ‘Insurance Contracts’ in 2023. The 2019 and 2020 figures have not been restated and are therefore excluded from the comparison. |
| 62 | IHG | Annual Report and Form 20-F 2023 |
| KPIs | 2023 status and 2024 priorities | |||||
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| Employee engagement survey scores Colleague HeartBeat survey, completed by IHG employees or colleagues employed at owned, leased or managed leased and managed hotels (excluding our joint ventures).
We measure employee engagement to monitor risks relating to talent (see page 46) and to help us understand the issues that are relevant to our people as we build a diverse and inclusive culture (see page 29). |
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2023 status • The score of 87% improved on the prior year and was 10% higher than external benchmarks.
• Prioritised employee development and retention activities:
– Focused on launching the ‘squiggly career’ concept and an interactive critical experiences framework that helps employees explore the different career journeys available within IHG corporate.
– Evolved our leadership development programme content to include further support for people leaders on how to develop their teams through focused career conversations, performance check-ins and providing timely feedback.
– Launched a new corporate onboarding programme to help our new starters in four pilot locations learn the business and network with people across teams.
• Continuing to focus on employee wellbeing, including piloting a mental health first aider programme in the UK, highlighting and investing in our Employee Assistance Programme, and celebrating key calendar events such as World Mental Health Day.
• Delivered on diversity, equity and inclusion (DE&I) initiatives:
– Continuing to expand our Employee Resource Group (ERG) membership and presence globally.
––Celebrated key calendar events such as International Women’s Day, Pride and International Day of Persons with Disabilities.
– Launched new inclusive hiring practices to help increase our representation of diverse leaders across our senior leadership population.
• Launched Leading for Growth Executive Development Programme, designed specifically for those at VP level and above to help stimulate thinking around how we lead today along with exploring future development.
2024 priorities • Continue to foster an inclusive culture and further raise our representation of diverse leaders across our senior leadership.
• Increase support for employees to plan their development internally.
• Continue to develop our people leadership capability through learning, communications, events and toolkits.
• Scale our corporate onboarding programme to all corporate locations.
• Continued focus on our L&L capability and talent.
• Integrate more of the L&L hotel estate into our HR platforms.
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| Absolute carbon footprint Total GHG emissions (Tonnes of CO2e), calculated using the market-based methodology to take account of renewable energy. For more information on our carbon footprint methodology see page 239.
Our global target is to reduce absolute Scope 1, 2 and Scope 3 (FERA and franchised hotels energy) GHG emissions 46% by 2030 from a 2019 baseline year.
This target has been validated by the SBTi as being consistent with climate science to limit global temperature rise to 1.5°C above pre-industrial levels. To ensure progress against this target, we work with our hotels to drive energy efficiency and carbon reductions across our estate. |
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2023 status • While there was an increase year-on-year in 2023 due to the recovery in occupancy and growth in the size of the estate, we continued to drive energy efficiency with a 3.8% reduction in carbon emissions per occupied room from 2019 and a 1.9% absolute reduction against the baseline.
• Continued rollout of ECMs across existing estate hotels and new-builds, focused on those measures with a ROI of less than 5 years, supported by brand standards and reflected in corporate remuneration targets.
• Ongoing access to training, tools and resources to help hotels maximise their energy efficiency, including resources in the US for owners to identify tax and other financial incentives to help fund energy efficiency investments.
• Expanded US owner access to renewable electricity through our community solar programme.
2024 priorities • Continue to rollout our decarbonisation roadmap focusing on energy-efficiency measures in the existing estate, transitioning to renewable energy and developing new-build hotels operating with very low/zero carbon emissions. See pages 56 to 58 for more information on our transition plan.
• Developing a programme to accelerate the number of new-build hotels that are energy-efficient, have no fossil fuels combusted on-site and are fully powered by renewable energy where available.
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| Key performance indicators (KPIs) | IHG | Annual Report and Form 20-F 2023 | 63 |
Strategic Report Chief Financial Officer’s review rading strengthened through Tthe year, with RevPAR exceeding pre-pandemic highs in each quarter. This, combined with growth in our well-invested brand portfolio and efficient cost base, drove higher profitability and fee margin. Our proven cash-generative business model resulted in $1.0bn returned to shareholders in 2023, while continuing to invest for future growth. Trading performance Following the investments made in our loyalty and technology platforms, guest enrolments and bookings increased through the year, and our owners were able to leverage our enterprise to capture demand as guests returned, yielding rate and occupancy gains. Travel demand remained healthy, supported by strong leisure and continued recovery in business and groups, with RevPAR exceeding pre-pandemic highs in the year. The degree of RevPAR growth varied across the regions. Performance in the Americas and EMEAA continued to exceed pre-pandemic levels through 2023. Greater China rebounded significantly following the lifting of Covid-19 related restrictions in late 2022, with the region also exceeding 2019 levels by the third quarter. System growth During the year, gross system size increased by 5.3%, demonstrating the strength of our brand portfolio. Conversions represented 37% of openings and signings combined, as our brand portfolio including our newly launched midscale conversion brand, Garner, enables us to more readily capture these opportunities that contribute to delivering our system growth. Our continued focus on the quality of our estate resulted in a removals rate of 1.5% year-on-year, in line with our historical underlying average. Net system size increased by 3.8%. Operating profit Operating profit was $1,066m, an increase of $438m from the prior year. Operating profit from reportable segmentsa improved to $1,019m compared to $828m in 2022. The strong growth in revenue and our cost management resulted in a 3.4%pts improvement in fee margina to 59.3%. Our growth in operating profit was achieved alongside continued investment to support future growth, including in the expansion of our brand portfolio and investments in our enterprise platform. Cash generation and liquidity Demonstrating the highly cash-generative nature of our business, net cash from operating activities increased by $247m to $893m, and adjusted free cash flowa improved by $254m to $819m, compared to the prior year. During 2023, we returned $1.0bn to shareholders through a combination of ordinary dividends and share buybacks. Robust drove RevPAR trading and to exceed profitability pre highs -pandemic in 2023, demonstrating the strength of our business model.” Our net debt:adjusted EBITDA ratio at the end of the year finished at 2.1x, beneath the 2.5-3.0x range we aim to maintain. At the year-end, the Group’s total liquidity was $2,572m. The Board has proposed a final dividend of 104.0¢, +10% vs 2022, taking the dividend for the year to 152.3¢. The Board has also approved a further share buyback programme to return an additional $800m to shareholders. Our uses of cash remain unchanged: ensuring the business is appropriately invested in to optimise growth; funding a sustainably growing dividend; and then returning excess funds to shareholders. Future growth and 2024 priorities Looking to 2024, we are confident that travel demand will continue to trend ahead of pre-pandemic levels. We remain focused on our multi-year commitment to invest in our brand portfolio, loyalty programme and technology platforms. Our support to owners has continued through uplifts in revenue generation, targeted procurement solutions and the management of inflationary pressures through build and operational efficiencies. We are confident in our asset-light, fee-based business model, combined with our track record of fee margin growth through focused cost management, which is proven to be highly cash-generative, enabling us to fund further investments and additional shareholder returns. Michael Glover Chief Financial Officer a Use of Non-GAAP measures: In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on pages 84 to 88, and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 231. 64 IHG | Annual Report and Form 20-F 2023
Performance
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Group Income Statement summary
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| Revenueb | ||||||||||||||||||||||||||||||||||||||||
| Americas | 1,105 | 1,005 | 10.0 | 774 | 29.8 | |||||||||||||||||||||||||||||||||||
| EMEAA | 677 | 552 | 22.6 | 303 | 82.2 | |||||||||||||||||||||||||||||||||||
| Greater China | 161 | 87 | 85.1 | 116 | (25.0 | ) | ||||||||||||||||||||||||||||||||||
| Central | 221 | 199 | 11.1 | 197 | 1.0 | |||||||||||||||||||||||||||||||||||
| Revenue from reportable segmentsc | 2,164 | 1,843 | 17.4 | 1,390 | 32.6 | |||||||||||||||||||||||||||||||||||
| System Fund and reimbursable revenues | 2,460 | 2,049 | 20.1 | 1,517 | 35.1 | |||||||||||||||||||||||||||||||||||
| Total revenue | 4,624 | 3,892 | 18.8 | 2,907 | 33.9 | |||||||||||||||||||||||||||||||||||
| Operating profitb | ||||||||||||||||||||||||||||||||||||||||
| Americas | 815 | 761 | 7.1 | 559 | 36.1 | |||||||||||||||||||||||||||||||||||
| EMEAA | 215 | 152 | 41.4 | 5 | NMd | |||||||||||||||||||||||||||||||||||
| Greater China | 96 | 23 | 317.4 | 58 | (60.3) | |||||||||||||||||||||||||||||||||||
| Central | (107 | ) | (108 | ) | (0.9 | ) | (88 | ) | 22.7 | |||||||||||||||||||||||||||||||
| Operating profit from reportable segmentsc | 1,019 | 828 | 23.1 | 534 | 55.1 | |||||||||||||||||||||||||||||||||||
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| Fee business |
992 | 805 | 23.2 | 569 | 41.5 | |||||||||||||||||||||||||||||||||||
| Owned, leased and managed lease |
29 | 19 | 52.6 | (36 | ) | NM | d | |||||||||||||||||||||||||||||||||
| Insurance activities |
(2 | ) | 4 | NM | d | 1 | NM | d | ||||||||||||||||||||||||||||||||
| System Fund and reimbursable result | 19 | (105 | ) | NM | d | (11 | ) | 854.5 | ||||||||||||||||||||||||||||||||
| Operating profit before exceptional items | 1,038 | 723 | 43.6 | 523 | 38.2 | |||||||||||||||||||||||||||||||||||
| Operating exceptional items | 28 | (95 | ) | NM | d | (29 | ) | 227.6 | ||||||||||||||||||||||||||||||||
| Operating profit | 1,066 | 628 | 69.7 | 494 | 27.1 | |||||||||||||||||||||||||||||||||||
| Net financial expenses | (52 | ) | (96 | ) | (45.8 | ) | (139 | ) | (30.9 | ) | ||||||||||||||||||||||||||||||
| Analysed as: | ||||||||||||||||||||||||||||||||||||||||
| Adjusted interest expensec |
(131 | ) | (122 | ) | 7.4 | (142 | ) | (14.1 | ) | |||||||||||||||||||||||||||||||
| System Fund interest |
44 | 16 | 175.0 | 3 | 433.3 | |||||||||||||||||||||||||||||||||||
| Foreign exchange gains |
35 | 10 | 250.0 | – | – | |||||||||||||||||||||||||||||||||||
| Fair value (losses)/gains on contingent purchase consideration | (4 | ) | 8 | NM | d | 6 | 33.3 | |||||||||||||||||||||||||||||||||
| Profit before tax | 1,010 | 540 | 87.0 | 361 | 49.6 | |||||||||||||||||||||||||||||||||||
| Tax | (260 | ) | (164 | ) | 58.5 | (96 | ) | 70.8 | ||||||||||||||||||||||||||||||||
| Analysed as: | ||||||||||||||||||||||||||||||||||||||||
| Adjusted taxc |
(253 | ) | (194 | ) | 30.4 | (124 | ) | 56.5 | ||||||||||||||||||||||||||||||||
| Tax attributable to System Fund |
(3 | ) | – | NM | d | – | – | |||||||||||||||||||||||||||||||||
| Tax on foreign exchange gains |
3 | 4 | (25.0 | ) | – | – | ||||||||||||||||||||||||||||||||||
| Tax on fair value gains on contingent purchase consideration |
– | – | – | (1 | ) | NM | d | |||||||||||||||||||||||||||||||||
| Tax on exceptional items and exceptional tax |
(7 | ) | 26 | NM | d | 29 | (10.3 | ) | ||||||||||||||||||||||||||||||||
| Profit for the year | 750 | 376 | 99.5 | 265 | 41.9 | |||||||||||||||||||||||||||||||||||
| Adjusted earningse | 635 | 511 | 24.3 | 269 | 90.0 | |||||||||||||||||||||||||||||||||||
| Basic weighted average number of ordinary shares (millions) | 169 | 181 | (6.6 | ) | 183 | (1.1 | ) | |||||||||||||||||||||||||||||||||
| Earnings per ordinary share | ||||||||||||||||||||||||||||||||||||||||
| Basic | 443.8¢ | 207.2¢ | 114.2 | 145.4¢ | 42.5 | |||||||||||||||||||||||||||||||||||
| Adjustedc | 375.7¢ | 282.3¢ | 33.1 | 147.0¢ | 92.1 | |||||||||||||||||||||||||||||||||||
| Dividend per share | 152.3¢ | 138.4¢ | 10.0 | 85.9¢ | 61.1 | |||||||||||||||||||||||||||||||||||
| Average US dollar to sterling exchange rate | $1:£0.80 | $1: £0.81 | (1.2 | ) | $1: £0.73 | 11.0 | ||||||||||||||||||||||||||||||||||
| a | Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’ and to combine System Fund and reimbursables (see ‘New accounting standards and other presentational changes’ on page 172. |
| b | Americas and EMEAA include revenue and operating profit before exceptional items from both fee business and owned, leased and managed lease hotels. Greater China includes revenue and operating profit before exceptional items from fee business. |
| c | Definitions for non-GAAP measures can be found in the ‘Key performance measures and non-GAAP measures’ section on pages 84 to 88 along with reconciliations of these measures to the most directly comparable line items within the Group Financial Statements which can be found on pages 226 to 231. |
| d | Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period. |
| e | Adjusted earnings as used with adjusted earnings per share, a non-GAAP measure. |
| f | Re-presented for a change to the definition of adjusted tax (see page 231). |
| Performance | IHG | Annual Report and Form 20-F 2023 | 65 |
Strategic Report
Performance continued
Group continued
Highlights for the year ended
31 December 2023
Trading improved significantly in the first quarter, as travel in the comparative period of 2022 was impacted by the Omicron variant of Covid-19. From April, the comparatives became subsequently tougher as government-mandated travel restrictions eased in the prior year. Leisure demand in the Americas and EMEAA saw continued strength, supported by improving corporate and group bookings. Greater China rebounded significantly, with RevPAR exceeding pre-pandemic levels in the third quarter. By the fourth quarter, average daily rate remained above pre-pandemic highs and occupancy had recovered to within 1%pt of 2019 levels.
Revenue
Group comparable RevPAR improved year-on-year by 33.0% in the first quarter, 17.1% in the second quarter, 10.5% in the third quarter, 7.6% in the fourth quarter and 16.1% in the full year. When compared to the pre-pandemic levels of 2019, Group comparable RevPAR increased 6.8% in the first quarter, 9.9% in the second quarter, 12.8% in the third quarter, 12.7% in the fourth quarter and 10.9% in the full year. Overall, average daily rate exceeded 2019 levels by 12.7% and occupancy was 1.1%pts lower.
Our other key driver of revenue, net system size, increased by 3.8% year-on-year to 946,203 rooms.
Total revenue increased by $732m (18.8%) to $4,624m, including a $411m increase in System Fund and reimbursable revenue. Revenue from reportable segmentsa increased by $321m (17.4%) to $2,164m, driven by the improved trading conditions. Underlying revenuea increased by $347m to $2,164m, with underlying fee revenuea increasing by $249m. Owned, leased and managed lease revenue increased by $77m.
Operating profit and margin
Operating profit improved by $438m from $628m to $1,066m, including a $123m increase in operating exceptional items, from a $95m charge in 2022 to a $28m income in 2023, and a $124m increase in the reported System Fund and reimbursable result, from a $105m loss in 2022 to a $19m profit in 2023.
Operating profit from reportable segmentsa increased by $191m (23.1%) to $1,019m, with fee business operating profit increasing by $187m (23.2%) to $992m, due to the improvement in trading which drove a $65m increase in incentive management fees to $168m. Owned, leased and managed lease operating profit improved from $19m to $29m. Underlying operating profita increased by $201m (24.6%) to $1,019m.
Fee margina increased by 3.4%pts over the prior year to 59.3% benefitting from the improvement in trading.
The impact of the movement in average USD exchange rates for 2022 compared to 2023 netted to a $2m impact on operating profit from reportable segmentsa when calculated as restating 2022 figures at 2023 exchange rates, but negatively impacted operating profit from reportable segmentsa by $13m when applying 2022 rates to 2023 figures.
If the average exchange rate during January 2024 had existed throughout 2023, the 2023 operating profit from reportable segmentsa would have been $4m lower.
System Fund and reimbursable result
The Group operates a System Fund to collect and administer cash assessments from hotel owners for specified purposes of use including marketing, reservations and the Group’s loyalty programme, IHG One Rewards. The System Fund also benefits from proceeds from the sale of loyalty points under third-party co-branding arrangements. The Fund is not managed to generate a surplus or deficit for IHG over the longer term, but is managed for the benefit of hotels in the IHG system with the objective of driving revenues for the hotels in the system.
The growth in the IHG One Rewards programme means that, although assessments are received from hotels up front when a member earns points, more revenue is deferred each year than is recognised in the System Fund. This can lead to accounting losses in the System Fund each year as the deferred revenue balance grows which do not necessarily reflect the Fund’s cash position and the Group’s capacity to invest.
Reimbursable revenue represents reimbursements of expenses incurred on behalf of managed and franchised properties and relates, predominantly, to payroll costs at managed properties where we are the employer. As IHG record reimbursable expenses based upon costs incurred with no added mark-up, this revenue and related expenses have no impact on either operating profit or net profit for the year.
In the year to 31 December 2023, System Fund and reimbursable revenues increased $411m (20.1%) to $2,460m, driven by the continued strength in travel demand, strong performance of the IHG One Rewards programme since the relaunch in the first half of last year.
The reported System Fund and reimbursable result improved to a $19m profit from a $105m loss, primarily due to the continued strength in travel demand on revenues, partially offset by increased investments in media as well as revenue-driving channels and activities.
Operating exceptional items
Exceptional items are identified by virtue of their size, nature or incidence and are excluded from the calculation of adjusted earnings per ordinary sharea as well as other Non-GAAP measures (see Use of Non-GAAP measures, pages 226 to 231) in order to allow a better understanding of the underlying trading performance and trends of the Group and its reportable segments. Examples of exceptional items can include, but are not restricted to, gains and losses on the disposal of assets, impairment charges and reversals, the costs of individually significant legal cases or commercial disputes and reorganisation costs.
Operating exceptional items totalled $28m income, driven by the following items:
| • | share of profits from the InterContinental New York Barclay associate of $18m, due to an increase in the fair value of the hotel, which resulted in the reversal of an $18m liability recognised in 2022; and |
| • | other operating income of $10m relating to amounts receivable from the Group’s insurer under its business interruption policy for certain owned, leased and managed lease hotels due to Covid-19. |
Further information on exceptional items can be found in note 6 to the Group Financial Statements.
| a | Definitions for Non-GAAP revenue and operating profit measures can be found on pages 84 to 88. Reconciliations of these measures to the most directly comparable line items within the Group Financial Statements can be found on pages 226 to 231. |
| 66 | IHG | Annual Report and Form 20-F 2023 |
Net financial expenses
Net financial expenses decreased to $52m from $96m, including $35m in foreign exchange gains. Adjusted interesta, as reconciled on page 231, and which excludes exceptional finance expenses and foreign exchange gains/losses and adds back interest attributable to the System Fund, increased by $9m to an expense of $131m. The increase in adjusted interestb was primarily driven by an increase in interest attributable to the System Fund of $28m due to increased base rates, offset by an increase in financial income of $17m.
Financial expenses include $78m
(2022: $82m) of total interest costs on public bonds, which are fixed rate debt. Interest expense on lease liabilities was $29m (2022: $29m).
Fair value gains and losses on contingent purchase consideration
Contingent purchase consideration arose on the acquisition of Regent. The net loss of $4m (2022: $8m gain) is principally due to an unfavourable movement in observable US corporate bond rates. The total contingent purchase consideration liability at 31 December 2023 is $69m (31 December 2022: $65m).
Taxation
The adjusted taxa rate for 2023 was 28% (2022: 27%). Taxation within exceptional items totalled a charge of $7m (2022: credit of $26m) and relates to the tax impacts of the operating exceptional items. Tax paid in 2023 totalled $243m (2022: $211m).
IHG pursues an approach to tax that is consistent with its business strategy and its overall business conduct principles. The approach seeks to ensure full compliance with all tax filing, payment and reporting obligations on the basis of communicative and transparent relationships with tax authorities. The IHG Audit Committee reviews IHG’s approach to tax annually, including consideration of the Group’s current tax profile. Further information on tax can be found in note 8 to the Group Financial Statements.
|
IHG’s Approach to Tax policy is available at ihgplc.com/responsible-business under policies. |
Earnings per ordinary share
The Group’s basic earnings per ordinary share is 443.8¢ (2022: 207.2¢). Adjusted earnings per ordinary sharea increased by 93.4¢ to 375.7¢.
Dividends and returns
The Board is proposing a final dividend of 104.0¢ in respect of 2023, which is growth of 10% on 2022. With the interim dividend of 48.3¢ paid in October 2023, the total dividend for the year would therefore be 152.3¢, representing an increase of 10%. The ex-dividend date is Thursday 4 April 2024 and the Record Date is Friday 5 April 2024. The corresponding dividend amount in Pence Sterling per ordinary share will be announced on Thursday 25 April 2024, calculated based on the average of the market exchange rates for the three working days commencing 22 April 2024. Subject to shareholder approval at the AGM on Friday 3 May 2024, the dividend will be paid on Tuesday 14 May 2024.
The dividend payments in 2023 have returned close to $250m to IHG’s shareholders. An additional $750m of surplus capital was returned to shareholders through a share buyback programme that concluded in December 2023. This repurchased 10,643,334 shares at an average price of £55.88 per share and reduced the total number of voting rights in the Company by 6.1%.
The Board has approved a further share buyback programme to return an additional $800m to shareholders in 2024.
Share price and market capitalisation
The IHG share price closed at £70.90 on Friday 29 December 2023, up 49.5% from £47.44 on 30 December 2022. The market capitalisation of the Group at the year-end was £11.7bn.
For discussion of 2022 results, and the changes compared to 2021, refer to the 2022 Annual Report and Form 20-F. The impact of IFRS 17 adoption on those years was not material (see new accounting standards and other presentational changes on page 172)
|
ihgplc.com/investors under Annual Report. |
| a | Definitions for Non-GAAP revenue and operating profit measures can be found on pages 84 to 88. Reconciliations of these measures to the most directly comparable line items within the Group Financial Statements can be found on pages 226 to 231. |
Accounting principles
The Group results are prepared under International Financial Reporting Standards (IFRS) as described on page 161 of the Group Financial Statements. The application of IFRS requires management to make judgements, estimates and assumptions, and those considered critical to the preparation of the Group results are set out on page 162.
The Group discloses certain financial information both including and excluding exceptional items. For comparability of the periods presented, some of the performance indicators in this performance review are calculated after eliminating these exceptional items. An analysis of exceptional items is included in note 6.
| Performance | IHG | Annual Report and Form 20-F 2023 | 67 |
Strategic Report
Performance continued
Group continued
Adjusted EBITDAa reconciliation
| 12 months ended 31 December | ||||||||||||||||||||
| 2023 $m |
2022 $m |
2023 vs 2022 $m change |
2021 $m |
2022 vs 2021 $m change |
||||||||||||||||
| Cash flow from operations | 1,219 | 961 | 848 | |||||||||||||||||
| Cash flows relating to exceptional items | 29 | 43 | 12 | |||||||||||||||||
| Impairment reversal/(loss) on financial assets | 1 | (5) | – | |||||||||||||||||
| Other non-cash adjustments to operating profit | (60) | (61) | (71) | |||||||||||||||||
| System Fund and reimbursable result | (19) | 105 | 11 | |||||||||||||||||
| System Fund depreciation and amortisation | (83) | (86) | (94) | |||||||||||||||||
| Other non-cash adjustments to System Fund result | (23) | (24) | (6) | |||||||||||||||||
| Working capital and other adjustments | (79) | (101) | (110) | |||||||||||||||||
| Capital expenditure: contract acquisition costs (key money), net of repayments | 101 | 64 | 42 | |||||||||||||||||
| Adjusted EBITDAa | 1,086 | 896 | 190 | 632 | 264 | |||||||||||||||
Group Cash Flow summary
| 12 months ended 31 December | ||||||||||||||||||||
| 2023 $m |
2022 $m |
2023 vs 2022 $m change |
2021 $m |
2022 vs 2021 $m change |
||||||||||||||||
| Adjusted EBITDAa | 1,086 | 896 | 190 | 632 | 264 | |||||||||||||||
| Working capital and other adjustments | 79 | 101 | 110 | |||||||||||||||||
| Impairment (reversal)/loss on financial assets | (1) | 5 | – | |||||||||||||||||
| Other non-cash adjustments to operating profit | 60 | 61 | 71 | |||||||||||||||||
| System Fund and reimbursable result | 19 | (105) | (11) | |||||||||||||||||
| Non-cash adjustments to System Fund result | 106 | 110 | 100 | |||||||||||||||||
| Capital expenditure: contract acquisition costs | ||||||||||||||||||||
| (key money) net of repayments | (101) | (64) | (42) | |||||||||||||||||
| Capital expenditure: maintenance | (38) | (44) | (33) | |||||||||||||||||
| Cash flows relating to exceptional items | (29) | (43) | (12) | |||||||||||||||||
| Net interest paid | (83) | (104) | (126) | |||||||||||||||||
| Tax paid | (243) | (211) | (86) | |||||||||||||||||
| Principal element of lease payments | (28) | (36) | (32) | |||||||||||||||||
| Purchase of own shares by employee share trusts | (8) | (1) | – | |||||||||||||||||
| Adjusted free cash flowa | 819 | 565 | 254 | 571 | (6) | |||||||||||||||
| Capital expenditure: gross recyclable investments | (61) | (15) | (5) | |||||||||||||||||
| Capital expenditure: gross System Fund capital investments | (46) | (35) | (19) | |||||||||||||||||
| Deferred purchase consideration paid | – | – | (13) | |||||||||||||||||
| Disposals and repayments, including other financial assets | 8 | 16 | 58 | |||||||||||||||||
| Repurchase of shares, including transaction costs | (790) | (482) | – | |||||||||||||||||
| Dividends paid to shareholders | (245) | (233) | – | |||||||||||||||||
| Dividends paid to non-controlling interest | (3) | – | – | |||||||||||||||||
| Net cash flow before other net debta movements | (318) | (184) | (134) | 592 | (776) | |||||||||||||||
| Add back principal element of lease repayments | 28 | 36 | 32 | |||||||||||||||||
| Exchange and other non-cash adjustments | (131) | 178 | 24 | |||||||||||||||||
| (Increase)/decrease in net debtd | (421) | 30 | (451) | 648 | (618) | |||||||||||||||
| Net debta at the beginning of the year | (1,851) | (1,881) | (2,529) | |||||||||||||||||
| Net debta at the end of the year | (2,272) | (1,851) | (421) | (1,881) | 30 | |||||||||||||||
| a | Definitions for non-GAAP measures can be found in the ‘Key performance measures and non-GAAP measures’ section on pages 84 to 88. |
| 68 | IHG | Annual Report and Form 20-F 2023 |
Cash flow from operations
For the year ended 31 December 2023, cash flow from operations was $1,219m, an increase of $258m on the previous year, primarily reflecting the increase in operating profit. Cash flow from operations is the principal source of cash used to fund interest and tax payments, capital expenditure, ordinary dividend payments and additional returns of capital of the Group.
Adjusted free cash flowa
Adjusted free cash flowa was an inflow of $819m, an increase of $254m on the prior year. Adjusted EBITDAa increased by $190m and the System Fund and reimbursable result improved by $124m due to stronger trading. Net interest paid decreased by $21m primarily due to an increase in interest received of $14m. These were partly offset by a $22m lower working capital and other adjustments cash inflow, an increase in contract acquisition (key money) costs net of repayments of $37m and $32m higher tax payments. Working capital and other adjustments includes $123m of cash inflow related to deferred revenue, driven primarily by the loyalty programme. Exceptional cash costs in the year of $29m includes payments relating to commercial litigation and disputes; in the prior year, the cost of ceasing operations in Russia was also included.
Net and gross capital expenditure
Net capital expenditurea was $157m (2022: $59m) and gross capital expenditurea was $253m (2022: $161m). Gross capital expenditurea comprised: $146m maintenance capex and key money; $61m gross recyclable investments; and $46m System Fund capital investments. Net capital expenditurea includes the offset from $8m proceeds from other financial assets, $7m key money repayments and $81m System Fund depreciation and amortisation.
Net debta
Net debta increased by $421m from $1,851m at 31 December 2022 to $2,272m at 31 December 2023. There were $1,035m of payments related to ordinary dividends and the share buyback programmes during the year. The change in net debta includes adverse net foreign exchange impacts of $105m driven by translation of the Group’s sterling bond debt and $26m of other non-cash adjustments.
Balance sheet
| 2023 $m |
2022 $m |
|||||||||||
| Goodwill and other intangible assets | 1,099 | 1,144 | ||||||||||
| Other non-current assets | 1,585 | 1,394 | ||||||||||
| Cash and cash equivalents | 1,322 | 976 | ||||||||||
| Other current assets | 807 | 702 | ||||||||||
| Total assets | 4,813 | 4,216 | ||||||||||
| Loans and other borrowings | (3,166 | ) | (2,396 | ) | ||||||||
| Other current liabilities | (1,591 | ) | (1,489 | ) | ||||||||
| Other non-current liabilities | (2,002 | ) | (1,939 | ) | ||||||||
| Total liabilities | (6,759 | ) | (5,824 | ) | ||||||||
| Net liabilities | (1,946 | ) | (1,608 | ) | ||||||||
Net liabilities
The Group had net liabilities of $1,946m at 31 December 2023 ($1,608m at 31 December 2022). In accordance with accounting standards, the Group’s internally developed brands are not recorded on the Group’s balance sheet, and its asset-light business model means that most properties from which income is derived are not owned. This does not have an impact on the ability of the Group to raise external funding or the dividend capacity of the Group.
Goodwill and other intangible assets
Goodwill and other intangible assets of $1,099m decreased by $45m compared to the prior year driven by amortisation of software assets. Goodwill and brands have a total net book value of $775m as at 31 December 2023 ($774m as at 31 December 2022). Brands relate to the acquisitions of Kimpton, Regent and Six Senses. They are each considered to have an indefinite life given their strong brand awareness and reputation, and management’s commitment to continued investment in their growth. Goodwill and brands are allocated to cash generating units (CGUs), and they are tested annually for impairment, with no impairment recognised in 2023 given the recoverable amounts of the CGUs exceeded their carrying value. The movement in the year is due to exchange rates.
The remaining balance of intangible assets primarily relates to software ($297m).
Working capital
Trade receivables increased by $87m, from $493m at 31 December 2022 to $580m, primarily due to improved trading in the last quarter of 2023 compared to the last quarter of 2022. Current trade and other payables increased by $14m, primarily due to $13m deferred consideration moving from non-current payables in 2023. Deferred revenue increased by $124m, driven by an increase in the future redeemable points balance related to the loyalty programme.
Cash and borrowings
Net debta of $2,272m (2022: $1,851m) is analysed by currency as follows:
| 2023 $m |
2022 $m |
|||||||||||
| Borrowings | ||||||||||||
| Sterling* | 2,076 | 2,378 | ||||||||||
| US dollar* | 1,481 | 416 | ||||||||||
| Euros | 4 | 4 | ||||||||||
| Other | 33 | 29 | ||||||||||
| Cash and cash equivalents | ||||||||||||
| Sterling | (918 | ) | (380 | ) | ||||||||
| US dollar | (266 | ) | (494 | ) | ||||||||
| Euros | (19 | ) | (15 | ) | ||||||||
| Canadian dollar | (7 | ) | (7 | ) | ||||||||
| Chinese renminbi | (55 | ) | (37 | ) | ||||||||
| Other | (57 | ) | (43 | ) | ||||||||
| Net debta | 2,272 | 1,851 | ||||||||||
| Average net debt level | 2,155 | 1,763 | ||||||||||
| * | Including the impact of derivative financial instruments. |
Cash and cash equivalents includes $30m (2022: $24m) that is not available for use by the Group due to local exchange controls, $14m (2022: $11m) which is restricted for use on capital expenditure under hotel lease agreements and $12m (2022: $12m) subject to contractual and regulatory restrictions.
| g | Information on the maturity profile and interest structure of borrowings is included in notes 22 to 24 to the Group Financial Statements. |
Borrowings included bank overdrafts of $44m (2022: $55m), which were matched by an equivalent amount of cash and cash equivalents under the Group’s cash pooling arrangements. Under these arrangements, each pool contains a number of bank accounts with the same financial institution, and the Group pays interest on net overdraft balances within each pool. Overseas subsidiaries are typically in a cash-positive position and the matching overdrafts are held by the Group’s central treasury company in the UK.
| g | Information on the Group’s approach to allocation of capital resources can be found on pages 12 and 13. |
| a | Definitions for Non-GAAP measures can be found on pages 84 to 88. Reconciliations of these measures to the most directly comparable line items within the Group Financial Statements can be found on pages 226 to 231. |
| Performance | IHG | Annual Report and Form 20-F 2023 | 69 |
Strategic Report
Performance continued
Group continued
|
Sources of liquidity As at 31 December 2023, the Group had total liquidity of $2,572m (31 December 2022: $2,224m), comprising $1,350m of undrawn bank facilities and $1,222m of cash and cash equivalents (net of overdrafts and restricted cash). The change in total liquidity from December 2022 of $348m is primarily due to a new bond issuance of $657m, offset by other net cash outflows of $318m.
In November 2023, the Group issued a €600m 4.375% bond repayable in November 2029. Currency swaps were transacted at the same time as the bond was issued in order to swap the proceeds and interest flows to US Dollars. The currency swaps fix the bond debt at $657m, with interest payable semi-annually at 5.97%.
The Group currently has $3,122m of sterling and euro bonds outstanding. The bonds mature in October 2024 (€500m), August 2025 (£300m), August 2026 (£350m), May 2027 (€500m), October 2028 (£400m) and November 2029 (€600m). There are currency swaps in place on the euro bonds, fixing the October 2024 bond at £454m, the May 2027 bond at £436m and the November 2029 bond at $657m. The Group currently has senior unsecured long-term credit ratings of BBB from S&P and Baa2 from Moody’s.
The Group is further financed by a $1.35bn syndicated bank revolving credit facility (RCF). A one-year extension option was exercised during the year and the facility now matures in 2028. There is a one-year extension option remaining at the lenders discretion. There are two financial covenants: interest cover and leverage ratio. Covenants are tested at half year and full year on a trailing 12-month basis. The interest cover covenant requires a ratio of Covenant EBITDA to Covenant interest payable above 3.5:1 and the leverage ratio requires Covenant net debt to Covenant EBITDA below 4.0:1. At 31 December 2023 the leverage ratio was 2.14 and the interest cover ratio was 12.34. See note 24 to the Financial Statements for further information. The RCF was undrawn at 31 December 2023.
The Group is in compliance with all of the applicable financial covenants in its loan documents, none of which are expected to present a material restriction on funding in the near future.
It is management’s opinion that the available facilities are sufficient for the Group’s present liquidity requirements.
|
|
Off-balance sheet arrangements At 31 December 2023, the Group had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the Group’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Contingent liabilities Contingent liabilities include guarantees over loans made to facilitate third-party ownership of hotels of up to $50m and outstanding letters of credit of $68m. The Group may also be exposed to additional liabilities resulting from litigation and security incidents. See note 30 to the Group Financial Statements for further details. |
Future cash requirements from contractual obligations The Group’s future cash flows arising from contractual commitments relating to long-term debt obligations (including interest payable), derivatives, lease liabilities and other financial liabilities are analysed in note 24 to the Group Financial Statements. Other cash requirements relate to future pension scheme contributions (see note 27 to the Group Financial Statements) and capital commitments (see note 30 to the Group Financial Statements).
The Group also has future commitments for key money payments which are contingent upon future events and may reverse. |
Disaggregation of total gross revenueb in IHG’s System
Total gross revenue provides a measure of the overall strength of the Group’s brands. It comprises total rooms revenue from franchised hotels and total hotel revenue from managed hotels and owned, leased and managed lease hotels and excludes revenue from the System Fund and reimbursement of costs. Other than owned, leased and managed lease hotels, total gross revenue is not revenue attributable to IHG as it is derived from hotels owned by third parties. The definition of this key performance measure can be found on page 84.
| 12 months ended 31 December | ||||||||||||||||||
| 2023 | 2022 | % | ||||||||||||||||
| $bn | $bn | change | c | |||||||||||||||
| Analysed by brand | ||||||||||||||||||
| InterContinental | 5.1 | 4.0 | 26.6 | |||||||||||||||
| Kimpton | 1.3 | 1.2 | 10.0 | |||||||||||||||
| Hotel Indigo | 0.9 | 0.7 | 28.2 | |||||||||||||||
| Crowne Plaza | 3.7 | 3.0 | 23.9 | |||||||||||||||
| Holiday Inn Express | 9.2 | 8.3 | 11.5 | |||||||||||||||
| Holiday Inn | 6.0 | 5.1 | 16.9 | |||||||||||||||
| Staybridge Suites | 1.2 | 1.2 | 6.4 | |||||||||||||||
| Candlewood Suites | 0.9 | 0.8 | 3.7 | |||||||||||||||
| Otherd | 3.3 | 1.5 | 121.5 | |||||||||||||||
| Total | 31.6 | 25.8 | 22.6 | |||||||||||||||
| Analysed by ownership type | ||||||||||||||||||
| Franchisede (revenue not attributable to IHG) |
20.0 | 16.7 | 19.6 | |||||||||||||||
| Managede (revenue not attributable to IHG) |
11.1 | 8.7 | 28.4 | |||||||||||||||
| Owned, leased and managed lease (revenue recognised in Group income statement) |
0.5 | 0.4 | 18.8 | |||||||||||||||
| Total | 31.6 | 25.8 | 22.6 | |||||||||||||||
Total gross revenue in IHG’s system increased by 22.6% (23.4% increase at constant currency) to $31.6bn as a result of improved trading conditions and growth in the number of hotels in our system.
| a | As shown in the Cash Flow summary on page 68. |
| b | Definitions for the key performance measures can be found in the ‘Use of key performance measures and non-GAAP measures’ section, which can be found on pages 84 to 88. Reconciliations of these measures to the most directly comparable line items within the Group Financial Statements can be found on pages 226 to 231. |
| c | Year-on-year percentage movement calculated from source figures. |
| d | Includes Holiday Inn Club Vacations. |
| e | Includes exclusive partner hotels. |
| 70 | IHG | Annual Report and Form 20-F 2023 |
Group hotel and room count
| Hotels | Rooms | |||||||||||||||||||||||
| Change over | Change over | |||||||||||||||||||||||
| At 31 December | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Analysed by brand | ||||||||||||||||||||||||
| Six Senses | 25 | 6 | 1,761 | 395 | ||||||||||||||||||||
| Regent | 10 | 1 | 3,087 | 59 | ||||||||||||||||||||
| InterContinental | 222 | 15 | 73,500 | 3,694 | ||||||||||||||||||||
| Vignette Collection | 11 | 8 | 2,283 | 1,704 | ||||||||||||||||||||
| Kimpton | 78 | 2 | 13,721 | 413 | ||||||||||||||||||||
| Hotel Indigo | 153 | 10 | 20,218 | 1,764 | ||||||||||||||||||||
| voco | 62 | 17 | 15,507 | 5,083 | ||||||||||||||||||||
| HUALUXE | 20 | (1 | ) | 5,529 | (454 | ) | ||||||||||||||||||
| Crowne Plaza | 408 | 5 | 112,232 | 1,813 | ||||||||||||||||||||
| EVEN Hotels | 26 | 4 | 3,931 | 751 | ||||||||||||||||||||
| Holiday Inn Express | 3,171 | 80 | 336,317 | 9,415 | ||||||||||||||||||||
| Holiday Inn | 1,202 | 4 | 215,910 | 351 | ||||||||||||||||||||
| Garner | 2 | 2 | 158 | 158 | ||||||||||||||||||||
| avid hotels | 67 | 8 | 6,027 | 674 | ||||||||||||||||||||
| Atwell Suites | 2 | – | 186 | – | ||||||||||||||||||||
| Staybridge Suites | 325 | 11 | 35,320 | 1,359 | ||||||||||||||||||||
| Holiday Inn Club Vacations | 30 | 2 | 9,526 | 704 | ||||||||||||||||||||
| Candlewood Suites | 376 | 8 | 33,497 | 744 | ||||||||||||||||||||
| Iberostar Beachfront Resorts | 49 | 16 | 17,600 | 5,198 | ||||||||||||||||||||
| Othera | 124 | 1 | 39,893 | 751 | ||||||||||||||||||||
| Total | 6,363 | 199 | 946,203 | 34,576 | ||||||||||||||||||||
| Analysed by ownership type | ||||||||||||||||||||||||
| Franchisedb | 5,356 | 154 | 680,601 | 24,170 | ||||||||||||||||||||
| Managed | 990 | 44 | 261,371 | 10,394 | ||||||||||||||||||||
| Owned, leased and managed lease | 17 | 1 | 4,231 | 12 | ||||||||||||||||||||
| Total | 6,363 | 199 | 946,203 | 34,576 | ||||||||||||||||||||
| During the year, 47,919 rooms (275 hotels) opened, compared to 49,443 rooms (269 hotels) in the prior year which included 12,402 rooms (33 hotels) under the Iberostar Beachfront Resorts brand.
Openings included 18,274 rooms (134 hotels) in the Holiday Inn Brand Family, 5,098 rooms (16 hotels) under the Iberostar Beachfront Resorts brand and the first 158 rooms (two hotels) under Garner, our newly launched conversion brand.
In 2023, 13,343 rooms (76 hotels) left the IHG system, compared to 18,143 rooms (96 hotels) in 2022 which included 6,457 rooms (28 hotels) as part of ceasing operations in Russia. The removals rate of 1.5% was in line with our historical underlying average.
Net system size increased by 3.8% year-on-year to 946,203 rooms.
|
a Includes eight open hotels that will be re-branded to voco and five open hotels that will be re-branded to Vignette Collection.
b Includes exclusive partner hotels. |
Total number of hotels 6,363
Total number of rooms
946,203 |
| Performance | IHG | Annual Report and Form 20-F 2023 | 71 |
Strategic Report
Performance continued
Group continued
Group pipeline
| Hotels | Rooms | |||||||||||||||||||||||
| At 31 December | 2023 | Change over 2022 | 2023 | Change over 2022 | ||||||||||||||||||||
| Analysed by brand | ||||||||||||||||||||||||
| Six Senses | 42 | 4 | 3,057 | 426 | ||||||||||||||||||||
| Regent | 11 | 1 | 2,442 | 132 | ||||||||||||||||||||
| InterContinental | 100 | 10 | 25,271 | 2,690 | ||||||||||||||||||||
| Vignette Collection | 18 | 11 | 2,056 | 1,456 | ||||||||||||||||||||
| Kimpton | 54 | 13 | 10,761 | 2,318 | ||||||||||||||||||||
| Hotel Indigo | 132 | 13 | 20,939 | 1,088 | ||||||||||||||||||||
| voco | 74 | 35 | 12,741 | 2,512 | ||||||||||||||||||||
| HUALUXE | 25 | 4 | 6,343 | 993 | ||||||||||||||||||||
| Crowne Plaza | 126 | 15 | 32,442 | 3,492 | ||||||||||||||||||||
| EVEN Hotels | 33 | 2 | 5,383 | 104 | ||||||||||||||||||||
| Holiday Inn Express | 632 | 15 | 78,019 | 1,284 | ||||||||||||||||||||
| Holiday Inn | 246 | 17 | 45,901 | 1,811 | ||||||||||||||||||||
| Garner | 5 | 5 | 332 | 332 | ||||||||||||||||||||
| avid hotels | 141 | (4 | ) | 11,577 | (808 | ) | ||||||||||||||||||
| Atwell Suites | 41 | 11 | 4,124 | 1,123 | ||||||||||||||||||||
| Staybridge Suites | 164 | 2 | 18,185 | 190 | ||||||||||||||||||||
| Holiday Inn Club Vacations | 2 | 1 | 832 | 680 | ||||||||||||||||||||
| Candlewood Suites | 151 | 27 | 11,957 | 1,689 | ||||||||||||||||||||
| Iberostar Beachfront Resorts | 5 | (10 | ) | 2,240 | (3,825 | ) | ||||||||||||||||||
| Other | 14 | (15 | ) | 2,352 | (2,201 | ) | ||||||||||||||||||
| Total | 2,016 | 157 | 296,954 | 15,486 | ||||||||||||||||||||
| Analysed by ownership type | ||||||||||||||||||||||||
| Franchiseda | 1,426 | 113 | 174,084 | 10,773 | ||||||||||||||||||||
| Managed | 589 | 44 | 122,715 | 4,713 | ||||||||||||||||||||
| Owned, leased and managed lease | 1 | – | 155 | – | ||||||||||||||||||||
| Total | 2,016 | 157 | 296,954 | 15,486 | ||||||||||||||||||||
| At the end of 2023, the global pipeline totalled 296,954 rooms (2,016 hotels), an increase of 15,486 rooms (157 hotels), as signings outpaced openings and terminations. The IHG pipeline represents hotels where a contract has been signed and the appropriate fees paid.
During the year, 79,220 rooms (556 hotels) were signed, compared to 80,338 rooms (467 hotels) in the prior year which included 18,467 rooms (48 hotels) under the Iberostar Beachfront Resorts brand. Signings in 2023 included 30,062 rooms (220 hotels) for the Holiday Inn Brand Family, 808 rooms (13 hotels) under the Six Senses brand and 490 rooms (seven hotels) as part of our newly launched brand, Garner.
|
a Includes exclusive partner hotels. |
Total number of hotels in the pipeline
2,016
Total number of rooms in the pipeline
296,954 |
| 72 | IHG | Annual Report and Form 20-F 2023 |
Americas momentu Our growth m across brand por ourtfolio in us 2023 for fur pther repares acceleration.” Jolyon Bulley Chief Executive Officer, Americas Americas revenue 2023 ($1,105m) Americas number of rooms (519,594) Comparable RevPAR movement on previous year (12 months ended 31 December 2023) Fee business InterContinental 12.0% Kimpton 8.9% Hotel Indigo 4.9% Crowne Plaza 11.2% EVEN Hotels 8.5% Holiday Inn Express 6.4% Holiday Inn 7.2% avid hotels 8.6% Staybridge Suites 6.1% Candlewood Suites 2.4% All brands 7.0% Owned, leased and managed lease All brands 16.8% e continued our growth Wmomentum across our brand portfolio in 2023 by delivering industry-leading guest experiences, driving competitive owner returns and deepening owner relationships. Building on our midscale expertise, we launched Garner, our new conversion brand, and strengthened our Luxury & Lifestyle proposition, preparing us for further acceleration in years to come. Industry performance in 2023 Industry RevPAR in the Americas increased by 14.5% year-on-year (increased by 31.7% against 2019) driven by both average daily rate and occupancy which increased by 12.8% and 0.9%pts, respectively. Canada and Latin America drove RevPAR growth across the region, followed by the US upper upscale and upscale chain scales. US lodging industry growth continued to normalise in 2023, with RevPAR increasing by 4.9% (increased 13.2% against 2019) and average daily rate increasing by 4.3%. Occupancy increased by 0.4%pts on the prior year, as strong recovery in urban locations and group activity was partially offset by increased outbound travel. Room supply increased by 0.3%, while conversion activity accelerated. RevPAR in the US upper midscale chain scale, where the Holiday Inn and Holiday Inn Express brands operate, increased by 4.2%. Industry RevPAR increased by 18.3% in Canada driven by both occupancy and average daily rate increases. RevPAR in Latin America increased by 38.0% and in Mexico RevPAR increased by 1.4%. IHG’s regional performance in 2023 IHG’s comparable RevPAR in the Americas increased by 7.0% compared to 2022 (increased by 13.0% against 2019), driven by a 1.5%pts increase in occupancy and a 4.6% increase in average daily rate. The region is predominantly represented by the US, where comparable RevPAR increased by 5.4% compared to 2022 (increased by 11.1% against 2019), and where we are most weighted towards our upper midscale brands, Holiday Inn and Holiday Inn Express. US RevPAR for the Holiday Inn brand increased by 4.3%, while the Holiday Inn Express brand increased by 5.3%. Comparable RevPAR in Canada increased by 18.7%, while Mexico increased by 15.5%. Kimpton Hotel Monaco, Washington DC, US Performance IHG | Annual Report and Form 20-F 2023 73
Strategic Report
Performance continued
Americas continued
Americas results
| 12 months ended 31 December | ||||||||||||||||||||||||||||||
| 2023 $m |
2022 $m |
2023 vs 2022 % change |
2021 $m |
2022 vs 2021 % change |
||||||||||||||||||||||||||
| Revenue from the reportable segmenta | ||||||||||||||||||||||||||||||
| Fee business | 957 | 879 | 8.9 | 691 | 27.2 | |||||||||||||||||||||||||
| Owned, leased and managed lease | 148 | 126 | 17.5 | 83 | 51.8 | |||||||||||||||||||||||||
| Total | 1,105 | 1,005 | 10.0 | 774 | 29.8 | |||||||||||||||||||||||||
| Operating profit from the reportable segmenta | ||||||||||||||||||||||||||||||
| Fee business | 787 | 741 | 6.2 | 568 | 30.5 | |||||||||||||||||||||||||
| Owned, leased and managed lease | 28 | 20 | 40.0 | (9 | ) | NM | b | |||||||||||||||||||||||
| 815 | 761 | 7.1 | 559 | 36.1 | ||||||||||||||||||||||||||
| Operating exceptional items | 27 | (46 | ) | NM | b | (22 | ) | 109.1 | ||||||||||||||||||||||
| Operating profit | 842 | 715 | 17.8 | 537 | 33.1 | |||||||||||||||||||||||||
| Review of the year ended 31 December 2023 With 519,594 rooms (4,414 hotels), the Americas represented 55% of the Group’s room count. The key profit-generating market is the US, and the Group is also represented in Latin America, Canada, Mexico and the Caribbean. 93% of rooms in the region are operated under the franchised business model, primarily under our brands in the upper midscale segment (including the Holiday Inn Brand Family). In the upscale market segment, Crowne Plaza is predominantly franchised, whereas, in the luxury market segment, InterContinental branded hotels are operated under both franchise and management agreements, while Kimpton is mainly managed. 17 of the Group’s 19 hotel brands are represented in the Americas.
Trading in the Americas was ahead of pre-pandemic levels throughout 2023 and travel demand remained strong. Double-digit RevPAR growth in the first quarter reflected the prior year comparative period being impacted by localised restrictions; from April onwards, the comparatives strengthened, as government-mandated restrictions eased in 2022.
Continued strength in leisure demand resulted in US RevPAR growth ahead of pre-pandemic levels. This was further supported by the return of corporate and group activity through the year.
In Q4, average daily rate increased by 3.1% and occupancy reduced by 1.0%pts year-on-year. Across our US franchised estate, which is weighted to domestic demand in upper midscale hotels, RevPAR was broadly flat in the fourth quarter. The US managed estate, weighted to upper upscale and luxury hotels in urban locations, saw RevPAR increase by 1.8%.
|
Americas comparable RevPAR grew 18% in the first quarter, 6% in the second quarter, 4% in the third quarter, 1% in the fourth quarter and 7% in the full year, all compared to 2022. Compared to 2019, RevPAR increased 11% in the first quarter, 12% in the second quarter, 14% in the third quarter, 14% in the fourth quarter and 13% in the full year.
Revenue from the reportable segmenta increased by $100m (10.0%) to $1,105m. Operating profit increased by $127m to $842m, driven by the increase in revenue, together with a $73m favourable change in exceptional income. Operating profit from the reportable segmenta increased by $54m (7.1%) to $815m.
Revenue and operating profit from the reportable segmenta are further analysed by fee business and owned, leased and managed lease hotels.
Fee business revenuea increased by $78m (8.9%) to $957m. Fee business operating profita increased by $46m (6.2%) to $787m, driven by improved trading. Fee margina decreased to 82.2%, compared to 84.3% in 2022, reflecting cost investment in growth initiatives, including Garner. There were $21m of incentive management fees earned (2022: $18m).
Owned, leased and managed lease revenue increased by $22m to $148m, with comparable RevPAR up 16.8% vs 2022 leading to an increase in owned, leased and managed leased operating profit of $28m compared to $20m in the prior year. |
For discussion of 2022 results, and the changes compared to 2021, refer to the 2022 Annual Report and Form 20-F.
|
||||||
|
a Definitions for Non-GAAP revenue and operating profit measures can be found on pages 84 to 88. Reconciliations of these measures to the most directly comparable line items within the Group Financial Statements can be found on pages 226 to 231.
b Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period.
|
||||||||
| 74 | IHG | Annual Report and Form 20-F 2023 |
Americas hotel and room count
| Hotels |
|
Rooms |
|
|||||||||||||||||||||
| Change over | Change over | |||||||||||||||||||||||
| At 31 December | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Analysed by brand | ||||||||||||||||||||||||
| Six Senses | 1 | 1 | 10 | 10 | ||||||||||||||||||||
| InterContinental | 43 | 1 | 15,674 | 133 | ||||||||||||||||||||
| Vignette Collection | 1 | 1 | 355 | 355 | ||||||||||||||||||||
| Kimpton | 63 | 1 | 10,895 | 291 | ||||||||||||||||||||
| Hotel Indigo | 72 | (1 | ) | 9,578 | (169 | ) | ||||||||||||||||||
| voco | 12 | 4 | 1,299 | 376 | ||||||||||||||||||||
| Crowne Plaza | 106 | (4 | ) | 27,142 | (1,192 | ) | ||||||||||||||||||
| EVEN Hotels | 19 | – | 2,744 | 1 | ||||||||||||||||||||
| Holiday Inn Express | 2,509 | 37 | 228,753 | 3,669 | ||||||||||||||||||||
| Holiday Inn | 688 | (8 | ) | 111,754 | (1,613 | ) | ||||||||||||||||||
| Garner | 2 | 2 | 158 | 158 | ||||||||||||||||||||
| avid hotels | 67 | 8 | 6,027 | 674 | ||||||||||||||||||||
| Atwell Suites | 2 | – | 186 | – | ||||||||||||||||||||
| Staybridge Suites | 303 | 7 | 31,675 | 646 | ||||||||||||||||||||
| Holiday Inn Club Vacations | 30 | 2 | 9,526 | 704 | ||||||||||||||||||||
| Candlewood Suites | 376 | 8 | 33,497 | 744 | ||||||||||||||||||||
| Iberostar Beachfront Resorts | 23 | – | 9,027 | – | ||||||||||||||||||||
| Othera | 97 | (1 | ) | 21,294 | (689 | ) | ||||||||||||||||||
| Total | 4,414 | 58 | 519,594 | 4,098 | ||||||||||||||||||||
| Analysed by ownership type | ||||||||||||||||||||||||
| Franchisedb | 4,242 | 57 | 482,948 | 4,500 | ||||||||||||||||||||
| Managed | 168 | – | 35,309 | (412 | ) | |||||||||||||||||||
| Owned, leased and managed lease | 4 | 1 | 1,337 | 10 | ||||||||||||||||||||
| Total | 4,414 | 58 | 519,594 | 4,098 | ||||||||||||||||||||
| a | Includes four open hotels that will be re-branded to voco. |
| b | Includes exclusive partner hotels. |
|
Total number of hotels 4,414
Total number of rooms 519,594
Gross system size growth was 2.0% year-on-year. We opened 10,405 rooms (101 hotels) during the year, compared to 20,568 rooms (125 hotels) in 2022 which included 9,027 rooms (23 hotels) under the Iberostar Beachfront Resorts brand. Over half of the region’s openings were in our Holiday Inn Brand Family. Openings also included 11 Candlewood Suites, four voco hotels and the first two properties of our newly launched conversion brand, Garner, in the US.
There were 6,307 rooms (43 hotels) removed in the year. The removal rate of 1.2%, up from 0.8% in the prior year, was closer to the historical underlying average of 1.5%. Net system size growth was 0.8% year-on-year.
|
| Performance | IHG | Annual Report and Form 20-F 2023 | 75 |
Strategic Report
Performance continued
Americas continued
Americas pipeline
| Hotels |
|
Rooms |
|
|||||||||||||||||||||
| Change over | Change over | |||||||||||||||||||||||
| At 31 December | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Analysed by brand | ||||||||||||||||||||||||
| Six Senses | 8 | 2 | 474 | 151 | ||||||||||||||||||||
| Regent | 1 | 1 | 167 | 167 | ||||||||||||||||||||
| InterContinental | 12 | 2 | 2,708 | 305 | ||||||||||||||||||||
| Vignette Collection | 3 | 1 | 261 | 86 | ||||||||||||||||||||
| Kimpton | 28 | 4 | 5,518 | 935 | ||||||||||||||||||||
| Hotel Indigo | 31 | 5 | 4,337 | 690 | ||||||||||||||||||||
| voco | 12 | 8 | 1,383 | 636 | ||||||||||||||||||||
| Crowne Plaza | 9 | 2 | 2,210 | 892 | ||||||||||||||||||||
| EVEN Hotels | 11 | 1 | 1,239 | 68 | ||||||||||||||||||||
| Holiday Inn Express | 349 | 9 | 33,463 | 571 | ||||||||||||||||||||
| Holiday Inn | 72 | 7 | 8,639 | 669 | ||||||||||||||||||||
| Garner | 5 | 5 | 332 | 332 | ||||||||||||||||||||
| avid hotels | 141 | (4 | ) | 11,577 | (808 | ) | ||||||||||||||||||
| Atwell Suites | 41 | 11 | 4,124 | 1,123 | ||||||||||||||||||||
| Staybridge Suites | 145 | 3 | 15,351 | 428 | ||||||||||||||||||||
| Holiday Inn Club Vacations | 2 | 1 | 832 | 680 | ||||||||||||||||||||
| Candlewood Suites | 151 | 27 | 11,957 | 1,689 | ||||||||||||||||||||
| Iberostar Beachfront Resorts | 5 | – | 2,240 | (151 | ) | |||||||||||||||||||
| Other | 14 | 1 | 2,352 | 382 | ||||||||||||||||||||
| Total | 1,040 | 86 | 109,164 | 8,845 | ||||||||||||||||||||
| Analysed by ownership type | ||||||||||||||||||||||||
| Franchiseda | 994 | 78 | 101,989 | 7,731 | ||||||||||||||||||||
| Managed | 46 | 8 | 7,175 | 1,114 | ||||||||||||||||||||
| Total | 1,040 | 86 | 109,164 | 8,845 | ||||||||||||||||||||
| a | Includes exclusive partner hotels. |
|
Total number of hotels in the pipeline 1,040
Total number of rooms in the pipeline 109,164
At 31 December 2023, the pipeline totalled 109,164 rooms (1,040 hotels), representing 21% of the region’s system size.
Signings of 28,297 rooms (271 hotels) in 2023, compared to 32,464 rooms (231 hotels) in 2022 which included 11,418 rooms (28 hotels) under the Iberostar Beachfront Resorts brand. The majority of signings were in our midscale and upper midscale brands including the Holiday Inn Brand Family (11,299 rooms, 103 hotels), avid hotels (1,594 rooms, 23 hotels) and Atwell Suites (1,648 rooms, 16 hotels). Other notable signings included eight Kimpton hotels and seven Garner properties.
9,047 rooms (84 hotels) were removed from the pipeline in 2023, compared to 8,180 rooms (78 hotels) in the prior year.
|
| 76 | IHG | Annual Report and Form 20-F 2023 |
EMEAA a We strong delive ored verall 2023 in long by -ter inm vesting growth priority m acarkets ross our .” Kenneth Macpherson Chief Executive Officer, EMEAA EMEAA revenue 2023 ($677m) EMEAA number of rooms (247,267) Comparable RevPAR movement on previous year (12 months ended 31 December 2023) Fee business Six Senses 17.7% InterContinental 26.0% Kimpton 47.1% Hotel Indigo 24.5% voco 10.5% Crowne Plaza 23.7% Holiday Inn Express 21.9% Holiday Inn 23.4% Staybridge Suites 12.5% All brands 23.5% Owned, leased and managed lease All brands 31.8% e delivered a strong overall W2023 by investing in long-term growth across our priority markets. This included opening iconic properties under Regent and Vignette Collection within Luxury & Lifestyle, and creating elevated guest experiences with greater consistency across our brands. We are in a stronger position than before to accelerate growth. Industry performance in 2023 Industry RevPAR in EMEAA increased by 26.0% year-on-year (increased by 26.4% against 2019), driven by an improvement in both occupancy and average daily rate by 6.0%pts and 14.7%, respectively. In Europe, RevPAR increased by 19.3% (increased 28.4% against 2019) driven by both occupancy and average daily rate. In the UK, industry RevPAR increased by 14.5% compared to 2022 (increased 25.9% against 2019), where UK room demand increased by 5.7% and supply increased by 0.4%. In Germany, RevPAR increased by 18.5% (increased 3.0% against 2019). France saw RevPAR increase by 18.1%, driven by a 14.2% increase in average daily rate. RevPAR increased by 37.4% (increased 55.2% against 2019) in the Middle East, driven by average daily rate. Elsewhere in EMEAA, RevPAR in Australia increased 10.8% (increased 21.4% against 2019), Japan increased by 66.0% (increased 10.4% against 2019) and Thailand increased by 58.2% (increased 10.4% against 2019), driven by both occupancy and average daily rate. IHG’s regional performance in 2023 EMEAA comparable RevPAR increased by 23.7% compared to 2022 (increased 15.4% against 2019), driven by a 9.8% increase in average daily rate coupled with a 7.9%pts increase in occupancy. In the UK, the region’s largest market, RevPAR increased by 13.7% compared to 2022 (increased by 16.9% against 2019). Germany saw a RevPAR increase of 27.0% and France increased by 23.3%. RevPAR in the Middle East increased by 11.7% (increased 13.2% against 2019), with the fourth quarter down 1% as the comparative period benefitted from FIFA World Cup. India increased by 27.3% (increased 37.0% against 2019). Elsewhere in EMEAA, the variances in performance largely reflected the timing of travel restrictions being lifted in the prior year. RevPAR increased in Australia by 18.5% (increased 14.2% against 2019), increased by 57.3% (decreased 5.6% against 2019) in Japan and increased by 67.9% (increased 14.7% against 2019) in Thailand. Crowne Plaza, Ankara, Turkey Performance IHG | Annual Report and Form 20-F 2023 77
Strategic Report
Performance continued
EMEAA continued
EMEAA results
| 12 months ended 31 December | ||||||||||||||||||||||||||||
| 2023 $m |
2022 $m |
2023 vs 2022 % change |
2021 $m |
2022 vs 2021 % change |
||||||||||||||||||||||||
| Revenue from the reportable segmenta | ||||||||||||||||||||||||||||
| Fee business | 354 | 284 | 24.6 | 149 | 90.6 | |||||||||||||||||||||||
| Owned, leased and managed lease | 323 | 268 | 20.5 | 154 | 74.0 | |||||||||||||||||||||||
| Total | 677 | 552 | 22.6 | 303 | 82.2 | |||||||||||||||||||||||
| Operating profit/(loss) from the reportable segmenta | ||||||||||||||||||||||||||||
| Fee business | 214 | 153 | 39.9 | 32 | 378.1 | |||||||||||||||||||||||
| Owned, leased and managed lease | 1 | (1 | ) | NM | b | (27 | ) | (96.3) | ||||||||||||||||||||
| 215 | 152 | 41.4 | 5 | NMb | ||||||||||||||||||||||||
| Operating exceptional items | 1 | (49 | ) | NM | b | (7 | ) | 600.0 | ||||||||||||||||||||
| Operating profit | 216 | 103 | 109.7 | (2 | ) | NMb | ||||||||||||||||||||||
|
Review of the year ended 31 December 2023 Comprising 247,267 rooms (1,237 hotels) at the end of 2023, EMEAA represented 26% of the Group’s room count. Revenues are primarily generated from hotels in the UK and gateway cities in continental Europe, the Middle East and Asia. The largest proportion of rooms in the UK and continental Europe are operated under the franchised business model, primarily under our upper midscale brands (Holiday Inn and Holiday Inn Express). In the upscale market segment, Crowne Plaza is evenly proportioned between the franchised and managed operating models, whereas in the luxury market segment, the majority of InterContinental branded hotels are operated under management agreements. The majority of hotels in markets outside Europe are operated under the managed business model.
Through the year, the dispersion of RevPAR performance across the region narrowed as the easing of travel restrictions impacted trading in all markets. RevPAR rebounded significantly in the first half of the year when compared to 2022; with the pace of recovery in the second half reflecting performance in the comparable prior period. Leisure travel remained the strongest category, with corporate bookings and group activity continuing to improve as the year went on.
The UK, which saw one of the earlier easing of restrictions in the prior year, saw RevPAR up 13.7%. Continental Europe increased by 25.5%, Australia increased by 18.5% and South East Asia & Korea increased by 41.5%. Elsewhere, RevPAR in the Middle East increased 11.7%, as Q4 in the prior year benefitted from the FIFA World Cup. RevPAR in Saudi Arabia increased by 21.2% and India increased by 27.3%.
|
|
EMEAA comparable RevPAR increased 64% in the first quarter, 27% in the second quarter, 16% in the third quarter, 7% in the fourth quarter and 24% in the full year, all compared to 2022. Compared to 2019, RevPAR increased 10% in the first quarter, 15% in the second quarter, 17% in the third quarter, 19% in the fourth quarter and 15% in the full year.
Revenue from the reportable segmenta increased by $125m (22.6%) to $677m. Operating profit increased by $113m to $216m, driven by improved trading, together with the non-recurrence of the $49m of operating exceptional charges in the prior year. Operating profit from the reportable segmenta increased by $63m to $215m profit. Incentive management fees earned improved to $101m (2022: $69m).
Revenue and operating profit from the reportable segmenta are further analysed by fee business and owned, leased and managed lease hotels.
Fee business revenuea increased by $70m (24.6%) to $354m. Fee business operating profita increased to $214m from $153m in the prior year, driven by the improvement in trading. Fee margina recovered to 60.5% in 2023, compared to 52.7% in 2022.
Owned, leased and managed lease revenue increased by $55m to $323m, with comparable RevPAR up 32% vs 2022. The easing of trading challenges on this largely urban-centred portfolio resulted in an owned, leased and managed lease operating profit of $1m, up from a $1m loss in 2022. |
For discussion of 2022 results, and the changes compared to 2021, refer to the 2022 Annual Report and Form 20-F.
|
|||||
|
a Definitions for Non-GAAP revenue and operating profit measures can be found on pages 84 to 88. Reconciliations of these measures to the most directly comparable line items within the Group Financial Statements can be found on pages 226 to 231.
b Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period.
|
| 78 | IHG | Annual Report and Form 20-F 2023 |
EMEAA hotel and room count
| Hotels | Rooms | |||||||||||||||||||||
| At 31 December | 2023 | Change over 2022 |
2023 | Change over 2022 |
||||||||||||||||||
| Analysed by brand | ||||||||||||||||||||||
| Six Senses | 23 | 5 | 1,621 | 385 | ||||||||||||||||||
| Regent | 4 | – | 1,036 | (77) | ||||||||||||||||||
| InterContinental | 119 | 8 | 34,443 | 1,582 | ||||||||||||||||||
| Vignette Collection | 7 | 4 | 1,206 | 627 | ||||||||||||||||||
| Kimpton | 12 | – | 2,376 | (21) | ||||||||||||||||||
| Hotel Indigo | 58 | 7 | 7,029 | 1,296 | ||||||||||||||||||
| voco | 38 | 9 | 11,791 | 3,865 | ||||||||||||||||||
| Crowne Plaza | 178 | (4 | ) | 43,285 | (657) | |||||||||||||||||
| Holiday Inn Express | 349 | 8 | 51,488 | 1,613 | ||||||||||||||||||
| Holiday Inn | 382 | 8 | 69,330 | 1,463 | ||||||||||||||||||
| Staybridge Suites | 22 | 4 | 3,645 | 713 | ||||||||||||||||||
| Iberostar Beachfront Resorts | 26 | 16 | 8,573 | 5,198 | ||||||||||||||||||
| Othera | 19 | 3 | 11,444 | 1,616 | ||||||||||||||||||
| Total | 1,237 | 68 | 247,267 | 17,603 | ||||||||||||||||||
| Analysed by ownership type | ||||||||||||||||||||||
| Franchisedb | 839 | 37 | 140,830 | 8,914 | ||||||||||||||||||
| Managed | 385 | 31 | 103,543 | 8,687 | ||||||||||||||||||
| Owned, leased and managed lease | 13 | – | 2,894 | 2 | ||||||||||||||||||
| Total | 1,237 | 68 | 247,267 | 17,603 | ||||||||||||||||||
| a | Includes three open hotels that will be re-branded to voco and five open hotels that will be re-branded to Vignette Collection. |
| b | Includes exclusive partner hotels. |
EMEAA pipeline
| Hotels | Rooms | |||||||||||||||||||||
| Change over | Change over | |||||||||||||||||||||
| At 31 December | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||
| Analysed by brand | ||||||||||||||||||||||
| Six Senses | 30 | 2 | 2,350 | 275 | ||||||||||||||||||
| Regent | 7 | 1 | 1,468 | 100 | ||||||||||||||||||
| InterContinental | 56 | 5 | 13,510 | 1,714 | ||||||||||||||||||
| Vignette Collection | 14 | 9 | 1,523 | 1,098 | ||||||||||||||||||
| Kimpton | 15 | 7 | 2,365 | 831 | ||||||||||||||||||
| Hotel Indigo | 53 | 7 | 8,309 | 265 | ||||||||||||||||||
| voco | 51 | 19 | 8,907 | 80 | ||||||||||||||||||
| Crowne Plaza | 49 | 9 | 11,529 | 1,152 | ||||||||||||||||||
| Holiday Inn Express | 89 | 1 | 13,309 | 110 | ||||||||||||||||||
| Holiday Inn | 86 | 2 | 16,122 | (314) | ||||||||||||||||||
| Staybridge Suites | 19 | (1 | ) | 2,834 | (238) | |||||||||||||||||
| Iberostar Beachfront Resorts | – | (10 | ) | – | (3,674) | |||||||||||||||||
| Othera | – | (16 | ) | – | (2,583) | |||||||||||||||||
| Total | 469 | 35 | 82,226 | (1,184) | ||||||||||||||||||
| Analysed by ownership type | ||||||||||||||||||||||
| Franchiseda | 174 | 10 | 24,516 | (2,172) | ||||||||||||||||||
| Managed | 294 | 25 | 57,555 | 988 | ||||||||||||||||||
| Owned, leased and managed lease | 1 | – | 155 | – | ||||||||||||||||||
| Total | 469 | 35 | 82,226 | (1,184) | ||||||||||||||||||
| a | Includes exclusive partner hotels. |
|
Total number of hotels 1,237
Total number of rooms 247,267
Gross system size growth was 9.2% year-on-year. During the year, 21,174 rooms (87 hotels) opened, an increase of 4,963 rooms (8 hotels) compared to 2022. Openings included 4,700 rooms (26 hotels) in our Holiday Inn Brand Family and 5,098 rooms (16 hotels) under our Iberostar Beachfront Resorts brand. Other notable openings included four Vignette Collection hotels representing new country entries for the brand, eight InterContinental hotel openings and four Six Senses properties.
3,571 rooms (19 hotels) were removed in the year, two thirds less than in the prior year (10,747 rooms, 47 hotels) which included 6.5k (28 hotels) related to the ceasing of operations in Russia. Net system size increased 7.7% year-on-year.
Total number of hotels in the pipeline
469
Total number of rooms in the pipeline 82,226
At 31 December 2023, the EMEAA pipeline totalled 82,226 rooms (469 hotels), representing 33% of the region’s system size.
Signings of 24,787 rooms (151 hotels) in 2023, compared to 25,847 rooms (128 hotels) in the prior year which included 7,049 rooms (20 hotels) under the Iberostar Beachfront Resort brand. Over a quarter of signings were in the luxury segment including 2,500 rooms (12 hotels) under Vignette Collection and 531 rooms (six hotels) under the Six Senses brand.
|
| Performance | IHG | Annual Report and Form 20-F 2023 | 79 |
(12 months ended 31 December 2023) s the Chinese economy recovered, Awe welcomed guests back with evolved brand offerings and supported owners with enhanced enterprise delivery, resulting in performance across our hotels exceeding pre-pandemic levels. Alongside the debut of Vignette Collection and the Regent on the Bund in Shanghai, we celebrated the opening of our 700th hotel, underlining our continued rapid growth in Greater China. Industry performance in 2023 The industry saw strong recovery across Greater China in 2023 following the lifting of localised lockdowns at the end of the prior year. Industry RevPAR in Greater China increased by 61.1% compared to 2022 (decreased by 0.8% against 2019). Supply increased by 3.3% and demand increased 40.2%. RevPAR across all tiers increased compared to 2022. Tier 1 cities saw a 68.8% increase in RevPAR, as room demand increased by 44.4%. In Tier 2 cities, RevPAR increased 47.2%, driven by both occupancy and average daily rate, while in Tier 3 cities, RevPAR increased by 43.9%. In Tier 4 cities, RevPAR increased by 55.0%, driven by demand increasing by 39.3%. RevPAR in Hong Kong SAR increased by 70.3% driven by average daily rate which increased 34.2%. Macau SAR RevPAR increased 391.9%, with demand increasing 175.0% driven by inbound Mainland China travel. IHG’s regional performance in 2023 IHG’s comparable RevPAR in Greater China increased by 71.7% compared to 2022 (increased by 0.7% against 2019), driven by a 19.1%pts increase in occupancy and an 18.0% increase in average daily rate as trading conditions improved following the lifting of travel restrictions in December 2022. In Mainland China, RevPAR increased by 70.7%. Tier 1 cities increased by 96.6% as they benefitted from domestic leisure and the prior year comparables reflecting travel restrictions, comparedto 61.6% in Tier 2-4 cities. RevPAR in Hong Kong SAR increased by 93.8% while RevPAR in Macau SAR increased by 279.9%. Crowne Plaza Hotel & Suites Landmark Shenzhen, China
Greater China results
| 12 months ended 31 December | ||||||||||||||||||||||||||||
| |
2023 $m |
|
|
2022 $m |
|
|
2023 vs 2022 % change |
|
|
2021 $m |
|
2022 vs 2021 % change |
||||||||||||||||
| Revenue from the reportable segmenta | ||||||||||||||||||||||||||||
| Fee business | 161 | 87 | 85.1 | 116 | (25.0) | |||||||||||||||||||||||
| Total | 161 | 87 | 85.1 | 116 | (25.0) | |||||||||||||||||||||||
| Operating profit from the reportable segmenta | ||||||||||||||||||||||||||||
| Fee business | 96 | 23 | 317.4 | 58 | (60.3) | |||||||||||||||||||||||
| Operating profit | 96 | 23 | 317.4 | 58 | (60.3) | |||||||||||||||||||||||
|
Review of the year ended 31 December 2023 Comprising 179,342 rooms (712 hotels) at 31 December 2023, Greater China represented approximately 20% of the Group’s room count. The majority of rooms in Greater China operate under the managed business model, although the franchised segment continues to grow, representing approximately one-third of the region’s open rooms.
Following the lifting of localised travel restrictions in December 2022, the trading conditions in Greater China rebounded significantly through 2023. Monthly RevPAR growth against the prior year peaked in the March to May period, lapping the travel restrictions in place in the comparable prior period, with RevPAR peaking in April, up more than 170% year-on-year; by July and August, RevPAR was up 40% and 38% respectively as leisure demand was strong in the prior summer period; the fourth quarter saw RevPAR improve to 72% year-on-year, as more restrictions were re-introduced in the prior year comparative period.
For the year, Tier 1 cities saw RevPAR up 97% as they lapped travel restrictions in place in the comparable period, and benefitted from increased domestic travel.
Tier 2-4 cities saw RevPAR increase 62% reflecting the lesser impact from Covid-19 in 2022.
Compared to 2022, overall Greater China RevPAR increased 75% in the first quarter and 110% in the second quarter, as the comparable prior year trading was impacted by travel restrictions, before increasing 43% in the third quarter and 72% in the fourth quarter, with 72% in the full year. Compared to 2019, RevPAR declined 9% in the first quarter, declined 1% in the second quarter, increased 9% in the third quarter, before declining 1% in the fourth quarter, with the full year increasing 1%.
|
Revenue from the reportable segmenta in 2023 increased by $74m (85.1%) to $161m and operating profit increased by $73m (317.4%) to $96m. The improvement in trading at our managed hotels led to incentive management fees increasing from $16m in 2022 to $46m in 2023. Fee margina increased to 59.6%, compared to 26.4% in 2022.
|
|||||
|
For discussion of 2022 results, and the changes compared to 2021, refer to the 2022 Annual Report and Form 20-F.
|
||||||
|
a Definitions for Non-GAAP revenue and operating profit measures can be found on pages 84 to 88. Reconciliations of these measures to the most directly comparable line items within the Group Financial Statements can be found on pages 226 to 231.
|
||||||
| Performance | IHG | Annual Report and Form 20-F 2023 | 81 |
Strategic Report
Performance continued
Greater China continued
Greater China hotel and room count
| Hotels | Rooms | |||||||||||||||||||||||||||||||
| Change over | Change over | |||||||||||||||||||||||||||||||
| At 31 December | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||
| Analysed by brand | ||||||||||||||||||||||||||||||||
| Six Senses | 1 | – | 130 | – | ||||||||||||||||||||||||||||
| Regent | 6 | 1 | 2,051 | 136 | ||||||||||||||||||||||||||||
| InterContinental | 60 | 6 | 23,383 | 1,979 | ||||||||||||||||||||||||||||
| Vignette Collection | 3 | 3 | 722 | 722 | ||||||||||||||||||||||||||||
| Kimpton | 3 | 1 | 450 | 143 | ||||||||||||||||||||||||||||
| Hotel Indigo | 23 | 4 | 3,611 | 637 | ||||||||||||||||||||||||||||
| voco | 12 | 4 | 2,417 | 842 | ||||||||||||||||||||||||||||
| HUALUXE | 20 | (1 | ) | 5,529 | (454 | ) | ||||||||||||||||||||||||||
| Crowne Plaza | 124 | 13 | 41,805 | 3,662 | ||||||||||||||||||||||||||||
| EVEN Hotels | 7 | 4 | 1,187 | 750 | ||||||||||||||||||||||||||||
| Holiday Inn Express | 313 | 35 | 56,076 | 4,133 | ||||||||||||||||||||||||||||
| Holiday Inn | 132 | 4 | 34,826 | 501 | ||||||||||||||||||||||||||||
| Othera | 8 | (1 | ) | 7,155 | (176 | ) | ||||||||||||||||||||||||||
| Total | 712 | 73 | 179,342 | 12,875 | ||||||||||||||||||||||||||||
| Analysed by ownership type | ||||||||||||||||||||||||||||||||
| Franchised | 275 | 60 | 56,823 | 10,756 | ||||||||||||||||||||||||||||
| Managed | 437 | 13 | 122,519 | 2,119 | ||||||||||||||||||||||||||||
| Total | 712 | 73 | 179,342 | 12,875 | ||||||||||||||||||||||||||||
| a | Includes one open hotel that will be re-branded to voco. |
Greater China pipeline
| Hotels | Rooms | |||||||||||||||||||||||||||||||
| Change over | Change over | |||||||||||||||||||||||||||||||
| At 31 December | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||
| Analysed by brand | ||||||||||||||||||||||||||||||||
| Six Senses | 4 | – | 233 | – | ||||||||||||||||||||||||||||
| Regent | 3 | (1 | ) | 807 | (135 | ) | ||||||||||||||||||||||||||
| InterContinental | 32 | 3 | 9,053 | 671 | ||||||||||||||||||||||||||||
| Vignette Collection | 1 | 1 | 272 | 272 | ||||||||||||||||||||||||||||
| Kimpton | 11 | 2 | 2,878 | 552 | ||||||||||||||||||||||||||||
| Hotel Indigo | 48 | 1 | 8,293 | 133 | ||||||||||||||||||||||||||||
| voco | 11 | 8 | 2,451 | 1,796 | ||||||||||||||||||||||||||||
| HUALUXE | 25 | 4 | 6,343 | 993 | ||||||||||||||||||||||||||||
| Crowne Plaza | 68 | 4 | 18,703 | 1,448 | ||||||||||||||||||||||||||||
| EVEN Hotels | 22 | 1 | 4,144 | 36 | ||||||||||||||||||||||||||||
| Holiday Inn Express | 194 | 5 | 31,247 | 603 | ||||||||||||||||||||||||||||
| Holiday Inn | 88 | 8 | 21,140 | 1,456 | ||||||||||||||||||||||||||||
| Total | 507 | 36 | 105,564 | 7,825 | ||||||||||||||||||||||||||||
| Analysed by ownership type | ||||||||||||||||||||||||||||||||
| Franchised | 258 | 25 | 47,579 | 5,214 | ||||||||||||||||||||||||||||
| Managed | 249 | 11 | 57,985 | 2,611 | ||||||||||||||||||||||||||||
| Total | 507 | 36 | 105,564 | 7,825 | ||||||||||||||||||||||||||||
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|
|
Total number of hotels 712
Total number of rooms 179,342
Gross system size growth was 9.8% year-on-year, with 16,340 rooms (87 hotels) added to our system in 2023, an increase from 12,664 rooms (65 hotels) in 2022. Openings were mainly in our Holiday Inn Brand family (7,552 rooms, 51 hotels), with a further four voco properties, three Vignette Collection hotels and our sixth Regent hotel in the region.
Removals included 3,465 rooms (14 hotels) in the year, representing a removal rate of 2.1%. Net system size growth was 7.7% year-on-year.
Total number of hotels in the pipeline 507
Total number of rooms in the pipeline 105,564
As at 31 December 2023, the pipeline totalled 105,564 rooms (507 hotels), representing 59% of the region’s system size.
Signings of 26,136 rooms (134 hotels) were ahead of last year by 4,109 rooms (26 hotels). Almost half of signings were in our Holiday Inn Brand family. Other notable signings included 17 Crowne Plaza hotels, 12 voco hotels and three Kimpton properties.
|
| 82 | IHG | Annual Report and Form 20-F 2023 |
Central
Central results
| 12 months ended 31 December | ||||||||||||||||||||||||||||||||||||||||
| 2023 $m |
2022 $m |
2023 vs 2022 % change |
2021 $m |
2022 vs 2021 % change |
||||||||||||||||||||||||||||||||||||
| Revenue | 221 | 199 | 11.1 | 197 | 1.0 | |||||||||||||||||||||||||||||||||||
| Gross costs | (328 | ) | (307 | ) | 6.8 | (285 | ) | 7.7 | ||||||||||||||||||||||||||||||||
| (107 | ) | (108 | ) | (0.9 | ) | (88 | ) | 22.7 | ||||||||||||||||||||||||||||||||
| Operating loss | (107 | ) | (108 | ) | (0.9 | ) | (88 | ) | 22.7 | |||||||||||||||||||||||||||||||
| Review of the year ended 31 December 2023 Central revenue, which is mainly comprised of technology fee income and revenue from insurance activities, increased by $22m (11.1%) to $221m. Central revenue was primarily driven by the growth of IHG system size and the insurance programme. |
Gross costs increased by $21m (6.8%) year-on-year, driven by $12m increase in the insurance programme which was matched by associated revenues and by investment spend to support growth initiatives, including the integration of Iberostar Beachfront Resorts. | The resulting $107m operating loss was a decrease of $1m year-on-year. |
Regent Hotel, Shanghai on the Bund, China
| Performance | IHG | Annual Report and Form 20-F 2023 | 83 |
Strategic Report
Performance continued
Key performance measures and non-GAAP measures
Key performance measures and non-GAAP measures used by management
The Annual Report and Form 20-F presents certain financial measures when discussing the Group’s performance which are not measures of financial performance or liquidity under International Financial Reporting Standards (IFRS). In management’s view, these measures provide investors and other stakeholders with an enhanced understanding of IHG’s operating performance, profitability, financial strength and funding requirements. These measures do not have standardised meanings under IFRS, and companies do not necessarily calculate these in the same way. As these measures exclude certain items (for example, impairment and the costs of individually significant legal cases or commercial disputes), they may be materially different to the measures prescribed by IFRS and may result in a more favourable view of performance. Accordingly, they should be viewed as complementary to, and not as a substitute for, the measures prescribed by IFRS and as included in the Group Financial Statements (see pages 154 to 160).
| Linkage of performance measures to Directors’ remuneration and KPIs |
|
See pages 116 to 140 for more information on Directors’ remuneration and pages 60 to 63 for more information on KPIs. |
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Annual Performance Plan |
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Long Term Incentive Plan |
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Key Performance Indicators | |||||||||||
| Measure | Commentary | |||
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| Global revenue per available room (RevPAR) growth
RevPAR, average daily rate and occupancy statistics are disclosed on pages 232 to 234. |
RevPAR is the primary metric used by management to track hotel performance across regions and brands. RevPAR is also a commonly used performance measure in the hotel industry. RevPAR comprises IHG’s System (see Glossary, page 268) rooms revenue divided by the number of room nights available and can be derived from occupancy rate multiplied by the average daily rate (ADR). ADR is rooms revenue divided by the number of room nights sold.
References to RevPAR, occupancy and ADR are presented on a comparable basis, comprising groupings of hotels that have traded in all months in both the current and comparable year. The principal exclusions in deriving this measure are new hotels (including those acquired), hotels closed for major refurbishment and hotels sold in either of the comparable years.
RevPAR and ADR are quoted at a constant US$ conversion rate, in order to allow a better understanding of the comparable year-on-year trading performance excluding distortions created by fluctuations in currency movements.
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| Total gross revenue from hotels in IHG’s System
Owned, leased and managed lease revenue as recorded in the Group Financial Statements is reconciled to total gross revenue on page 70. |
Total gross revenue is revenue not wholly attributable to IHG; however, management believes this measure is meaningful to investors and other stakeholders as it provides a measure of System performance, giving an indication of the strength of IHG’s brands and the combined impact of IHG’s growth strategy and RevPAR performance.
Total gross revenue refers to revenue which IHG has a role in driving and from which IHG derives an income stream. IHG’s business model is described on pages 10 to 13. Total gross revenue comprises:
• Total rooms revenue from franchised hotels;
• Total hotel revenue from managed and exclusive partner hotels including food and beverage, meetings and other revenues, reflecting the value driven by IHG and the base upon which fees are typically earned; and
• Total hotel revenue from owned, leased and managed lease hotels.
Other than total hotel revenue from owned, leased and managed lease hotels, total gross revenue is not revenue attributable to IHG as these managed, franchised and exclusive partner hotels are owned by third parties.
Total gross revenue is used to describe this measure as it aligns with terms used in the Group’s management, franchise and exclusive partner agreements and, therefore, is well understood by owners and other stakeholders.
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| 84 | IHG | Annual Report and Form 20-F 2023 |
| Measure |
Commentary |
|||
| Revenue and operating profit measures The reconciliation of the most directly comparable line item within the Group Financial Statements (i.e. total revenue and operating profit, accordingly) to the non-IFRS revenue and operating profit measures is included on pages 226 to 231. |
Revenue and operating profit from (1) fee business, (2) owned, leased and managed lease hotels, and (3) insurance activities are described as ‘revenue from reportable segments’ and ‘operating profit from reportable segments’, respectively, within note 2 to the Group Financial Statements. These measures are presented insofar as they relate to each of the Group’s regions and its Central functions.
Management believes revenue and operating profit from reportable segments are meaningful to investors and other stakeholders as they exclude the following elements and reflect how management monitors the business:
• System Fund and reimbursables – the System Fund is not managed to generate a surplus or deficit for IHG over the longer term, it is managed for the benefit of the hotels within the IHG system. As described within the Group’s accounting policies (page 164), the System Fund is operated to collect and administer cash assessments from hotel owners for specific purposes of use including marketing, the Guest Reservation System and hotel loyalty programme. |
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| As described within the Group’s accounting policies (page 164), there is a cost equal to reimbursable revenues so there is no profit impact. Cost reimbursements are not applicable to all hotels, and growth in these revenues is not reflective of growth in the performance of the Group. As such, management does not include these revenues in their analysis of results. |
||||
| • Exceptional items – these are identified by virtue of either their size, nature or incidence with consideration given to consistency of treatment with prior years and between gains and losses. Exceptional items include, but are not restricted to, gains and losses on the disposal of assets, impairment charges and reversals, the costs of individually significant legal cases or commercial disputes and reorganisation costs. As each item is different in nature and scope, there will be little continuity in the detailed composition and size of the reported amounts which affect performance in successive periods. Separate disclosure of these amounts facilitates the understanding of performance including and excluding such items. The Group’s accounting policy for exceptional items and further detail of those items presented as such are included in the Group Financial Statements (see pages 165 and 179 to 180). |
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| In further discussing the Group’s performance in respect of revenue and operating profit, additional non-IFRS measures are used and explained further below: | ||||
| • Underlying revenue; |
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| • Underlying operating profit; |
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| • Underlying fee revenue; and |
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| • Fee margin. |
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| Operating profit measures are, by their nature, before interest and tax. The Group’s reported operating profit additionally excludes fair value changes in contingent purchase consideration, which relates to financing of acquisitions. Management believes such measures are useful for investors and other stakeholders when comparing performance across different companies as interest and tax can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. | ||||
| Although management believes these measures are useful to investors and other stakeholders in assessing the Group’s ongoing financial performance and provide improved comparability between periods, there are limitations in their use as compared to measures of financial performance under IFRS. As such, they should not be considered in isolation or viewed as a substitute for IFRS measures. In addition, these measures may not necessarily be comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation.
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| Underlying revenue and underlying operating profit | These measures adjust revenue from reportable segments and operating profit from reportable segments, respectively, to exclude revenue and operating profit generated by owned, leased and managed lease hotels which have been disposed, and significant liquidated damages, which are not comparable year-on-year and are not indicative of the Group’s ongoing profitability. The revenue and operating profit of current year acquisitions are also excluded as these obscure underlying business results and trends when comparing to the prior year. In addition, in order to remove the impact of fluctuations in foreign exchange, which would distort the comparability of the Group’s operating performance, prior year measures are restated at constant currency using current year exchange rates. | |||
| Management believes these are meaningful to investors and other stakeholders to better understand comparable year-on-year trading and enable assessment of the underlying trends in the Group’s financial performance.
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| Performance | IHG | Annual Report and Form 20-F 2023 | 85 |
Strategic Report
Performance continued
Key performance measures and non-GAAP measures continued
| Measure |
Commentary |
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| Revenue and operating profit measures continued Underlying fee revenue growth
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Underlying fee revenue is used to calculate underlying fee revenue growth. Underlying fee revenue is calculated on the same basis as underlying revenue as described above but for the fee business only and to exclude revenue and operating profit from insurance activities, which are not a core part of the Group’s trading operations.
Management believes underlying fee revenue is meaningful to investors and other stakeholders as an indicator of IHG’s ability to grow the core fee-based business, aligned to IHG’s asset-light strategy. |
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| Fee margin
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Fee margin is presented at actual exchange rates and is a measure of the profit arising from fee revenue. Fee margin is calculated by dividing ‘fee operating profit’ by ‘fee revenue’. Fee revenue and fee operating profit are calculated from revenue from reportable segments and operating profit from reportable segments, as defined above, adjusted to exclude revenue and operating profit from the Group’s owned, leased and managed lease hotels as well as from insurance activities and significant liquidated damages.
Management believes fee margin is meaningful to investors and other stakeholders as an indicator of the sustainable long-term growth in the profitability of IHG’s core fee-based business, as the scale of IHG’s operations increases with growth in IHG’s system size. |
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| Adjusted interest Financial income and financial expenses as recorded in the Group Financial Statements is reconciled to adjusted interest on page 231. |
Adjusted interest is presented before exceptional items and excludes foreign exchange gains/losses primarily related to the Group’s internal funding structure and the following items of interest which are recorded within the System Fund:
• Interest income is recorded in the System Fund on the outstanding cash balance relating to the IHG loyalty programme. These interest payments are recognised as interest expense for IHG.
• Other components of System Fund interest income and expense, including capitalised interest, lease interest expense and interest income on overdue receivables.
Given results related to the System Fund are excluded from adjusted measures used by management, these are excluded from adjusted interest and adjusted earnings per ordinary share (see below).
The exclusion of foreign exchange gains/losses provides greater comparability with covenant interest as calculated under the terms of the Group’s revolving credit facility.
Management believes adjusted interest is a meaningful measure for investors and other stakeholders as it provides an indication of the comparable year-on-year expense associated with financing the business including the interest on any balance held on behalf of the System Fund. |
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| Adjusted tax The tax expense and the tax rate as recorded in the Group Financial Statements are reconciled to adjusted tax and the adjusted tax rate on page 231. |
Adjusted tax excludes the impact of foreign exchange gains/losses, exceptional items, System Fund and fair value gains/losses on contingent consideration.
Foreign exchange gains/losses vary year-on-year depending on the movement in exchange rates, and fair value gains/losses on contingent consideration and, as outlined above, exceptional items also vary year-on-year. These can impact the current year’s tax charge. The System Fund (including interest and tax) is not managed to a surplus or deficit for IHG over the longer term and is, in general, not subject to tax.
Management believes removing these from both profit and tax provides a better view of the Group’s underlying tax rate on ordinary operations and aids comparability year-on-year, thus providing a more meaningful understanding of the Group’s ongoing tax charge.
The adjusted tax definition has been amended from 2023 to align to the adjustments made to adjusted earnings per share and ensure consistency between measures. The measure has been re-presented for prior years to show consistent presentation. |
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| Adjusted earnings per ordinary share Profit available for equity holders is reconciled to adjusted earnings per ordinary share on page 231. |
Adjusted earnings per ordinary share adjusts the profit available for equity holders used in the calculation of basic earnings per share to remove the System Fund and reimbursable result, interest attributable to the System Fund and foreign exchange gains/losses as excluded in adjusted interest (above), change in fair value of contingent purchase consideration, exceptional items, and the related tax impacts of such adjustments and exceptional tax.
Management believes that adjusted earnings per share is a meaningful measure for investors and other stakeholders as it provides a more comparable earnings per share measure aligned with how management monitors the business. |
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| Net debt Net debt is included in note 23 to the Group Financial Statements. |
Net debt is used in the monitoring of the Group’s liquidity and capital structure and is used by management in the calculation of the key ratios attached to the Group’s bank covenants and with the objective of maintaining an investment grade credit rating. Net debt is used by investors and other stakeholders to evaluate the financial strength of the business.
Net debt comprises loans and other borrowings, lease liabilities, the principal amounts payable and receivable on maturity of derivatives swapping debt values, less cash and cash equivalents. A summary of the composition of net debt is included in note 23 to the Group Financial Statements. |
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| 86 | IHG | Annual Report and Form 20-F 2023 |
| Measure |
Commentary |
|
| Adjusted EBITDA Cash from operations as recorded in the Group Financial Statements is reconciled to adjusted EBITDA on page 68. |
One of the key measures used by the Group in monitoring its debt and capital structure is the net debt: adjusted EBITDA ratio, which is managed with the objective of maintaining an investment grade credit rating. The Group has a stated aim of targeting this ratio at 2.5-3.0x. Adjusted EBITDA is defined as cash flow from operations, excluding cash flows relating to exceptional items, cash flows arising from the System Fund and reimbursable result, other non-cash adjustments to operating profit or loss, working capital and other adjustments, and contract acquisition costs (key money).
Adjusted EBITDA is useful to investors as an approximation of operational cash flow generation and is also relevant to the Group’s banking covenants, which use Covenant EBITDA in calculating the leverage ratio. Details of covenant levels and performance against these are provided in note 24 to the Group Financial Statements. |
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| Gross capital expenditure, net capital expenditure, adjusted free cash flow The reconciliation of the Group’s statement of cash flows (i.e. net cash from investing activities, net cash from operating activities, accordingly) to the non-IFRS capital expenditure and cash flow measures is included on page 230. |
These measures have limitations as they omit certain components of the overall cash flow statement. They are not intended to represent IHG’s residual cash flow available for discretionary expenditures, nor do they reflect the Group’s future capital commitments. These measures are used by many companies, but there can be differences in how each company defines the terms, limiting their usefulness as a comparative measure. Therefore, it is important to view these measures only as a complement to the Group statement of cash flows. | |
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| Gross capital expenditure | Gross capital expenditure represents the consolidated capital expenditure of IHG inclusive of System Fund capital investments (see page 13 for a description of System Fund capital investments and recent examples).
Gross capital expenditure is defined as net cash from investing activities, adjusted to include contract acquisition costs (key money). In order to demonstrate the capital outflow of the Group, cash flows arising from any disposals or distributions from associates and joint ventures are excluded. The measure also excludes any material investments made in acquiring businesses, including any subsequent payments of deferred or contingent purchase consideration included within investing activities, which represent ongoing payments for acquisitions.
Gross capital expenditure is reported as either maintenance, recyclable or System Fund. This disaggregation provides useful information as it enables users to distinguish between:
• System Fund capital investments which are strategic investments to drive growth at hotel level;
• Recyclable investments (such as investments in associates and joint ventures and loans to facilitate third-party ownership of hotel assets), which are intended to be recoverable in the medium term and are to drive the growth of the Group’s brands and expansion in priority markets; and
• Maintenance capital expenditure (including contract acquisition costs), which represents a permanent cash outflow.
Management believes gross capital expenditure is a useful measure as it illustrates how the Group continues to invest in the business to drive growth. It also allows for comparison year-on-year. |
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| Net capital expenditure | Net capital expenditure provides an indicator of the capital intensity of IHG’s business model. Net capital expenditure is derived from net cash from investing activities, adjusted to include contract acquisition costs (net of repayments) and to exclude any material investments made in acquiring businesses, including any subsequent payments of deferred or contingent purchase consideration included within investing activities which are typically non-recurring in nature. Net capital expenditure includes the inflows arising from any disposal and loan repayment receipts, or distributions from associates and joint ventures.
In addition, System Fund depreciation and amortisation relating to property, plant and equipment and intangible assets, respectively, is added back, reducing the overall cash outflow. This reflects the way in which System Funded capital investments are recovered from the System Fund, over the life of the asset (see page 13).
Management believes net capital expenditure is a useful measure as it illustrates the net capital investment by IHG, after taking into account capital recycling through asset disposal and the funding of strategic investments by the System Fund. It provides investors and other stakeholders with visibility of the cash flows which are allocated to long-term investments to drive the Group’s strategy. |
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| Performance | IHG | Annual Report and Form 20-F 2023 | 87 |
Strategic Report
Performance continued
Key performance measures and non-GAAP measures continued
| Measure |
Commentary |
|
| Gross capital expenditure, net capital expenditure, adjusted free cash flow continued Adjusted free cash flow
|
Adjusted free cash flow is net cash from operating activities adjusted for: (1) the inclusion of the cash outflow arising from the purchase of shares by employee share trusts reflecting the requirement to satisfy incentive schemes which are linked to operating performance; (2) the inclusion of maintenance capital expenditure (excluding contract acquisition costs); (3) the inclusion of the principal element of lease payments; and (4) the exclusion of payments of deferred or contingent purchase consideration included within net cash from operating activities.
Management believes adjusted free cash flow is a useful measure for investors and other stakeholders as it represents the cash available to invest back into the business to drive future growth and pay the ordinary dividend, with any surplus being available for additional returns to shareholders. |
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Changes in definitions to the 2022 Annual Report and Accounts
The following definitions have been amended:
| • | The definition and calculation of Total Gross Revenue has been amended to include revenue from exclusive partner hotels, as this revenue reflects the value that IHG generates for its exclusive partner hotels. The value of Total Gross Revenue is unchanged in comparative years. |
| • | Underlying fee revenue and operating profit measures have been amended to separate revenue and related costs from insurance activities from fee business revenue and costs. This change is due to the adoption of IFRS 17 ‘Insurance Contracts’, which requires insurance related revenue and costs to be disclosed separately from fee revenues. Underlying fee revenue and operating profit measures have also been amended. Comparative periods have been restated for this change. |
| • | The definition and reconciliation of fee margin has been amended to remove the exclusion of insurance revenues and costs, as insurance related revenues and costs are no longer included as part of fee business (see above). Where information is available, comparative periods have been re-presented for this change. |
| • | The adjusted tax definition has been amended to align to the adjustments made to adjusted earnings per share to ensure consistency between measures. Fair value gains/losses on contingent consideration and System Fund interest are therefore now excluded from the calculation of adjusted tax. The measure has been restated for prior years to show consistent presentation. |
The performance review should be read in conjunction with the Non-GAAP reconciliations on pages 226 to 231 and the Glossary on pages 267 to 268.
| 88 | IHG | Annual Report and Form 20-F 2023 |
| Governance |
Chair’s overview
|
uring 2023, the Board sought to build on the Group’s strong foundation and culture of governance and to gain a deeper understanding of the trends and factors affecting the | |
| long-term sustainable success, resilience and future prospects of the Group. | ||
The Board strives to enhance an environment of transparency and accountability, to ensure that reliable governance frameworks and processes are maintained, while encouraging an approach to decision-making that facilitates the Group’s strategic priorities in a constantly evolving geopolitical and regulatory environment.
Across the year, the Board maintained a high level of engagement and interaction with the Group’s stakeholders. Extensive shareholder consultation was undertaken by the Board, particularly in relation to the approach to remuneration and the Directors’ Remuneration Policy approved during the year.
The Board also enjoyed continued constructive engagement with owners and colleagues throughout the year. For example, I was pleased to spend time meeting with the CEO of the IHG Owners Association, which provided valuable insight into the perspectives of our owners on the Group’s strategic initiatives. I also enjoyed meeting and hearing directly from a number of colleagues as part of the Board’s Voice of the Employee engagement programme.
Focus areas and activities
The Board had another active year in 2023, and more information on its activities is given on pages 101 to 103.
The Board oversaw the evolution of the Group’s strategy and endorsed the refinement of the Group’s ambition to focus on accelerating growth, as well as the enhancements to the strategic pillars and the new growth behaviours.
The Board actively engaged with the Group’s growth agenda, supporting and approving the launch of the Garner brand.
The Board was further pleased to support the Group’s creation of value for shareholders by approving the $750m share buyback programme announced and completed during the year as well as the regular dividend payments.
Cybersecurity was again a significant area of focus for the Board. The Board discussed the broad nature of cyber risk with external specialists, including emerging risk areas, such as the rise of AI, and the approach to prioritising mitigating initiatives. The Board also monitored throughout the year the Group’s approach to cyber risk and the increased investment in security measures, as well as the culture of security awareness and the approach to training across the organisation.
Board composition
During the year, we also saw the successful execution of Board succession planning with changes at both the Executive and Non-Executive levels. At the Executive level, Elie Maalouf and Michael Glover succeeded Keith Barr and Paul Edgecliffe-Johnson as Chief Executive Officer and Chief Financial Officer respectively.
At the Non-Executive level, in the first half of the year, as previously announced, Graham Allan and Byron Grote transitioned to become Chair of the Responsible Business Committee and Chair of the Audit Committee respectively.
The execution of succession planning continued with Angie Risley joining the Board in September and succeeding Jo Harlow as Chair of the Remuneration Committee from 1 January 2024, following Jo’s retirement from the Board. We also announced the appointment of Ron Kalifa as Non-Executive Director with effect from 1 January 2024. Further information on Board appointments during the year can be found in the Nomination Committee Report on page 115.
I would again like to express my and the Board’s sincere gratitude to Keith, Paul and Jo for their contribution to IHG.
| 90 | IHG | Annual Report and Form 20-F 2023 |
I am also proud to report that at the end of 2023, our Board continues to exceed the FTSE 100 Women Leaders Review target for women on a FTSE 100 Board. With regard to the Parker Review (the FTSE 350 Ethnic Diversity Submission), IHG continues to exceed the original target set by the Review of at least one director from an ethnically diverse background, with four ethnically diverse directors. Likewise, IHG has set targets for ethnic diversity in relation to senior management. Further detail and reporting on these targets can be found on pages 30 and 31.
Committee activities
The Board delegates certain responsibilities to its Committees to assist in ensuring effective corporate governance across the business. During 2023:
| • | the Audit Committee focused on monitoring the Group’s risk management and internal controls systems (see its report on pages 107 to 111); |
| • | the Remuneration Committee focused on developments in relation to incentive plans, including approval of the Deferred Award Plan rules and the inclusion of ESG metrics in the Long Term Incentive Plan (see its report on pages 116 to 140); |
| • | the Responsible Business Committee focused on progress against the 2023 responsible business priorities, which support the Company’s Journey to Tomorrow responsible business plan (see its report on pages 112 and 113); and |
| • | the Nomination Committee focused on the execution of Board and Committee succession plans and the external evaluation (see its report on pages 114 and 115). |
Further detail on the Group’s governance structure is given on page 100.
Board performance review
During the year, an external review of the effectiveness of the Board and its Committees was undertaken. I am pleased to report that overall the review supported the positive conclusions of the Board and its Committees as to their effectiveness. Further details of the external evaluation can be found on pages 104 to 106. Individual director feedback assessments were also conducted, details of which can be found on page 106.
Compliance and our dual listing
IHG continues to operate as a dual-listed company with a premium listing on the London Stock Exchange and a secondary listing on the New York Stock Exchange (NYSE). Under the UK listing rules, we are obliged to make a statement as to how we have applied the principles of the UK Corporate Governance Code (the Code). Under the NYSE listing rules, as a foreign private issuer, we are required to disclose any significant ways in which our corporate governance practices differ from those of US companies. To ensure consistency of information provided to both UK and US investors, we produce a combined Annual Report and Form 20-F.
Our Statement of compliance with the Code is on pages 141 and 142. A summary outlining the differences between the Group’s UK corporate governance practices and those followed by US companies can be found on page 258.
Looking forward
In 2024, the Board will focus on the outcomes of the external evaluation completed in 2023 and the delivery of the Group’s strategic objectives, while ensuring that the integrity of the Group’s governance framework is maintained.
Deanna Oppenheimer
Chair of the Board
19 February 2024
| Chair’s overview | IHG | Annual Report and Form 20-F 2023 | 91 |
| Governance |
Our Board of Directors
At 19 February 2024, our
Board of Directors comprises:
Deanna Oppenheimer
Non-Executive Chair
Appointed to the Board: 1 June 2022
Skills and experience: Deanna is founder of CameoWorks, LLC, an advisory firm to CEOs of early-stage technology companies, and BoardReady. Between 2005 and 2011, Deanna worked at Barclays plc where she was Chief Operating Officer of the UK business before becoming CEO of UK and Western Europe Retail Banking and subsequently Vice Chair, Global Retail Banking. Prior to this, Deanna was the President of Consumer Banking at Washington Mutual, Inc. She previously held a number of Non-Executive board positions, including with Tesco PLC (as Senior Independent Director), Whitbread PLC, Worldpay, Inc., and AXA S.A., among others.
Board contribution: Deanna has extensive board-level and executive leadership experience, across a number of high-profile consumer-focused brands, and brings valuable insights and perspectives to IHG. As Chair, Deanna is responsible for leading the Board and ensuring it operates in an effective manner, promoting constructive relations with IHG’s shareholders and with stakeholders.
Other appointments
Deanna is a Non-Executive Director of Thomson Reuters Corporation. She also sits on the private board of Slalom, LLC.
Elie Maalouf
Chief Executive Officer (CEO)
Appointed to the Board: 1 January 2018
Skills and experience: Elie was appointed Chief Executive Officer at IHG in July 2023. Prior to this, Elie served as Chief Executive Officer, Americas since February 2015. He joined the Group having spent six years as President and Chief Executive Officer of HMSHost Corporation, where he was also a member of the board of directors. Elie brings a broad global experience spanning hotel development, branding, finance, real estate and operations management as well as food and beverage expertise. Prior to joining IHG, Elie was Senior Advisor with McKinsey & Company from 2012 to 2014.
Board contribution: Elie is responsible for the executive management of the Group and ensuring the implementation of Board strategy and policy.
Other appointments
Elie is a member of the Executive Committee of the World Travel & Tourism Council and the U.S. Travel Association CEO Roundtable.
Board Committee membership key
| A | Audit Committee member | |
| R | Remuneration Committee member | |
| RB | Responsible Business | |
| Committee member | ||
| N | Nomination Committee member | |
| Chair of a Board Committee |
| 92 | IHG | Annual Report and Form 20-F 2023 |
Michael Glover
Chief Financial Officer (CFO)
Appointed to the Board: 20 March 2023
Skills and experience: Michael is an Accounting and Finance graduate of Baylor University and a certified public accountant. He was previously Chief Financial Officer of the Americas and Group Head of Commercial Finance, where he had group-wide responsibility for commercial finance operations, including the global procurement, sales and marketing and technology functions, as well as IHG’s System Fund. During his tenure with the business, Michael has held several roles at Group and regional levels, including CFO of IHG’s China region from February 2013 to September 2015, at which time Michael became Group Financial Controller, where he oversaw Tax, Treasury and Financial Reporting group-wide, and delivered a finance transformation programme that enabled significant simplification, automation and the transfer of work to IHG’s service centre.
Before IHG, Michael worked with several large Fortune 250 companies in a wide range of roles, beginning his career at Halliburton Energy Services in 1995.
Board contribution: Michael is responsible, together with the Board, for overseeing the financial operations of the Group.
Other appointments
N/A.
Graham Allan
Senior Independent Non-Executive Director (SID)
Appointed to the Board: 1 September 2020a
Skills and experience: Graham was Group Chief Executive of Dairy Farm International Holdings Ltd from 2012 to 2017, a leading Asian retailer headquartered in Hong Kong. He previously served in several senior positions at Pepsico/Yum! Brands from 1992 to 2012. He assumed the role of President of Yum! Restaurants International in 2003 and led the development of global brands KFC, Pizza Hut and Taco Bell in more than 120 international markets. Prior to his tenure at Yum! Restaurants, he worked as a consultant, including at McKinsey & Company. Graham has also been a Director of Americana Foods, the former operating company of the Americana Restaurants business.
Board contribution: Graham brings to the Board more than 40 years of strategic, commercial and brand experience within consumer–focused businesses across multiple geographies. Graham was appointed as Senior Independent Non-Executive Director from 1 January 2022 and became Chair of the Responsible Business Committee from 1 March 2023.
Other appointments
Graham is Senior Independent Non-Executive Director at Intertek plc, Independent Non-Executive Director of Associated British Foods plc and Independent Non-Executive Director of Americana Restaurants International plc. He also serves as Chairman of Bata Footwear, a private company.
Daniela Barone Soares
Independent Non-Executive Director
Appointed to the Board: 1 March 2021
Skills and experience: Daniela is currently Chief Executive Officer of Snowball Impact Management Ltd. She was formerly Chief Executive Officer of financial advisory and strategic consultancy, Granito Group. Prior to this, she was Chief Executive Officer at Impetus, a private equity foundation, and Executive Chair of Gove.digital, a private technology business working with the public sector to improve social services in Brazil. She has served on various commercial and non-profit boards and advisory boards, including Halma plc, Evora S.A. in Brazil and the UK National Advisory Board to the G8 Social Impact Investment Taskforce. She also spent nearly 15 years combined in roles at Save the Children, BancBoston Capital private equity, Citibank and Goldman Sachs.
Board contribution: Daniela brings to the IHG Board a clear commitment to Environmental, Social and Governance (ESG) responsibilities and in-depth knowledge of the role of technology in driving change.
Other appointments
Daniela is a Designated Member of Snowball Impact Investments GP LLP, a diversified investment fund focused on generating financial returns with a positive social and environmental impact. She is also a Trustee of the Haddad Foundation, a Member of the Advisory Board of Forward Institute and Trustee of the Institute for the Future of Work.
| a | Graham was a member of the Board from 1 January 2010 to 15 June 2012 prior to being appointed as Chief Operating Officer of Dairy Farm International Holdings Limited. |
Skills of Directors
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a Experience in a CFO/senior finance role and/or investment banking sector
b Experience in a role leading corporate strategy, a management consulting role and/or a divisional CEO role
c Experience in consumer/brands organisation or a role as marketing executive with multibrand background
d Experience in a multinational organisation holding responsibility globally/across several regions
e Experience in a UK and US listed organisation
f Experience in a global CEO role |
| Our Board of Directors | IHG | Annual Report and Form 20-F 2023 | 93 |
| Governance |
| Our Board of Directors continued |
Arthur de Haast
Independent Non-Executive Director
Appointed to the Board: 1 January 2020
Skills and experience: Arthur has held several senior roles in the Jones Lang LaSalle (JLL) group, including Chair of JLL’s Capital Markets Advisory Council and Chair and Global CEO of JLL’s Hotels and Hospitality Group. Arthur is also a former Chair of the Institute of Hospitality.
Board contribution: Arthur has more than 30 years’ experience in the capital markets, hotels and hospitality sectors, along with significant board-level knowledge around sustainability.
Other appointments
Arthur is Chair of JLL’s Capital Markets Advisory Council, an Independent Non-Executive Director of Chalet Hotels Limited and Chair of its Risk Management Committee, and a member of the Advisory Board of the Scottish Business School, University of Strathclyde, Glasgow.
Duriya Farooqui
Independent Non-Executive Director
Appointed to the Board: 7 December 2020
Skills and experience: Duriya is an Independent Director at Intercontinental Exchange, Inc. (ICE), a leading operator of global exchanges and clearing houses, and provider of mortgage technology, data and listings services. She is also an executive coach and mentor with The Exco Group, focused on helping Fortune 500 companies develop high-performing leadership teams. Duriya was previously President of Supply Chain Innovation at Georgia-Pacific, leading an organisation responsible for supply chain transformation. Prior to this, she was Executive Director of Atlanta Committee for Progress, a coalition of over 30 CEOs providing leadership on economic growth and inclusion opportunities in Atlanta. Duriya has also been a principal at Bain & Company and Chief Operating Officer of the City of Atlanta.
Board contribution: Duriya’s diverse board and executive-level experience brings valuable insights and perspectives to IHG. She combines more than two decades of relevant expertise in business strategy, transformation and innovation, with a clear commitment to driving responsible operations and diversity.
Other appointments
Duriya is an Independent Director of Intercontinental Exchange, Inc. She serves on the boards of NYSE and ICE NGX, both subsidiaries of ICE, and co-chairs the NYSE Board Advisory Council. She is also a Trustee of Agnes Scott College, a member of the Board of Councilors of The Carter Center and a Board Commissioner of Atlanta Housing.
Byron Grote
Independent Non-Executive Director
Appointed to the Board: 1 July 2022
Skills and experience: Byron’s career spanned over 30 years in the international oil and gas sector, including Standard Oil of Ohio and subsequently BP p.l.c, where he held management positions in retail marketing, trading, mining, exploration and production, renewables, petrochemicals, and finance. He served as an Executive Director on the Board of BP p.l.c. for 13 years and was the Chief Financial Officer from 2002 until 2011. He previously served as the Senior Independent Director and Audit Committee Chair at Anglo American plc, as a Non-Executive Director and Audit Committee Chair at Unilever PLC and Unilever N.V., and Non-Executive Director at Standard Chartered PLC.
Board contribution: Byron has extensive experience across a range of leading international businesses, both at board level and in senior management positions, particularly in finance and chairing audit committees. He is a participant in the European Audit Committee Leadership Network and a member of the Regulation Group of the Audit Committee Chairs’ Independent Forum. Byron assumed the role of Chair of the IHG Audit Committee in March 2023.
Other appointments
Byron is the Senior Independent Director and Chair of the Audit Committee at Tesco PLC. He is also a Non-Executive Director at Inchcape PLC and on the Supervisory Board of Akzo Nobel N.V., where he is the Deputy Chair and Audit Committee Chair.
Board Committee membership key
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Audit Committee member |
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Remuneration Committee member |
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Responsible Business Committee member |
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Nomination Committee member |
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Chair of a Board Committee |
| 94 | IHG | Annual Report and Form 20-F 2023 |
Sir Ron Kalifa
Independent Non-Executive Director
Appointed to the Board: 1 January 2024
Skills and experience: Ron was formerly Chief Executive Officer of Worldpay for over 10 years, serving as Vice Chairman thereafter and an Executive Director until February 2020. His longstanding career in financial services has allowed him to gain experience in marketing, strategy and operations on a global scale. Ron led a government-commissioned, independent Review of UK Fintech, which proposed a recommended strategy and delivery model to maintain the UK’s position as a global leader in financial services. Ron was knighted in the Queen’s Jubilee Birthday 2022 Honours List for services to financial services, technology and public service.
Board contribution: Ron brings to the IHG Board in-depth knowledge of high-growth sectors of financial markets, including payments and fintech strategy. He also has a wealth of experience through his tenure on various boards, including not-for-profit boards.
Other appointments
Ron is Chairman of Network International Holdings Plc. He is a Non-Executive Director and the Senior Independent Director on the Court of Directors of the Bank of England and a Non-Executive Director for the England & Wales Cricket Board. He is also Vice Chair at Brookfield Asset Management.
Ron is a Trustee of the Royal Foundation of the Prince and Princess of Wales.
Angie Risley
Independent Non-Executive Director
Appointed to the Board: 1 September 2023
Skills and experience: Angie’s career in human resources has spanned executive roles across a number of sectors, including at United Biscuits; Whitbread as an Executive Director, Group HR Director; and Lloyds Banking Group as a member of the Executive Committee as Group HR Director. She recently retired from Sainsbury’s where she was Group HR Director for 10 years and a member of the Operating Board.
Angie previously served as Non-Executive Director of Serco Group plc (and was Chair of the Remuneration Committee) as well as Sainsbury’s Bank plc, Arriva and Biffa, and she has been a member of the Low Pay Commission.
Board contribution: Angie brings to the IHG Board a wide range of experience from a variety of sectors and a strong background in human resources. Angie became Chair of the Remuneration Committee from 1 January 2024.
Other appointments
Angie is currently a Non-Executive Director at Smith & Nephew plc, where she is Chair of the Remuneration Committee and a member of the Nomination and Governance Committee and the Compliance and Culture Committee.
Sharon Rothstein
Independent Non-Executive Director
Appointed to the Board: 1 June 2020
Skills and experience: Sharon currently serves as Operating Partner of Stripes Group, a growth equity firm investing in high-growth consumer and SaaS (Software as a Service) companies. She previously served as Executive Vice President, Global Chief Marketing Officer and, subsequently, as Executive Vice President, Global Chief Product Officer for Starbucks Corporation. In addition, Sharon has held senior marketing and brand management positions at Sephora LLC, Godiva Chocolatier, Inc., Starwood Hotels & Resorts Worldwide, Inc., Nabisco Biscuit Company and Procter & Gamble Company.
Board contribution: Sharon brings extensive brands, marketing and digital expertise, having worked in senior positions for more than 25 years at iconic global companies. In addition to her knowledge of the hospitality industry, Sharon has wide-ranging board-level experience in a number of consumer-focused businesses.
Other appointments
Sharon serves on the boards of Yelp, Inc. and Block, Inc., and also for private companies Califia Farms, LLC and Levain Bakery, Inc.
| Our Board of Directors | IHG | Annual Report and Form 20-F 2023 | 95 |
| Governance |
| Our Board of Directors continued |
Changes to the Board, and its Committees, and Executive Committee
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| Graham Allan | Graham became Chair of the Responsible Business Committee and stood down from the Remuneration Committee with effect from 1 March 2023 | |||
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| Heather Balsley | Heather was appointed to the Executive Committee as Global Chief Customer Officer from 1 November 2023 | |||
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| Keith Barr | Keith stood down from the Board, the Executive Committee and his role as Chief Executive Officer on 30 June 2023 | |||
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| Claire Bennett | Claire stood down from the Executive Committee and her role as Global Chief Customer Officer on 31 October 2023 | |||
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| Jolyon Bulley | Jolyon was appointed as Chief Executive Officer, Americas from 1 July 2023 | |||
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| Arthur de Haast | Arthur joined the Audit Committee and stood down as a member of the Remuneration Committee with effect from 1 January 2023 | |||
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| Ian Dyson | Ian retired from the Board on 28 February 2023 | |||
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| Paul Edgecliffe-Johnson | Paul stood down from the Board, the Executive Committee and his role as Chief Financial Officer and Group Head of Strategy on 19 March 2023 | |||
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| Michael Glover | Michael joined the Board as an Executive Director as well as the Executive Committee when he was appointed as Chief Financial Officer from 20 March 2023 | |||
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| Byron Grote | Byron became the Audit Committee Chair and joined the Nomination Committee from 1 March 2023 | |||
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| Jo Harlow | Jo retired from the Board on 31 December 2023 | |||
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| Ron Kalifa | Ron was appointed to the Board as a Non-Executive Director with effect from 1 January 2024 | |||
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|
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| Elie Maalouf | Elie was appointed as Chief Executive Officer from 1 July 2023 | |||
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|
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| Jill McDonald | Jill retired from the Board on 28 February 2023 | |||
|
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|
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| Deanna Oppenheimer | Deanna became a member of the Remuneration Committee with effect from 1 January 2023 | |||
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| Angie Risley | Angie was appointed to the Board from 1 September 2023 and became Chair of the Remuneration Committee and joined the Nomination Committee from 1 January 2024 | |||
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Board and Committee membership and attendance in 2023
| |
Appointment date |
|
|
Committee appointments |
|
Board | |
Audit Committee |
a |
|
Responsible Business Committee |
|
|
Nomination Committee |
|
|
Remuneration Committee |
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||||||||||||||||||||||||||||||||||||
| Total meetings held | 8 | 5 | 4 | 6 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Chair | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deanna Oppenheimerb | 01/06/22 |
|
8/8 | – | – | 6/6 | 6/6 | |||||||||||||||||||||||||||||||||||||||||||||||
| Chief Executive Officer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Keith Barrc | 01/07/17 | 3/4 | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||
| Elie Maaloufd | 01/01/18 | 8/8 | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||
| Executive Directors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paul Edgecliffe-Johnsone | 01/01/14 | 1/1 | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||
| Michael Gloverf | 20/03/23 | 7/7 | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Independent Non-Executive Director |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
| Graham Allang | 01/09/20 |
|
8/8 | 5/5 | 4/4 | 6/6 | 3/3 | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-Executive Directors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Daniela Barone Soaresh | 01/03/21 |
|
7/8 | – | 4/4 | – | 6/6 | |||||||||||||||||||||||||||||||||||||||||||||||
| Arthur de Haast | 01/01/20 |
|
8/8 | 5/5 | 4/4 | – | – | |||||||||||||||||||||||||||||||||||||||||||||||
| Ian Dysoni | 01/09/13 |
|
1/1 | 1/1 | – | 1/1 | 2/3 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duriya Farooqui | 07/12/20 |
|
8/8 | 5/5 | 4/4 | – | – | |||||||||||||||||||||||||||||||||||||||||||||||
| Byron Grotej | 01/07/22 |
|
8/8 | 5/5 | – | 5/5 | 6/6 | |||||||||||||||||||||||||||||||||||||||||||||||
| Jo Harlow | 01/09/14 |
|
8/8 | – | – | 6/6 | 6/6 | |||||||||||||||||||||||||||||||||||||||||||||||
| Jill McDonaldk | 01/06/13 |
|
1/1 | 1/1 | 1/1 | 1/1 | – | |||||||||||||||||||||||||||||||||||||||||||||||
| Angie Risleyl | 01/09/23 |
|
3/3 | – | 1/1 | – | 2/2 | |||||||||||||||||||||||||||||||||||||||||||||||
| Sharon Rothsteinm | 01/06/20 |
|
7/8 | 5/5 | 4/4 | – | – | |||||||||||||||||||||||||||||||||||||||||||||||
| Board Committee membership key | ||
|
Audit Committee member | |
|
Remuneration Committee member | |
|
Responsible Business Committee member | |
|
Nomination Committee member | |
|
Chair of a Board Committee | |
|
Senior Independent Non-Executive Director | |
| a | In principle, the full Board attends the relevant sections of the Audit Committee meetings when financial results are considered. |
| b | In principle, the Chair attends all Committee meetings. |
| c | Keith Barr stood down as Chief Executive Officer on 30 June 2023 and did not attend the Board strategy meeting prior to stepping down. |
| d | Elie Maalouf was appointed Chief Executive Officer from 1 July 2023. |
| e | Paul Edgecliffe-Johnson stood down as Chief Financial Officer on 19 March 2023. |
| f | Michael Glover was appointed to the Board as Chief Financial Officer from 20 March 2023. |
| g | Graham Allan stood down from the Remuneration Committee and became Chair of the Responsible Business Committee from 1 March 2023 following Jill McDonald’s retirement from the Board on 28 February 2023. |
| h | Daniela Barone Soares did not attend a Board meeting due to a prior commitment. |
| i | Ian Dyson retired from the Board on 28 February 2023 and did not attend a Remuneration Committee meeting prior to his retirement. |
| j | Byron Grote became Chair of the Audit Committee from 1 March 2023 following Ian Dyson’s retirement from the Board on 28 February 2023. Byron also joined the Nomination Committee from 1 March 2023. |
| k | Jill McDonald retired from the Board on 28 February 2023. |
| l | Angie Risley was appointed to the Board from 1 September 2023. |
| m | Sharon Rothstein was unable to attend a Board meeting due to a prior commitment. |
| 96 | IHG | Annual Report and Form 20-F 2023 |
Our Executive Committee
In addition to Elie Maalouf and
Michael Glover, the Executive
Committee comprises:
Heather Balsley
Global Chief Customer Officer
Appointed to the Executive Committee: November 2023 (joined the Group: 2007)
Skills and experience: Before being appointed as Global Chief Customer Officer, Heather served as SVP, Global Loyalty & Partnerships for four years. During that time, Heather was responsible for the Company’s loyalty and partnerships business, including the re-launch of IHG One Rewards and co-brand credit card business, delivering significant successes. She has also served as SVP, Global Marketing, Mainstream Brands, developing and delivering brand strategies that enhance the guest experience and drive performance.
Heather also worked across all brand segments as SVP, Americas Brands and Marketing and held leadership roles in strategy. Throughout her time at IHG, she has worked extensively across markets globally and with our owners.
Prior to joining IHG, Heather spent seven years as a consultant with Marakon Associates in New York, where she advised Fortune 500 companies on performance-enhancing strategies.
She holds an MBA from Harvard Business School and a bachelor’s degree in Economics and Sociology from Duke University.
Key responsibilities: Heather leads all aspects of IHG’s brand strategy, positioning, marketing, commercial performance, customer data and analytics and the end-to-end customer experience across IHG’s portfolio of 19 brands, including our award-winning IHG One Rewards loyalty programme.
Jolyon Bulley
Chief Executive Officer, Americas and Group Transformation Lead, Luxury & Lifestyle
Appointed to the Executive Committee: November 2017 (joined the Group: 2001)
Skills and experience: A career hotelier, Jolyon has held a number of significant roles at IHG and, before being appointed as CEO, Americas in 2023, was CEO for Greater China from 2018.
Prior to that, he was Chief Operating Officer (COO) for the Americas from 2014 to 2017, leading the region’s operations for franchised and managed hotels, in addition to cultivating franchisee relationships and enhancing hotel operating performance. Jolyon also served as COO for Greater China for almost four years, with oversight of the region’s hotel portfolio and brand performance, new hotel openings and owner relations. In 2021, in addition to his role as CEO for Greater China, Jolyon was appointed to lead the Luxury & Lifestyle Transformation Team.
Jolyon joined IHG in 2001, as Director of Operations, New South Wales in Australia, and then held roles of increasing responsibility across IHG’s Asia-Pacific region. He became Regional Director Sales & Marketing for Australia, New Zealand & South Pacific in 2003, relocated to Singapore in 2005 and held positions of Vice President Operations South East Asia & India, Vice President Resorts, and Vice President Operations, South East & South West Asia.
Jolyon graduated from William Angliss Institute in Melbourne with a concentration in Tourism and Hospitality.
Key responsibilities: Jolyon is responsible for the management, growth and profitability of the Americas region and the development and defining of a clear strategy for our Luxury & Lifestyle brands’ performance and growth.
| Our Executive Committee | IHG | Annual Report and Form 20-F 2023 | 97 |
| Governance |
| Our Executive Committee continued |
Yasmin Diamond, CB
Executive Vice President, Global Corporate Affairs
Appointed to the Executive Committee: April 2016 (joined the Group: 2012)
Skills and experience: Before joining IHG in 2012, Yasmin was Director of Communications at the Home Office, where she advised the Home Secretary, ministers and senior officials on the strategic development and daily management of all the Home Office’s external and internal communications. She was previously Director of Communications at the Department for Environment, Food and Rural Affairs; Head of Communications for Welfare to Work and New Deal; and Head of Marketing at the Department for Education and Skills. Before joining government communications, Yasmin was Publicity Commissioner for the BBC, where she led communications activity around the launch of a new digital learning channel and around the BBC’s educational output for both adults and children.
In 2011, Yasmin was awarded a Companion of the Order of the Bath (CB) in the New Year’s Honours List in recognition of her career in government communications. In addition, Yasmin is an Independent Non-Executive Director of the Rugby Football Union and is a Board Trustee member of the Sustainable Hospitality Alliance.
Key responsibilities: Yasmin is responsible for all global corporate affairs activity, focused on supporting and enabling IHG’s broader strategic priorities. This includes all external, internal, hotel and owner communications; global government affairs work; and leading IHG’s Corporate Responsibility strategy.
Nicolette Henfrey
Executive Vice President, General Counsel and Company Secretary
Appointed to the Executive Committee: February 2019 (joined the Group: 2001)
Skills and experience: Nicolette joined IHG in 2001. Prior to leading the Business Reputation and Responsibility function, she held a number of senior legal roles, including Deputy Company Secretary. During that time, she worked with the Board, Executive Committee and wider organisation to ensure best-in-class delivery and compliance across legal, governance and regulatory areas. Nicolette is a solicitor qualified in England and South Africa and previously worked as a corporate lawyer at Linklaters in London and Findlay & Tait (now Bowmans) in South Africa.
Key responsibilities: Nicolette has global responsibility for all areas of corporate governance, legal, risk management, insurance, regulatory compliance, internal audit and hotel standards.
Wayne Hoare
Chief Human Resources Officer
Appointed to the Executive Committee: September 2020 (joined the Group: 2020)
Skills and experience: Wayne has more than 30 years of experience in HR and joined IHG from RCL FOODS, where he spent seven years as the company’s Chief Human Resources Officer, leading the culture building and talent strategy for 25,000 employees. Prior to joining RCL FOODS, Wayne spent 26 years at Unilever, where he worked across a broad range of roles in mature and developing markets across Europe, North America, Asia, Africa and the Middle East.
Wayne’s most recent role at Unilever was as SVP, HR – Global Centres of Expertise, where he held responsibility for the Global Talent, Leadership Development and Reward teams. He led the development of the company’s HR strategy to enable a performance culture focused on growth.
Key responsibilities: Wayne has global responsibility for talent management, learning and capability building, diversity, organisation development, reward and benefit programmes, employee relations and all aspects of the people and organisation strategy for the Group.
| 98 | IHG | Annual Report and Form 20-F 2023 |
Kenneth Macpherson
Chief Executive Officer, EMEAA
Appointed to the Executive Committee: April 2013 (joined the Group: 2013)
Skills and experience: Kenneth became CEO, EMEAA in January 2018. He was previously IHG’s CEO for Greater China, a role he held from 2013 to 2017. He has extensive experience across sales, marketing strategy, business development and operations. In addition to 12 years living and working in China, Kenneth’s career includes experience in Asia, the UK, France and South Africa. Before IHG, he worked for 20 years at Diageo, one of the UK’s leading branded companies. His senior management positions included serving as Managing Director of Diageo Greater China, where he helped to build the company’s presence and led the landmark deal to acquire ShuiJingFang, a leading manufacturer of China’s national drink, and one of the first foreign acquisitions of a Chinese listed company.
Key responsibilities: Kenneth is responsible for the management, growth and profitability of the EMEAA region. He also manages a portfolio of hotels in some of the world’s most exciting destinations, in both mature and emerging markets.
George Turner
Chief Commercial and Technology Officer
Appointed to the Executive Committee: January 2009 (joined the Group: 2008)
Skills and experience: In February 2019, George was appointed as Chief Commercial and Technology Officer. Prior to this, he spent over a decade as IHG’s EVP, General Counsel and Company Secretary, with responsibility for corporate governance, risk and assurance, legal, corporate responsibility and information security. He is a solicitor, qualifying to private practice in 1995. Before joining IHG, George spent over 10 years with Imperial Chemical Industries PLC, where he held various key positions including Deputy Company Secretary and Senior Legal Counsel.
Key responsibilities: George’s responsibilities include distribution; channels; revenue management; property, owner, guest and enterprise solutions; guest reservations and customer care; digital; information security; technology; and global sales.
Gender of Board and Executive Committee
| Number of Board members |
Percentage of the Board |
Number of senior positions on the |
Number in Executive Committee |
Percentage of Executive Committee |
||||||||||||||||||||||||||
| Men | 6 | 55% | 3 | 6 | 67% | |||||||||||||||||||||||||
| Women | 5 | 45% | 1 | 3 | 33% | |||||||||||||||||||||||||
| Not specified/prefer not to say | – | – | – | – | – | |||||||||||||||||||||||||
Ethnic background of Board and Executive Committee
| Number of Board members |
Percentage of the Board |
Number of senior positions on the Board (CEO, CFO, SID and Chair) |
Number in Executive Committee |
Percentage of Executive Committee |
||||||||||||||||||||||||||
| White British or other White (including minority-white groups) | 7 | 64% | 3 | 7 | 78% | |||||||||||||||||||||||||
| Mixed/Multiple Ethnic Groups | 1 | 9% | – | – | – | |||||||||||||||||||||||||
| Asian/Asian British | 2 | 18% | – | 1 | 11% | |||||||||||||||||||||||||
| Black/African/Caribbean/Black British | – | – | – | – | – | |||||||||||||||||||||||||
| Other ethnic group, including Arab | 1 | 9% | 1 | 1 | 11% | |||||||||||||||||||||||||
| Not specified/prefer not to say | – | – | – | – | – | |||||||||||||||||||||||||
The information in the tables above is compiled from self-reported data from the relevant individuals.
As at 19 February 2024, the Company complies with the following targets on board diversity in accordance with Listing Rule 9.8.6R(9): (i) at least 40% of the individuals on the Board are women; (ii) at least one senior position, namely the Chair of the Board, is held by a woman; and (iii) at least one individual on the Board is from a minority ethnic background.
| Our Executive Committee | IHG | Annual Report and Form 20-F 2023 | 99 |
Governance Governance structure Governance framework Our governance framework is headed by the Board, which while conducting business in a responsible manner. delegates certain management and oversight responsibilities to Executive management is responsible for the implementation various Committees to further IHG’s purpose, values and strategy, of strategy that is delivered by the Group’s workforce. THE BOARD The Board is responsible for promoting the long-term sustainable success of the Group and establishes its purpose, values and strategy. Operational matters, routine business and information disclosure procedures are delegated by the Board to Management Committees, with the exception of a number of key decisions and matters that are reserved for the Board. The schedule of matters reserved for the Board was reviewed and approved at the December 2023 Board meeting and is available on our website. The Board is supported by its four Principal Committees (Audit, Nomination, Remuneration and Responsible Business), all of which consist of Non-Executive Directors. These committees assist the Board in carrying out its functions and in overseeing the delivery of the strategic objectives it sets for management. See pages 101 to 103 for information. REPORTING BOARD COMMITTEES Audit Committee Leads on internal controls and risk management; financial reporting; internal audit; fraud and external audit and compliance. Maintains working relationships with management; Global Internal Audit; Disclosure Committee; and the external Auditor. See pages 107 to 111. Nomination Committee Leads on and examines nominations and appointments to the Board and its Committees and Responsible for reviewing the Group’s leadership needs. See pages 114 and 115. Remuneration Committee Leads on and reviews all aspects of remuneration of the Executive Directors and Executive Committee members and remuneration policy for senior executives. See pages 116 to 140. Responsible Business Committee Leads on responsible business objectives and strategy, including our approach to sustainable development and responsible procurement. Reviews our impact on the environment and communities. Reviews the Board’s engagement with the workforce and the Group’s diversity, equity and inclusion (DE&I) agenda. See pages 112 and 113. MANAGEMENT COMMITTEES Operational matters, routine business and information disclosure procedures are delegated by the Board to Management Committees. The Management Committees are comprised of senior executives, including, where relevant, the Executive Directors. Executive Committee Chaired by the CEO, it considers and manages the day-to-day strategic and operational issues facing the Group. Its remit includes executing the strategic plan once agreed upon by the Board, monitoring the Group’s performance and providing assurance to the Board in relation to overall performance and risk management. General Purposes Committee Chaired by an Executive Committee member, it attends to items of a routine nature and to the administration of matters, the principles of which have been agreed previously by the Board or an appropriate Committee. Disclosure Committee Chaired by the Group’s Financial Controller, it ensures that proper procedures are in place for statutory and listing requirements. This Committee reports to the Chief Executive Officer, the Chief Financial Officer and the Audit Committee.
Board activities
Key areas of focus during the year
Board meetings
The table below gives an overview of some of the regular and standing items discussed and decisions made at Board meetings during the year. The table overleaf sets out information on the key matters discussed by the Board in 2023 and our Section 172 statement includes information about how stakeholders were considered and impacted outcomes.
In several areas, much of the substantive preparation work took place within the Board’s Committees and was later confirmed by the Board or the whole Board attended certain sections of Committee meetings. Where this was the case, the discussions are treated as having taken place at Board level.
Performance The Board received regular updates from the CEO and CFO on recent and current trading, including RevPAR, operating profit, net system size growth and cash flow performance. These were also compared to the results of competitors and budget. Internal projections were compared with the consensus of forecasts by analysts to ensure that the Company’s prospects were appropriately reflected in market expectations. The Board also monitored the progress of the share buyback programme. Throughout the year, the Board also received regional performance updates from each of the regional Chief Executive Officers, covering regional market and competitive landscapes, financial performance, regional strategy and progress on regional initiatives, and risks and mitigation measures. Governance and assurance The Board received regular updates on principal and emerging risks, internal controls, risk management systems, the Group’s risk appetite, litigation, cybersecurity, compliance programmes and the global insurance programme. Committee Chairs also delivered reports on risk topics in relation to the areas of remit for their respective Committees. The Board received regulatory development updates from the General Counsel and Company Secretary, covering regulatory changes in areas such as corporate reporting and governance, executive remuneration, climate change, shareholder body voting guidelines and other ESG matters. The Board also reviewed and approved the Group’s Code of Conduct. Stakeholders The Board receives a regular report outlining share register movements, relative share price performance, investor relations activities and engagement with shareholders. The Board also considered views shared from the regular investor and analyst perception studies and feedback surveys, as well as individual meetings with investors. The Board receives a regular report outlining various geopolitical and social issues pertaining to IHG and its business; corporate affairs activity supporting IHG’s corporate reputation, brands and responsible business agenda; owner and colleague engagement; government and advocacy programmes; and industry-body engagement.
| Board activities | IHG | Annual Report and Form 20-F 2023 | 101 |
| Governance |
| Board activities continued |
| Key areas of focus during the year continued |
Key matters discussed in 2023 and Section 172 statement
Section 172 of the Companies Act 2006 requires a director of a company to promote the success of that company, and in doing so, the director must have regard to six factors. These are: the long-term consequences of a decision; the interests of its employees; business relationships with suppliers, customers and others; its impact on the community and environment; the desirability of maintaining high standards of business conduct; and the need to act fairly between members of the company. The table below summarises some of the main matters dealt with by the Board during the year and how it took the Section 172 factors into account. The relevant Section 172 factors are identified in the key at the bottom of the page.
| Finance and performance | ||||||||
| Financial plan The Board evaluated and approved the financial plan for the period 2023 to 2025. |
In approving the financial plan, the Board considered the dividend and shareholder return approach and assumptions, as well as taking into account the challenges for owners of the lending environment and construction financing. |
|
||||||
| Shareholder returns The Board considered and approved a final dividend for 2022, an interim dividend for 2023 and a $750m share buyback programme. |
In considering the dividends paid during the year and the share buyback programme, the Board took into account the creation of value for shareholders, the expectations of analysts in the context of the Company’s trading and viability assessments and capacity to pay as well as the external environment, including the geopolitical situation and macroeconomic developments, while having regard to the Group’s dividend policy. |
|
||||||
| Group finance The Board approved the update of the Group’s Euro Medium Term Note (EMTN) bond programme and the issuance of a €600m bond. |
In approving the EMTN programme update and the €600m bond issuance, the Board considered in particular the Group’s longer-term debt maturity and liquidity profiles as well as the benefits of prudent financial management to the Group’s employees and shareholders. |
|
||||||
| Financial statements The Board considered and approved the full and half-year financial results statements, including the going concern and viability statements, and whether the Annual Report was fair, balanced and understandable. |
In reviewing and approving for publication the Group Financial Statements, the Board ensured that the Group had met its regulatory requirements in relation to providing shareholders and other stakeholders with accurate information regarding the Group and further maintained the Group’s reputation for operating with high standards. |
|
||||||
| Strategic and operational matters | ||||||||
| Brand portfolio The Board approved the launch of the Garner brand. |
In considering the new brand launch, the Board focused in particular on the owner proposition and the return on investment for owners; the brand’s offering for IHG One Rewards members and other guests; the value the brand can generate for shareholders and investors; and the capabilities of the Group’s employees needed to support the launch. |
|
||||||
| Corporate strategy refresh The Board endorsed the Group’s refreshed corporate strategy. |
In considering and endorsing the corporate strategy refresh, including the new strategic pillars, associated metrics and growth behaviours, the Board had regard for the Group’s approach to driving performance to generate both short and long-term value for hotel owners and shareholders as well as the Group’s impact on communities and the environment. The Board further considered the impact of the new growth behaviours on employees, as well as the role the strategy plays in maintaining the Group’s high standards of business conduct. |
|
||||||
| Luxury & Lifestyle The Board endorsed the InterContinental brand refresh. |
The Board considered and endorsed the InterContinental brand refresh strategy, noting in particular the focus on implementing new service and culture training to deliver enhanced guest experiences, colleague behaviours and owner returns and noting the positive momentum shown by improved guest satisfaction data. |
|
||||||
| Growth strategy in regions – Americas, EMEAA and Greater China The Board received in-depth regional updates from the CEOs of each of the Group’s three regions, and provided oversight with regard to the Group’s growth strategy and strategic priorities. |
The Board received regular updates from the Group’s operating regions, covering the Group’s positioning and performance in relevant markets and in relation to brand performance, underlying growth drivers and the competitive environment, and further focused on actions to accelerate the Group’s growth. In its discussions, the Board paid particular attention to critical owner considerations in relation to optimising owner returns as well as initiatives to reduce energy consumption and food waste. |
|
||||||
| Key to considerations | ||||||||||||
|
Long term |
|
Suppliers and customers |
|
High standards | |||||||
|
Employees |
|
Community and environment |
|
Act fairly between members | |||||||
| 102 | IHG | Annual Report and Form 20-F 2023 |
| Board governance | ||||||||
| Board composition The Board approved the appointments of Elie Maalouf as Chief Executive Officer, Angie Risley as Chair Designate of the Remuneration Committee and Ron Kalifa as a Non-Executive Director. |
When approving Board appointments and succession plans, the Board had particular regard for ensuring that both the Board and its Principal Committees have the appropriate mix of skills, experience and knowledge to provide effective oversight over the short and long-term strategic objectives of the Group and effectively consider the interests of its stakeholders while also maintaining high standards of business conduct and complying with the UK Corporate Governance Code. |
|
||||||
| Executive Committee appointments The Board endorsed the changes and appointments to the Executive Committee during the year. |
In considering the talent and succession planning at the Executive Committee level, the Board focused on the skills, experience and profile required to optimise the Executive Committee, including relevant regional and functional leadership, to facilitate the delivery of the Group’s strategic objectives. |
|
||||||
| Regulatory Compliance The Board approved new or refreshed regulatory compliance policies. |
Across the year, the Board approved new or refreshed global policies in relation to Communities, Environment, Human Rights and Sanctions. In approving the policies, the Board considered, in particular, the various regulatory requirements and the external environment underpinning each policy, the impact of the policies on employees, owners, shareholders and suppliers as well as the Group’s reputation for operating with high standards. |
|
||||||
| People | ||||||||
| Incentive plan The Board approved the adoption of new Deferred Award Plan rules. |
In considering the new Deferred Award Plan rules, the Board considered the potential impact on employees in different territories and jurisdictions, as well as the need to balance corporate governance expectations with the regulatory requirements in different territories. |
|
||||||
| Our people and culture Voice of the Employee workforce engagement programme. |
The Board participated in employee feedback sessions, and received and considered regular updates from the Voice of the Employee workforce engagement programme, noting continued positive feedback from engagement sessions. |
|
||||||
Annual Board strategy meeting The 2023 Annual Board strategy meeting was held in Atlanta at the Group’s Americas region headquarters. The Board undertook a detailed review in respect of the following areas: the industry landscape and performance; the competitive context; IHG’s business model, financial model and strategy; and strategic choices to strengthen performance. The meeting also included an ‘outside-in’ perspective from an external adviser on the Group’s trajectory, further opportunities for growth and risks to delivery of the plan. Each Board member received a full briefing in advance of the Board strategy meeting, which enabled a productive and wide-ranging discussion with concrete outcomes, oriented around a relentless focus on growth, a strong commercial engine and a high-performance culture. Outcomes and action items were also addressed at subsequent Board meetings. Board members also had the opportunity to engage informally with colleagues from our Atlanta office.
|
|
See pages 36 and 37 for information about how we have engaged with our stakeholders in 2023. Further details of our regard for our people, communities and the planet are on page 3 and pages 28 to 35. |
| Board activities | IHG | Annual Report and Form 20-F 2023 | 103 |
| Governance |
| Board activities continued Our shareholders and investors |
During 2023, IHG continued its open dialogue with shareholders and investors and conducted its annual programme of investor relations activities with support from its brokers and advisers. The Board received regular updates and considered feedback as outlined on page 101. In addition, our Registrar and American Depositary Receipts (ADR) programme custodians have supported shareholders and ADR holders with their queries.
Committee Chairs and the Senior Independent Director are available for shareholders if they have concerns they wish to discuss.
Annual General Meeting (AGM)
The Board was pleased to meet shareholders in person at the 2023 AGM.
Our 2024 AGM will be held on Friday 3 May 2024. The notice of meeting will be sent to shareholders and made available on our website in due course.
|
|
Visit ihgplc.com/investors under Shareholder centre. |
|
|
Further information on the Board’s engagement with shareholders and investors is included on page 36. |
Director appointments and induction
Director appointments
Details of the appointments to the Board made during 2023 are described in the Nomination Committee Report on pages 114 and 115.
New Director inductions
Upon appointment, all new Directors undergo a comprehensive and formal induction programme that is tailored to meet their individual needs and respective roles on the Board. We believe this is crucial to ensure our Directors have a full understanding of all aspects of our business and familiarity with the Group’s purpose, culture and values to ensure they can contribute effectively to the Board.
For Michael Glover, a bespoke induction plan focused on his transition to an Executive Director and Executive Committee role was prepared, with a particular focus on his responsibilities as CFO. His induction included meetings with key external advisers and stakeholders and an overview of corporate governance requirements in relation to his responsibilities as an Executive Director.
Given Elie Maalouf’s longstanding role on the Board and Executive Committee, following his appointment as CEO, a targeted transition plan was put in place focusing on aspects specific to his role as CEO, with a particular emphasis on key investor, colleague, owner, media and industry relationships.
For Angie Risley and Ron Kalifa, tailored induction plans were prepared in advance of their appointment to the Board. Their plans broadly covered the following topics, while being tailored to their Committee appointments and roles, with a particular emphasis on understanding IHG’s business, long-term strategy, risks and opportunities within the business and governance processes and controls:
| • | information on the Group’s purpose, culture, values and strategy, including its business model, brands and the markets in which it operates; |
| • | key strategic initiatives; |
| • | our approach to internal controls and our risk management strategy; |
| • | information on the Board, its Committees and IHG’s governance processes; |
| • | a reminder of the rules relating to maintaining the confidentiality of inside information and restrictions in dealing in IHG shares, together with a briefing on the policies and procedures IHG has in place to ensure compliance with such rules; and |
| • | meetings with members of the Board and the Executive Committee, senior management from functions across the Group, the external Auditor and other key external advisers. |
Additional appointments
During 2023, the Board considered and endorsed the following additional appointments of Directors:
| • | Graham Allan as Chair of the Remuneration Committee of Associated British Foods PLC. |
| • | Arthur de Haast as a member of the Audit Committee of Chalet Hotels Limited. |
| • | Byron Grote as Interim Chair of Tesco PLC. |
| • | Jo Harlow as Senior Independent Director of Halma PLC. |
| • | Elie Maalouf as a member of the World Travel & Tourism Council’s Executive Committee. |
In each case, the Board took into account other appointments, the time commitment required for each role and the context of the UK Corporate Governance Code, including institutional investor and proxy adviser guidelines concerning over-boarding. It was concluded that the additional appointments should not adversely impact their performance but should enhance their ability to provide constructive challenge and strategic guidance.
Ongoing Director training and development
We understand the importance of an ongoing training programme for Directors to enable them to fully understand the Group’s business and operations in the context of the rapidly developing environment in which it operates. The Chair regularly reviews the training and development needs with each Director and the Board is made aware of training opportunities.
Board and Committee meetings are regularly used to update Directors on developments in the environment in which the business operates and in-depth presentations are provided on key topical areas. In 2023, these sessions included updates on assurance and governance matters; perspectives in relation to corporate philanthropy and community investment; and market updates in relation to remuneration and pensions.
In addition, the Company Secretary provides regular updates on regulatory, corporate governance and legal matters, and Directors are able to meet individually with senior management if necessary.
External evaluation
In line with best practice, each year, the performance and effectiveness of the Board and its Committees are carefully reviewed through a formal evaluation process, which is traditionally facilitated externally every three years. An external evaluation was last completed in 2019, with internal evaluations completed in 2020, 2021 and 2022 following agreement to defer an external evaluation to 2023 due to the recent appointment of the Chair in 2022.
In 2023, an external evaluation was undertaken and conducted by Independent Audit Limited (‘IA’), following a comprehensive evaluation of several providers. IA has no prior connection with the Company or any of its Directors, with the exception of conducting an external review for Hargreaves Lansdown PLC in 2021, a company on which the Chair has previously served as a director.
An outline of the evaluation process and details of the results of the review are set out on the following pages.
| 104 | IHG | Annual Report and Form 20-F 2023 |
Board effectiveness evaluation
Board evaluation process Stage 1 Appointment Following a review of several external board evaluation providers, IA was commissioned to facilitate the evaluation of the Board and its Committee. Stage 2 Preparation Questionnaires for the Board and four Committees were prepared by IA in discussion with the Company Secretary and the Chair and agreed by each Committee Chair. Stage 3 Completion of questionnaires and follow – up interviews The Board questionnaires were completed by all Board members, the Company Secretary and relevant members of senior management and follow-up interviews with each member of the Board and Company Secretary were conducted. Stage 4 Review of Board papers and meeting observation A review of Board papers and the observation of meetings of the Board and of the Audit, Nomination, and Responsible Business Committees was conducted by IA. Stage 5 Reporting IA analysed the results and complied a report for the Board and each Committee which was discussed in draft with the Chair and Company Secretary and presented to the Board and each of the Committees for discussion and consideration. IA invited Board members to follow up individually if desired. Results of Governance Review Strengths: The results of IA’s external review noted several strengths: 1) The Board’s composition is comprised of a good mix of skills, experience, and personalities that work well with each other and management. 2) New Board members have brought a high degree of openness and willingness to engage. 3) Engagement has been open and transparent, and Board members are able to contribute to productive debate in the decision-making process. Areas of focus for the year ahead: 1) Consideration of the ‘Big Trends’: continued consideration of industry trends and dynamics, including ever-changing customer needs and expectations and competitor actions. 2) Executive succession planning: following both CEO and CFO succession, looking to the capabilities, skills, diversity and characteristics needed for the future, focusing on Executive succession planning and strengthening the Board’s relationship with recently promoted senior management. 3) Risk, technology & ESG: given the dynamic external environment, continued focus on IHG’s overarching Risk Management Framework, emerging technologies and the wider ESG landscape.
| Board activities | IHG | Annual Report and Form 20-F 2023 | 105 |
| Governance |
| Board activities continued |
| Board effectiveness evaluation continued |
Board Committees
The external evaluation process also assessed the effectiveness and support provided by and to the Board Committees. Through the process, it was confirmed that they have the necessary attributes to support their effective operation and that the Committees are well integrated into the Board decision-making processes. Each of the
Committees reviewed the findings and agreed the respective actions with consideration of the overall Board findings where they were deemed relevant to the Committee’s work. Further details are set out in each Committee Report on pages 107, 112, 115 and 125.
Performance evaluation of Directors In addition to the external Board evaluation process outlined above, the Chair assessed the individual performance of the Non-Executive Directors and carried out one-to-one meetings with each of them, focusing on their contribution to the Board and Principal Committees and engagement with fellow Directors, taking into account their relevant skills, knowledge and experience. Particular points of note were shared with the individual Directors and overall, the Chair concluded that the Directors perform their duties independently and effectively and that they dedicate sufficient time to discharge their Board responsibilities. The performance assessment of the Chair was led by the SID. The evaluation focused on: overall leadership of the Board; the Board’s culture and the Chair’s ability to facilitate constructive Board relations; and managing the Board in accordance with high standards of corporate governance. The CEO evaluation was led by the Chair, who collected feedback to a series of questions from the Non-Executive Directors. Key areas of focus included: the Group’s performance and impact of the CEO; the relationship and ability to work collaboratively and transparently with the Board; delivery of the Group’s growth agenda; regard for community and the environment; building talent and organisational capabilities; and progress in relation to IHG’s 2023 plan and future strategic priorities.
| 106 | IHG | Annual Report and Form 20-F 2023 |
Audit Committee Report Strong and controls, governance and the of evolving assessment risks remain core of at how the IHG responsibly operates .” Byron Grote Chair of the Audit Committee Highlights: Ongoing review of the Group’s work to streamline and further automate core financial processes to drive efficiency while maintaining robust controls. Review of the disclosure of, and assurance over, financial and non-financial data, including both climate-related and wider ESG data, in line with evolving regulatory developments and external trends. Review of emerging and evolving risks linked to IHG’s growth strategy, changes in technology and other major initiatives, and regulatory developments. Review of governance and assurance of systems transitions in Finance and HR. Overview of the Group’s response to the Financial Reporting Council (FRC) consultation relating to the UK Corporate Governance Code. Key duties and role of the Committee Key objectives and summary of responsibilities The Audit Committee is responsible for ensuring that IHG maintains a strong control environment. It monitors the integrity of IHG’s financial reporting, including significant financial reporting judgements; maintains oversight and reviews our systems of internal control and risk management; monitors and reviews the effectiveness and performance of internal and external audit functions; and reviews the behaviours expected of IHG’s employees through the Code of Conduct and related policies. The Committee’s role, responsibilities and authority delegated to it by the Board are set out in its Terms of Reference (ToR), which are reviewed annually and approved by the Board. The ToR are available at ihgplc.com/investors under Corporate governance. As noted, the Committee focused its attention on reviewing and obtaining assurance in relation to emerging and evolving risks as well as the Group Financial Statements and controls. Key areas of focus over the year have been: the evolution of the Group’s financial governance programme, including streamlining processes and automation of controls; internal controls and assurance in connection with the Group’s HR system transition and Iberostar integration; the conclusions and recommendations of an external quality assessment of the Group’s Risk and Assurance function; review of the internal financial control framework of owned, leased, managed lease and managed hotels, including deployment of software to enhance controls and property-level workflows; and the Group’s approach to managing on-going compliance risks, including in relation to hotel operational safety and security, supply chain, data privacy and ethics and compliance. Membership and attendance at meetings Details of the Committee’s membership and attendance at meetings are set out on page 96. The Chair of the Board, CEO, CFO, Group Financial Controller, Head of Risk and Assurance, Deputy Company Secretary and our external Auditor attended all meetings in 2023. The General Counsel and Company Secretary also normally attends all meetings and in 2023, attended all but one of the meetings. Other attendees are invited to meetings as appropriate and the CEO and all other Directors were invited to Committee meetings where the approval of financial reporting was considered and discussed. The Committee continues to hold private sessions with the internal and external Auditors without the presence of management to ensure that a culture of transparency is maintained. The Committee Chair continues to have recent and relevant financial experience and all members of the Committee are Independent Non-Executive Directors. In accordance with the Code, the Board also considers that the Committee as a whole possesses competence relevant to the Company’s sector, having a range of financial and commercial experience in the hospitality industry and the broader commercial environment in which the Group operates. Further details of the skills and experience of the Committee members can be found on pages 93 to 95. Reporting to the Board Following each Committee meeting, the Committee Chair updates the Board on key issues discussed. The papers and minutes for each meeting are circulated to all Board members, who are invited to request further information if required and to provide any challenge where necessary. Effectiveness of the Committee During the year, the Committee’s effectiveness was reviewed as part of the external Board evaluation process. The Committee concluded that it remains effective, focuses on the right issues and provides a good level of challenge. An area identified for future focus is further developing Committee papers to continue to enhance discussions.
| Governance |
| Audit Committee Report continued |
Focus areas and activities
Financial and narrative reporting
During the year, the Committee reviewed and recommended approval of the interim and annual Financial Statements (considering the relevant accounting and reporting matters such as key judgement areas, going concern and viability statements, the financial reporting impacts of commercial litigation and disputes, exceptional items and impairment reviews) and the Group’s quarterly trading updates. All members of the Board are asked to attend these meetings.
As well as receiving input and guidance from the external Auditor on the areas outlined above, the Committee also received regular reports from the Chair of the Disclosure Committee, which liaised closely with other external advisers of the Group to ensure that disclosure and regulatory requirements were being appropriately considered and met. Copies of the Disclosure Committee’s minutes were also provided to the Committee.
The Committee received early drafts of the Annual Report and Form 20-F 2023 (Annual Report), and when providing comments considered: (i) the process for preparing and verifying the Annual Report, which included review by the Executive Committee and input from senior employees in the Company Secretariat, Legal, Operations, Strategy, Human Resources, Finance, Risk and Assurance teams; (ii) a report from the Chair of the Disclosure Committee; and (iii) a checklist prepared by the Annual Report team confirming compliance with the relevant regulatory requirements.
The Committee also considered management’s analysis of how the content, taken as a whole, was ‘fair, balanced and understandable’, and whether it contained the necessary information for shareholders to assess the Group’s position, performance, business model and strategy. In order to reach this conclusion, a dedicated project team worked on the contents of the Annual Report and a detailed verification process to confirm the accuracy of the information contained within the Annual Report was undertaken by the Financial Planning and Analysis department. The Committee then considered both the structure and content of the Annual Report to ensure that the key messages were effectively and consistently communicated and that meaningful links between the business model, strategy, KPIs, principal risks and remuneration were clearly identified throughout the Annual Report. The Committee also considered the proportionate and consistent consideration of climate matters across the Annual Report, including the Task Force on Climate-Related Financial Disclosures (TCFD) statement and an asset-by-asset review for impairment purposes.
Alongside this review, the Committee considered guidance provided by the FRC throughout the year, including in relation to the concept of an Audit and Assurance Policy within the proposed changes to the UK Corporate Governance Code. The Company’s consultation response to the FRC on the proposal was reviewed by the Committee. The Committee also reviewed trends in ESG reporting requirements and considered governance and assurance implications.
Following a review of the contents of the Annual Report alongside the aforementioned criteria, the Committee reported its recommendation to approve the Annual Report to the Board.
Significant matters in the 2023 Financial Statements
Throughout 2023, the Committee provided ongoing challenge to management’s accounting, reporting and internal controls. The Committee discussed with management and the external Auditor the significant areas of complexity, management judgement and estimation in relation to the Financial Statements, and the impact of any accounting developments or legislative changes. The Committee has satisfied itself that management had adequately identified and considered all potentially significant accounting and disclosure matters. The key items discussed are outlined on pages 110 and 111.
Internal control and risk management
The Board is responsible for establishing procedures to manage risk, overseeing the internal control framework and determining the nature and extent of the principal risks the Company is willing to take to achieve its long-term objectives. The Committee supports the Board by reviewing the effectiveness of the Group’s internal control and risk management systems and assessing emerging and principal risks and undertook such a review in respect of 2023.
In order to effectively review the internal control and risk management systems, the Committee:
| • | receives regular reports from management, the Risk and Assurance team and the external Auditor on the effectiveness of the systems for risk management and internal controls, including financial, operational and compliance controls; |
| • | reviews the process by which risks are identified (including procedures in place to identify emerging risks and linkage to wider consideration of strategy and resilience) and assesses the timeliness and effectiveness of action taken by management, including regular reports on the Company’s overall risk management and internal controls systems and principal risks; and |
| • | receives regular reports relevant to risk management and internal controls, both financial and non-financial, to ensure that current and emerging risks are identified and assessed and that there is an appropriate management response (see pages 42 to 49 for further detail on our risks and initiatives to manage them). |
As part of the Committee’s review of the internal control and risk management systems, key financial, operational and compliance controls across the business continue to be monitored and tested throughout the year. The Committee assesses the approach to Sarbanes-Oxley Act 2002 (SOX) compliance in accordance with our US obligations and reviews reports on the progress of the SOX programme at each meeting. During the year, the Committee received updates on the delivery of the training programme for SOX control owners and the longer-term objective of reducing the overall control count.
During 2023, the Committee considered the activity undertaken by the Risk and Assurance team to review and refresh risk profiles and integrate resilience planning into the prioritisation and capability building of the Group’s business teams. The Committee also received updates on:
| • | key assurance projects relating to the transition of the Group’s primary HR system and integration in respect of the Iberostar alliance; |
| • | supply chain risks and the strategy for mitigating uncertainties, noting the work of the Supply Chain Risk Council to drive awareness of emerging issues among relevant stakeholders and embedding risk management and internal control approaches in relation to supply chain; and |
| • | the Group’s approach to managing hotel operational safety and security risks, including the impact of conversion hotels and the development and integration of new business models such as branded residential and all-inclusive resorts on IHG’s operational safety and security framework. |
Having reviewed the internal controls and risk management systems throughout the year, the Committee concluded that the Group continues to have an effective system of risk management and internal controls, and that there are no material weaknesses in the control environment.
Tax risks, policies and governance
The Group’s CFO has responsibility for tax and tax policies at Board level. These policies and procedures are subject to regular review and update and are approved by the Audit Committee. Procedures to minimise risk include the preparation of thorough tax risk assessments for all transactions carrying material tax risk and,
| 108 | IHG | Annual Report and Form 20-F 2023 |
where appropriate, material tax uncertainties are discussed and resolved with tax authorities in advance.
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Our Approach to Tax document is available at ihgplc.com/en/responsible-business/policies-and-position-statements |
Principal risk areas
During the year, the Committee discussed and assessed the range and aggregate impact of dynamic risks that the Group faced in the context of the ongoing volatility in the geopolitical and macroeconomic environment. Alongside the review of the overall portfolio of risks, the Committee requested and received updates on the following specific areas:
| • | emerging risks in relation to the use and management of Generative Artificial Intelligence (Gen AI) and the management by the business of both upside and downside risks relating to Gen AI; |
| • | physical and chronic climate risks to the hospitality sector; and |
| • | the approach to cross-border data transfers. |
Further details of our principal risks, uncertainties and review process can be found on pages 42 to 49.
Non-audit services
IHG’s Audit and Non-Audit Services Pre-Approval Policy helps to ensure that the external Auditor’s independence and objectivity are not impacted by non-audit services provided by the external Auditor. The policy is reviewed by the Audit Committee annually.
The policy requires that pre-approval is obtained from the Audit Committee for all services provided by the external Auditor before any work can commence, without any de minimis threshold in line with US SEC requirements and UK ethical standards. The Committee reviewed the audit and non-audit fees incurred with the external Auditor and noted that there had been no prohibited services (as defined by SOX or under UK ethical standards) provided to the Group during the year. The Committee is prohibited from delegating non-audit services approval to management and compliance with the policy is actively managed.
IHG is committed to maintaining non-audit fees at a low level and the Committee remains cognisant of the guidelines of investor advisory bodies on non-audit fees. During 2023, 10% of services provided to the Group were non-audit services (2022: 11%), primarily related to System and Organisation Controls (SOC) Reports. These services are typically performed by external auditors as knowledge of the Company or Group is necessary for the provision of the non-audit services. Details of the fees paid to PwC for non-audit and statutory audit work during 2023 can be found on page 178. The Committee is satisfied that the Company was compliant during the year with the FRC’s Ethical and Auditing Standards in respect of the scope and maximum permitted level of fees incurred for non-audit services provided by PwC. Where non-audit work is performed by PwC, both the Company and PwC ensure adherence to robust processes to prevent the objectivity and independence of the external Auditor being compromised.
Risk and assurance – Internal Audit
The Committee discusses and approves the Internal Audit annual plan, which aims to provide objective and insightful assurance that appropriate controls are in place to support our strategy and growth ambitions. Progress against the Internal Audit plan is reported at each meeting and, during 2023, the Committee reviewed several areas set out in the plan, including programme governance and oversight of expenditure and benefit delivery.
The 2024 plan presented to the Committee in November 2023 maintains focus on the integrity of the risk management and internal control system, providing independent assurance to complement management’s own activities where these are relatively mature, well governed and/or regulated. Areas of focus in 2024 include management of interdependencies between major technology
programmes, control arrangements for data and information usage, storage and transfer and management’s preparedness for fast-evolving legislation.
Following consideration, the Committee confirmed its agreement to the 2024 Internal Audit plan, including the assurance objectives identified. The Committee reviews the results of completed audits and observations from other ongoing assurance and control improvement support, as well as actions taken by management in response to Internal Audit’s work.
The functional effectiveness of Internal Audit is assessed on an ongoing basis and reported to the Committee throughout the year. During 2023, this involved an independent external quality assessment of the function. The Committee reviewed and considered the conclusions of the external assessment, with particular focus on the future methodology and capabilities required for the function, including the use of external expertise.
Governance and compliance
The Committee is also responsible for reviewing the Group’s Code of Conduct and related policies.
Looking forward
During 2024, the Committee will remain focused on the Group’s internal control and risk management environment and approach to financial reporting. In doing so, the Committee will take into account developments in reporting responsibilities, including those relating to changes in the UK Corporate Governance Code and other regulatory requirements.
External Auditor – reappointment of PwC
The Committee reviewed and assessed PwC’s performance during the year and considered its reappointment as the Group’s external Auditor. PwC was originally appointed as the Group’s Auditor in March 2021, following a tender process in 2019. Giles Hannam remained as PwC’s lead audit partner in 2023.
The Committee regularly reviewed and assessed the progress of the audit throughout the year and also undertook a detailed effectiveness assessment through two surveys; one for Committee members and the other for senior management.
The surveys focused on the following areas:
| • | the quality and service of the audit team; |
| • | audit planning and execution; |
| • | communication with the Committee and senior management; |
| • | contribution to process controls and financial reporting; and |
| • | the independence and objectivity of the Auditors. |
The responses to the surveys were positive and noted in particular that the PwC audit team had developed a clear audit plan that was effectively communicated, demonstrated strong technical expertise and provided constructive challenge.
During 2023, the Committee also agreed with PwC that reporting would be provided against a series of audit quality indicators to support the Committee’s assessment of audit quality. This reporting was provided for the first time in February 2024.
Accordingly, the Committee concluded that the PwC audit team was providing the required quality in its provision of audit services and maintained appropriate levels of independence and objectivity. The Committee therefore recommended the continued appointment of PwC to the Board.
The Group has complied with the requirements of the Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014, which relates to the frequency and governance of tenders for the appointment of the external Auditor and the setting of a policy on the provision of non-audit services.
| Audit Committee Report | IHG | Annual Report and Form 20-F 2023 | 109 |
| Governance |
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Significant matters in the 2023 Financial Statements
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| Accounting for IHG One Rewards | Accounting for IHG One Rewards requires significant use of estimation techniques and represents a material deferred revenue balance. The Committee reviews the controls, judgements and estimates related to accounting for IHG One Rewards. | The Committee reviewed the deferred revenue balance, the valuation approach, the results of the external actuarial review and procedures completed to determine the breakage assumption for outstanding IHG One Rewards points.
The Committee reviewed management’s papers supporting the removal of an adjustment made in recent years that placed more emphasis on pre-Covid-19 redemption behaviours.
The Committee concluded that the deferred revenue balance is appropriately stated. |
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| Accounting for the System Fund | Given the unique nature of the System Fund, the Committee reviews the controls and processes related to System Fund accounting. | The Committee met with senior finance management to review and evaluate the risk areas associated with the System Fund.
The Committee reviewed a paper from management summarising the principles determining the allocation of revenues and expenses to the System Fund and the related governance and internal control environment. The Committee concluded that the accounting treatment of the System Fund and related disclosures are appropriate. |
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| Impairment testing | Judgement is applied in assessing whether triggering events for impairment testing of assets or cash-generating units have occurred. The Committee scrutinises the methodologies applied and the potential for asset impairment or impairment reversal. | The Committee reviewed management reports outlining the approach taken on impairment testing and key assumptions and sensitivities supporting the conclusion on the various asset categories. The Committee examined in detail whether triggering events for impairment testing had occurred. The Committee agreed with the determinations reached on impairment. | ||||||
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| Litigation and contingencies | From time to time, the Group is subject to legal proceedings with the ultimate outcome of each being subject to many uncertainties. The Committee reviews and evaluates the need for provisioning and considers the adequacy of the disclosure. | At each meeting during the year, the Committee considered reports detailing all material litigation matters including commercial disputes. The Committee discussed and agreed any provisioning requirements based on underlying factors. Disclosures were assessed, with particular emphasis on the completeness of uncertainties disclosed. | ||||||
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| Exceptional items | The Group exercises judgement in presenting exceptional items. The Committee reviews and challenges the classification of items as exceptional based on their size, nature or incidence, with consideration given to consistency of treatment with prior years and between gains and losses. | The Committee reviewed papers by management and considered the consistency of treatment and nature of items classified as exceptional. The Committee reviewed and challenged the significance, timing and nature of the exceptional items (see pages 179 to 180). The Committee also considered the sufficiency of disclosure and whether such disclosure explained the rationale for why each item is considered to be exceptional. The Committee concluded that the disclosures and the treatment of the items shown as exceptional are appropriate. | ||||||
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| Going concern and viability | The Committee reviews management’s financial modelling to conclude on the appropriateness of the going concern and viability statement. | The Committee reviewed and challenged the scenarios considered by management, the detailed cash flow forecasts and the mitigating actions available to management considered in its going concern assessment to June 2025 and the three-year viability assessment and concluded these were appropriate. The Committee also reviewed and challenged the reverse stress test assumptions to confirm the viability of the Group. The Committee reviewed going concern disclosures (page 161) and the viability statement (pages 50 and 51) and is satisfied these are appropriate. | ||||||
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| Climate risk | In preparing the Group Financial Statements, the potential impacts of climate change have been considered. | The Committee reviewed an analysis from management summarising the approach taken to consider climate risk in the Group Financial Statements and concluded that the disclosures were appropriate. The Committee agreed that the disclosures made in respect of the TCFD were appropriate. The Committee satisfied itself that the approach across the Annual Report has been proportionate and consistent. | ||||||
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| 110 | IHG | Annual Report and Form 20-F 2023 |
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| UK deferred tax asset | Given the size of the Group’s UK deferred tax asset ($113m), the Committee reviewed and challenged the key assumptions determining the recoverability of the deferred tax asset and whether this should be disclosed as a significant estimate. | The Committee confirmed the estimates used to support the recovery of the UK deferred tax asset were consistent with those used in the impairment and going concern and viability assessments. Given the recovery to levels of profitability assumed in these estimates, the Committee concluded that it agreed with the recognition of the deferred tax asset, that this was not a significant estimate, as a material change in estimate is not expected in the next 12 months, and that the disclosures are appropriate. | ||||||
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| Financial Statement disclosures | The Committee considers the appropriateness of disclosures in the Group Financial Statements. | The Committee reviewed disclosures required on adoption of IFRS 17 ‘Insurance Contracts’. The Committee also reviewed management’s proposals to improve the clarity and succinctness of the Group Financial Statements by omitting immaterial disclosures and combining disclosures around System Fund and reimbursable expenses in certain areas of the Financial Statements. The Committee concluded that the disclosures to the Group Financial Statements are appropriate and proportional. | ||||||
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| Audit Committee Report | IHG | Annual Report and Form 20-F 2023 | 111 |
Governance Responsible Business Committee Report We focused remain on ensuring strategy on IHG’s people, communities planet underpins and our performance long-term.” Graham Allan Chair of the Responsible Business Committee Highlights Worked together with the Remuneration Committee with respect to the inclusion of ESG metrics in the LTIP. Review of the Group’s strategy, workstreams and metrics in relation to each of the Group’s Journey to Tomorrow pillars. Review and approval of Group policies regarding key ESG areas, including Communities, Environment, Responsible Procurement and Human Rights. Expanded engagement with the Group’s workforce through the Voice of the Employee programme. Key duties and role of the Committee Key objectives and summary of responsibilities The Committee reviews and advises the Board on the Group’s responsible business objectives and strategy, including its impact on the environment and climate change; social, community and human rights issues; its approach to sustainable development and responsible procurement; and stakeholder engagement in relation to the Group’s approach to responsible business. The Committee is also responsible for assessing the Board’s engagement with the workforce and the Group’s DE&I agenda. The Committee’s role, responsibilities and authority delegated to it by the Board are set out in its Terms of Reference (ToR), which are reviewed annually and approved by the Board. The ToR are available at ihgplc.com/investors under Corporate governance. Membership and attendance at meetings The Committee’s membership and attendance at meetings are set out on page 96. The Chair of the Board, CEO, Executive Vice President, Global Corporate Affairs, Chief Sustainability Officer and Deputy Company Secretary attended all meetings held during the year. The General Counsel and Company Secretary attended all but one meeting. Reporting to the Board The Committee Chair updates the Board on all key issues raised at Committee meetings. Papers and minutes for each meeting are also circulated to all Board members, who are invited to request further information where necessary. Effectiveness of the Committee In 2023, the Committee’s effectiveness was reviewed as part of the external Board evaluation process. The Committee concluded that it remains effective and meets its responsibilities well. Focus areas identified include continued assessment of the risks relating to climate change and further engagement with the supply chain. Focus areas and activities Responsible business commitments The Committee’s key responsibilities and focus areas over the year have been: assessing the 2023 strategic priorities that support the Group’s 2030 responsible business commitments and monitoring the progress against them; reviewing the status of the Group’s DE&I targets and the work undertaken by management to drive achievement of the targets, including progress in relation to increasing gender and ethnic diversity within management at both the corporate and hotel level; monitoring the progress of climate risk reporting and the Group’s approach to TCFD reporting disclosures for 2023. Further information on TCFD is included on pages 52 to 59;assessing the progress of, and challenges to, the decarbonisation strategy and workstreams, with particular focus on the integration of ECMs into brand standards for operating hotels, developing new-build hotels that operate with very low carbon emissions and future options for a renewable energy programme, as well as the costs and impact on owners in relation to each; working with the Remuneration Committee to consider current and future ESG metrics included in the LTIP for Executive Directors and senior leaders, involving measures relating to people and the environment; reviewing the Group’s human rights programme and Modern Slavery Statement, with particular focus on identifying and addressing human rights risks specific to the hospitality industry; 112 IHG | Annual Report and Form 20-F 2023
| • | monitoring the Group’s responsible procurement programme: the Committee considered the progress of key workstreams of the Group’s responsible procurement strategy, including its alignment with the Group’s responsible business commitments and with particular focus on supplier diversity, including how green and diverse suppliers are defined and certified; and |
| • | assessing the Group’s approach to meeting its commitment to improve the lives of people in our communities around the world and strategic collaboration with expert charities to assist those in greatest need. |
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Further information on our 10-year responsible business plan can be found on pages 28 to 35. |
Looking forward
During 2024, the Committee will continue to focus on the progress of the Group’s 2030 responsible business commitments and the strategic priorities that support them. The Committee will also focus on developments in the regulatory landscape around ESG matters, particularly in relation to climate and environmental reporting.
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Our Responsible Business Report is available at ihgplc.com/responsible-business |
Voice of the Employee As IHG’s designated Non-Executive Director (NED) with responsibility for workforce engagement (Voice of the Employee), Duriya Farooqui, supported by the Group’s Global HR team, held a series of employee interface sessions throughout the year to engage directly with members of IHG’s corporate and hotel workforces, with the aim of sharing feedback with the Board for consideration in its decision-making. Role and responsibilities The role and responsibilities of the designated Voice of the Employee NED are to: • support the design of the structure and content of Board discussions on employee engagement and culture; • evaluate employee engagement approaches and their effectiveness; • ensure that employee feedback and interests are factored into the Board’s decisions and KPI setting; • ensure that the Board, through the Executive Committee, has effective methods of receiving feedback from employees and communicating Board and executive decisions and priorities throughout the organisation; • ensure all significant business and budget proposals include a management assessment of the impact on employees; and • ensure executives share employee feedback openly, transparently and in a balanced way, including reviewing employee engagement surveys and other employee reports, including whistleblowing. 2023 engagement Throughout 2023, Duriya, with the participation of several other NEDs and Chair Deanna Oppenheimer, hosted fifteen employee interface meetings to engage with a cross-section of employees and received detailed feedback. These feedback sessions, which were a mix of in person and virtual meetings/forums, included leader groups within the US and UK hotels, reservations and corporate populations, and ERGs across the UK, US, India, China and various EMEAA countries as well as colleagues who have recently joined the organisation. Discussion topics and themes in relation to the feedback received from employees included: workplace culture; leader communications; strategy, prioritisation and collaboration; talent attraction; onboarding and retention; personal and career development; technology and systems; and agile ways of working and decision-making. Additional engagement and activities undertaken by Duriya, the Chair of the Board, and other NEDs during the year included: • monitoring and reviewing the content and feedback from global ‘all employee’ CEO calls; • reviewing employee engagement survey results; • engaging with the Global HR Leadership team to receive broader cultural insights; and • engaging directly with senior leaders at Board and Committee meetings, the Board strategy event and the Group’s senior leaders’ meeting. Insights and learnings Duriya provided regular feedback to the Responsible Business Committee and the Board throughout the year, with key Board discussions taking place around the insights as well as action planning arising from employee engagement survey results. Plans for 2024 Duriya will remain as the Board member with responsibility for workforce engagement in 2024, assisted by additional NEDs. A schedule of discussions and feedback sessions has been arranged for 2024 and will continue to encompass a wide group of employees and leaders from across all regions, including ERGs, Lean In Circles and new starters. The discussion topics will be tailored to specifically focus on those areas that support the strategy. Additionally, the Board will continue to keep the functioning of the Voice of the Employee programme under review to ensure it meets best practice and complies with regulatory developments.
| Responsible Business Committee Report | IHG | Annual Report and Form 20-F 2023 | 113 |
Governance Nomination Committee Report Deanna Oppenheimer Chair of the Nomination Committee Highlights Successful execution of Board succession planning with the new appointments of Elie Maalouf as CEO, Angie Risley as Remuneration Committee Chair Designate and Ron Kalifa as Non-Executive Director, maintaining an appropriate balance of skills and enhancing Board diversity.The Board remains well positioned to provide constructive challenge, strategic guidance and offer appropriate advice to the Group’s management as it looks to deliver on the Group’s refreshed strategy. Oversaw the completion of the external Board and Committee evaluation process. Remained focused on succession planning at the Executive Committee and senior management level. Key duties and role of the Committee Key objectives and summary of responsibilities The Committee reviews the composition of the Board and its Principal Committees, evaluating the balance of skills, experience, independence, knowledge and diversity requirements before making appropriate recommendations to the Board as to any changes. It also ensures plans are in place for orderly succession both for Directors and other senior executives, and is responsible for reviewing the Group’s senior leadership needs. The Committee’s role, responsibilities and authority delegated to it by the Board, including processes in relation to appointments, are set out in its Terms of Reference (ToR), which are reviewed annually and approved by the Board. The ToR state that the Committee is responsible for considering potential candidates for appointment to the Board based on merit, cognitive and personal strengths with due regard for the benefits of diversity, including gender and social, ethnic and geographic backgrounds. The ToR are available at ihgplc.com/investors under Corporate governance. The Committee’s key responsibilities and focus areas during the year have been: • assessing the composition of the Board and the Principal Committees and succession planning, including consideration of gender balance and ethnic and geographical diversity, in accordance with the ToR and consistent with the Group’s Global Diversity, Equity, Inclusion and Equal Opportunities Policy (DE&I Policy); • engaging with external search consultancies and making recommendations on appointments to the Board; • overseeing the external performance evaluation of the Board and its Principal Committees as well as the evaluation of individual Non-Executive Directors; and • monitoring the Executive Committee and senior leadership talent and succession planning. Membership and attendance at meetings The Committee’s membership and attendance at meetings are available on page 96. All members of the Committee are Non-Executive Directors. When the Committee considers matters relating to the Chair of the Nomination Committee position, the Senior Independent Non-Executive Director (SID) acts as Committee Chair. 114 IHG | Annual Report and Form 20-F 2023
Reporting to the Board
The Committee makes recommendations to the Board for all Board appointments. Minutes are circulated to and reviewed by Committee members, and the Committee Chair reports back to the Board on the activities of the Committee following each meeting.
Effectiveness of the Committee and External Evaluation
During 2023, the Committee was reviewed as part of the external Board evaluation process. Details of the external evaluation, including how it was conducted, the nature and extent of the evaluator’s contact with the Board and the actions arising from the evaluation, are set out on pages 104 to 106. The Committee concluded that it remains effective and succeeds at ensuring that the right number and mix of directors with appropriate core skills are brought onto the Board. Succession planning at Executive Committee and senior management level was identified as an area for continued focus.
Focus areas and activities
Executive Director succession planning
An overview of the CFO succession process, following which Michael Glover was appointed as CFO, was included in last year’s Nomination Committee Report on page 113 of the Company’s Annual Report and Form 20-F 2022.
During 2023, the Committee oversaw the CEO succession process and the appointment of Elie Maalouf as CEO.
The Committee explored both internal and external candidates for the CEO role. A desktop review of possible external candidates was conducted by Spencer Stuart; the Chair also met with members of the Executive Committee to assess career aspirations and CEO capabilities. The Committee considered in particular the relative merits of internal and external candidates.
Following the interview process, including a presentation by Elie Maalouf to, and discussion with, all Non-Executive Directors, the Committee concluded that it should recommend to the Board the appointment of Elie as CEO.
The Committee also oversaw induction plans for both Michael and Elie in respect of their new roles. Further details of the induction plans are provided on page 104.
Board and Principal Committee composition and succession planning
The Committee continued to maintain and review throughout the year a Board skills matrix and a Board refreshment schedule, which track the skills, competencies and experiences of the Board members and provide an overview of the Board’s tenure, gender, ethnicity and Committee assignment considerations. These helped to inform future Board appointments and rotations.
Using this resource, and in anticipation of Jo Harlow reaching a nine-year term during the year, the Committee led the process to recruit a new Remuneration Committee Chair.
In addition, the Committee determined that the Board would benefit from recent CEO experience and further expertise in the technology and digital sector. Accordingly, the Committee initiated a search for an additional Non-Executive Director to meet this profile.
Spencer Stuart was engaged in connection with the Remuneration Committee Chair search (as well as the CEO succession) and Heidrick & Struggles was engaged in connection with the other Non-Executive Director search. Neither Spencer Stuart nor Heidrick & Struggles has any other connection with the Company or any individual Directors.
With regard to both searches, desktop reviews were conducted to identify suitable candidates for the roles. Shortlisted candidates met with various members of the Board and management as relevant, with assessments being made on the appropriate competencies, functional experience, cultural characteristics and consideration of candidates’ other commitments in line with the provisions of the UK Corporate Governance Code.
Following completion of an interview process and reference and background checks, the Committee recommended to the Board the appointment of Angie Risley as Non-Executive Director and Chair Designate of the Remuneration Committee, which was approved by the Board with effect from 1 September 2023.
Likewise, following similar completion of an interview process and reference and background checks, the Committee recommended to the Board the appointment of Ron Kalifa as Non-Executive Director, which was approved by the Board with effect from 1 January 2024.
Executive Committee talent and succession
Throughout the year, the Committee also received updates on talent and succession planning at Executive Committee and senior leadership levels, noting in particular progress against DE&I objectives.
Information on the gender and ethnicity balance of the Board and the Executive Committee is included on page 99. Information on the gender and ethnicity balance of senior management is included on page 30.
The Group’s DE&I Policy applies in respect of the Board and its Principal Committees. The DE&I Policy aims to create a diverse culture and support diversity and inclusion. When assessing and considering succession planning at Board and Executive Committee levels, the Committee takes diversity considerations into account consistent with the DE&I Policy. The DE&I Policy aligns to the Group’s responsible business commitments and a description of progress against these commitments is included in the 2023 DE&I Progress Report, available at ihgplc.com/Responsible Business under Reporting.
Looking forward
In 2024, the Committee will continue to ensure that we have appropriate plans in place for orderly succession of appointments to the Board and to senior management, so that an appropriate balance of skills, experience, knowledge and diversity is maintained.
| Nomination Committee Report | IHG | Annual Report and Form 20-F 2023 | 115 |
Table of contents
| 116 | Directors’ Remuneration Report (subject to advisory vote at the 2024 AGM) |
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| • | 119 At a glance |
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increase in LTIP quantum for Executive Directors, and which differed by shareholder. The increase in LTIP quantum was thoroughly discussed and explained in the consultations leading up to the approval of the 2023 DR Policy at the 2023 AGM and in our follow up discussions, and was well understood and supported by shareholders, based on the transparent benchmarking of the hotel industry.
In the context of this feedback, and the overall level of support for the DR Policy (at almost 75%), the Committee concluded that the DR Policy changes reflected the supportive views of a significant majority of shareholders, who continue to agree that the commercial rationale for the DR Policy changes is critical to the retention and development of global talent in order to drive the long-term success of the business. Feedback on votes against the DRR indicated that these related either to the use of discretion on the LTIP 2020/22 cash flow outcome or to other shareholder-specific concerns. The Committee considers that the 76.94% voting level demonstrated strong support for their view that the outcome reflected the exceptional performance of the Executive Directors in managing cash flow during the pandemic.
Having met with more shareholders in January 2024, their support of IHG’s continuous need to improve the competitiveness of Executive Director pay was evident. The Board is of the view that further changes to Executive Director pay will need to be considered in order to help protect our Executive Director retention and talent pipeline, which are key for successful future business growth.
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The approved DR Policy is available on IHG’s website at ihgplc.com/investors under Corporate governance. |
Board changes
The business criticality of attracting and retaining high performing Executive Directors and their succession pipeline has been highlighted in the departures of the Chief Financial Officer & Group Head of Strategy and the Group Chief Executive Officer during 2023. It is vital to IHG’s continued growth that the quality of talent existing in our current Executive Director team is reflected in our internal and external candidates for succession. The vast majority of our competitors are based in the US, therefore the corresponding talent market is US-based. There remains a significant difference between our CEO pay level and that of our US competitors, as well as differences in the structure and mix of incentives, and the Committee will remain focused and will continue to engage with shareholders going forward on how this can be addressed in the context of retaining existing talent and developing and retaining successor talent.
As announced by the Company on 5 May 2023 and the s430(2B) of the Companies Act 2006 declaration released on 28 June 2023, Keith Barr stepped down from the role of CEO, and from the Board, on 30 June 2023. The Committee exercised its discretion to treat Keith Barr as a ‘good leaver’, in accordance with the relevant provisions of applicable incentive and share plan rules. Elie Maalouf succeeded Keith Barr as CEO with effect from 1 July 2023. Elie was already a member of IHG’s Board and had been leading IHG’s Americas business as regional CEO for eight years.
Historically, our succession strategy has generally been to grow executive level successors within the business, particularly in the US. Whilst we remain focused on maintaining our ability to secure a strong executive level internal succession pipeline, this has become more challenging in recent years as those potential successors move to positions outside IHG offering more attractive packages at their level and above, both in terms of structure (for example, restricted stock units) and quantum. The ability to attract Elie Maalouf into the role of CEO has enabled us to secure a leader with significant US market experience and who continues to maintain key government and industry relationships in the US, as well as having an in-depth global knowledge of IHG. We are committed to ensuring that there remains a robust succession plan in place at executive level.
We shared remuneration details for Elie Maalouf upon his appointment in a voluntary published statement in July 2023, as well as in discussions with shareholders in October 2023. In our AGM follow-up meetings, strong support was expressed by shareholders regarding the way in which succession planning had been conducted, as well as for the pay arrangements for Elie, with recognition of the competitive challenges we face operating across UK and US markets, where pay structures vary substantially.
Elie’s annual base salary of £990,000 represents a 7% increase on that of his predecessor; the outgoing CEO Keith Barr would have received an estimated 4% increase to his salary in April 2024, reducing the difference to 2.9%. Furthermore, Elie will not be subject to a salary review until April 2025. We estimate that Elie’s full year CEO single total figure of remuneration will not exceed that of Keith Barr’s until 2025. Elie’s remuneration remains proportionate in the context of both the international hotel peer company and FTSE 100, and follows our strategy of growing successor talent in-house. The Board is fully supportive of the salary positioning in this context. External US recruitment would have involved a more significant pay increase and an externally recruited CEO, who would have not yet been tested in the IHG environment, would have represented a greater risk with less proven value. Full details of the remuneration arrangements for Elie Maalouf’s changes are in line with the approved DR Policy and can be found on page 126.
As reported in the 2022 Directors’ Remuneration Report, Paul Edgecliffe-Johnson stepped down from the role of Chief Financial Officer & Group Head of Strategy, and from the Board, and left IHG on 19 March 2023. Michael Glover succeeded Paul as Chief Financial Officer (CFO), effective 20 March 2023. We were delighted to be able to appoint someone with Michael’s expertise and experience. He has held several roles in his 18 years at IHG, including CFO of IHG’s China region, Group Financial Controller, and his most recent role as CFO Americas with group-wide responsibility for commercial finance operations.
Jill McDonald and Ian Dyson both stepped down from the Board as Non-Executive Directors on 28 February 2023. Subsequently, Graham Allan was appointed Chair of the Responsible Business Committee and Byron Grote was appointed Chair of the Audit Committee; both appointments took effect on 1 March 2023. I was appointed to the Board with effect from 1 September 2023, with membership of the Remuneration and Responsible Business Committees from that date, and assumed the Remuneration Committee Chair role on 1 January 2024. Sir Ron Kalifa joined the Board, with effect from 1 January 2024, becoming a member of the Remuneration and Audit Committees. The remuneration arrangements in respect of all changes were in line with the approved DR Policy and are covered on pages 126 and 127.
Wider workforce remuneration and employee engagement
The Committee is extremely mindful of ongoing inflationary pressures across many of our markets and its impact on the financial and emotional wellbeing of our employees. In 2023, salary increases for the UK and US corporate populations were above that for the CEO in role at the time. The overall average budget for 2024 increases is 4% for our global corporate workforce, with total budgets in the UK and the US being 4.2% and 3.6% respectively. The CEO is not eligible to receive a merit increase for 2024 following his appointment in July 2023, as explained above. We have also made an additional 15% available to the budgeted amount for the personal performance element of our 2023 Annual Performance Plan to increase bonus amounts for our strongest performers.
For the UK leased hotel estate, in agreement with the owner, budgeted 2023 salary increases ranged from 5% to 8%, with higher increases applicable for frontline employees, and one-off payments made to employees in 2023 for those who had worked for at least the final three months of 2022. Budgeted 2024 salary increases range from 3% to 13% with higher increases applicable for frontline employees.
| Directors’ Remuneration Report | IHG | Annual Report and Form 20-F 2023 | 117 |
| Governance |
| Directors’ Remuneration Report continued Remuneration Committee Chair’s statement |
The Real Living Wage will be applied for 12 months from April 2024, as a minimum for all staff, in line with the Real Living Wage Foundation level, and zero-hour contracts are not utilised in the UK leased estate.
In 2023, we also introduced a salary sacrifice electric car scheme for UK corporate colleagues, enhanced maternity and paternity pay for our UK managed hotels, and partnered with Busy Bees to provide both our UK corporate colleagues and our UK managed hotels a 20% discount on childcare fees. Further details of our approach to remuneration across the wider workforce, in general and throughout the year, are outlined on pages 123 to 124.
We were pleased to see overall employee engagement scores remain resilient at 87%, exceeding external benchmarks by 10%. Perceptions of pay also remained strong, exceeding external benchmarks across our hotel, reservations and general manager populations (see page 124). It is also pleasing to see that we have reduced our Gender Pay gap in the UK by 16% since 2017. I look forward to participating in some employee engagement sessions during 2024, as noted on page 127, and hearing views about remuneration more generally.
Implementation of Directors’ Remuneration Policy in 2024
As covered in more detail on pages 138 to 140:
| • | With regards to salary increases for Executive Directors, as mentioned above, the CEO will not receive an increase in 2024; the CFO will receive an increase in line with that of the global corporate workforce following an assessment of 2023 performance. |
| • | The non-financial measures for the 2024 Annual Performance Plan will remain as room openings and room signings, aligned to our key strategic objectives for our future growth priorities, and the financial measure will remain as operating profit from reportable segments, as in 2023. |
| • | LTIP 2024/26 cycle measures will remain as relative TSR, relative net system size growth, absolute cash flow, adjusted earnings per share and ESG. Retaining the same balance of measures for the 2024/26 cycle maintains an overall business performance focus. |
| – | The TSR comparator group has been expanded from 8 to 15 global hotel companies. Details of the new TSR comparator group can be found on pages 138 and 140. |
| – | New ESG metrics have been implemented, with environmental metrics based on Energy Conservation Measures (ECMs) and hotels that operate at low/zero carbon, as key areas in management control that support delivery of our carbon and energy goals. New People measures build on our 2023/25 LTIP representation targets. The new measures focus on quantitative targets in relation to driving greater inclusion and growing our next generation of hotel general managers from our talent pipelines. The Committee considers this innovative approach to People measures to be relevant and appropriate for the Company and fully aligned to our priorities in this area. See pages 139 and 140 for more details. |
| • | Retirement benefits for incumbent UK Executive Directors will continue to align with the maximum company contribution available to all other participants in the UK Pension plan. |
About this report
As always, we strive to make this report as easy to read as possible. Following this statement, there is a reminder of the approved DR Policy applicable in 2023 and its alignment with the UK Corporate Governance Code principles. There is an ‘At a glance’ section on pages 119 to 120 providing an illustration of 2023 remuneration outcomes and, over the following pages, there is a summary of how executive remuneration aligns to Company strategy; a summary of remuneration across the wider workforce; and, on pages 125 to 127, further background on the Remuneration Committee.
This Directors’ Remuneration Report (pages 116 to 140) will be put to an advisory vote by shareholders at the May 2024 Annual General Meeting.
Angie Risley
Chair of the Remuneration Committee
19 February 2024
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| Angie Risley | Remuneration Committee Chair (effective 1 January 2024) |
1 September 2023 |
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| Jo Harlow | Remuneration Committee Chair (1 October 2017 to 31 December 2023) |
1 September 2014 |
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| Deanna Oppenheimer | Chair of the Board |
1 January 2023 |
6/6 | |||||||||||
| Graham Allana | Senior Independent Non-Executive Director |
1 September 2020 to 1 March 2023 |
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| Daniela Barone Soares | Non-Executive Director |
1 March 2021 |
6/6 | |||||||||||
| Ian Dysonb | Audit Committee Chair (until 28 February 2023) |
1 September 2013 to 28 February 2023 |
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| Byron Grote | Audit Committee Chair (effective 1 March 2023) |
1 July 2022 |
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| a | Graham Allan stood down from the Remuneration Committee from 1 March 2023 when he became Chair of the Responsible Business Committee. |
| b | Ian Dyson retired from the Board on 28 February 2023. He did not attend one Remuneration Committee meeting that took place on 27 February 2023, one day prior to his retirement. |
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Certain KPIs and Non-GAAP measures are used throughout the Directors’ Remuneration Report. See pages 84 to 88 for additional detail. |
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Use of Non-GAAP measures: in addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on pages 84 to 88 and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 228.
| 118 | IHG | Annual Report and Form 20-F 2023 |
At a glance
| How to use this report |
Salary |
AUDITED | ||||||
| Within the Directors’ Remuneration Report, we have used colour coding to denote different elements of remuneration. The colours used and the corresponding remuneration elements are: |
50% cash and 50% deferred shares
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Audited information Content contained within a tinted panel highlighted with an ‘Audited’ tab indicates that all the information within the panel is audited. |
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Table of contents
| 119 | At a glance | 123 | Remuneration at IHG – the wider context | |||
| 121 | Our approach to remuneration – link to strategy | 125 | Remuneration Committee details |
Over the following pages of the report, we give an overview of how our remuneration arrangements are aligned to our purpose, ambition and strategic priorities. We have included a summary of our approved DR Policy on page 121, together with a reminder of how the Committee has addressed Provision 40 of the 2018 UK Corporate Governance Code in respect of remuneration policy and practice throughout 2023. Alignment of pay structures throughout the organisation and the implementation of remuneration policy across the wider workforce is covered on pages 123 to 124. Pages 125 to 127 contain a summary of Committee actions during the year.
Executive Director remuneration
2023 actual remuneration vs potential remuneration
The charts below show the 2023 potential remuneration opportunity and actual achievement compared to the 2022 actual achievement. The relevant figures for each of the elements that make up the single total figure of remuneration, as shown below for the Executive Directors, can be found in the table on page 128. See above for the key to individual elements of actual remuneration for 2022 and 2023.
For the purpose of reading the charts below, please note the following:
| • | Elie Maalouf’s 2023 figures are a combined total based on his CEO, Americas role for the 1 January to 30 June period and Group CEO role for the 1 July to 31 December period. |
| • | For Michael Glover, we have not shown 2022 figures as he was promoted to the Board on 20 March 2023 and was not an Executive Director for the 2022 period. His 2023 figures are based on fixed pay and APP for the period 20 March to 31 December and LTIP for the full 2021/23 cycle. |
| • | The one-off relocation payments made to Elie Maalouf and Michael Glover in 2023 have been included within their benefits figure for the purpose of the charts below. The respective amounts have been disclosed in the Other column of the single total figure table on page 128. |
| • | For both Keith Barr and Paul Edgecliffe-Johnson, their 2023 actual and potential figures are based on the period in which they were Executive Directors only (1 January-30 June 2023 for Keith Barr; and 1 January-19 March 2023 for Paul Edgecliffe-Johnson). |
Key for potential
Minimum = Fixed pay
Target = Fixed pay and on-target award for APP (115%) and 50% of maximum LTIP vesting
Maximum = Fixed pay and maximum award for APP and LTIP
Elie Maalouf, Chief Executive Oicer Value (£000) Keith Barr, Former Chief Executive O icer Value (£000) Michael Glover, Chief Financial O icer Value (£000) Paul Edgecli_e-Johnson, Former Chief Financial O icer Value (£000)
| Directors’ Remuneration Report | IHG | Annual Report and Form 20-F 2023 | 119 |
| Governance |
| Directors’ Remuneration Report continued At a glance continued |
How we performed in 2023
The Company delivered another year of strong performance against target in operating profit from reportable segments. Room openings were below target this year and room signings narrowly missed target, by less than one percent, however, both these measures achieved well above threshold performance. In the round, this meant the formulaic 2023 APP achievement was 142.2% of target, resulting in awards for Executive Directors of 163.5% of salary (81.8% of the capped maximum award). Under the LTIP, improved TSR performance against comparators resulted in the vesting of this element for the first time since 2020. This, combined with a solid net system size growth performance relative to our largest competitors and an exceptional management of cash flow, resulted in a formulaic outcome of 57.8% of maximum. Further details on the actual achievement for operating profit from reportable segments and absolute cash flow can be found on pages 128 and 129.
| 120 | IHG | Annual Report and Form 20-F 2023 |
Our approach to remuneration
Summary of approved Directors’ Remuneration Policy (DR Policy)
The Committee has considered the remuneration policy and practices in the context of Provision 40 of the UK Corporate Governance Code:
| Principle | IHG’s approach | |||
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| Clarity | Through the combination of short- and long-term incentive plan measures, the DR Policy is structured to support financial objectives and the strategic priorities of the business that deliver shareholder returns and long-term value creation. Further alignment with shareholder interests is driven by the significant proportion of share-based incentives and Executive Director shareholding requirements. Our reward policies are aligned throughout the organisation and include a proportion of performance-related reward, driving engagement for the whole of the workforce. We always seek to report our DR Policy and performance-related remuneration measures, targets and outcomes in a clear, transparent and balanced way, with relevant and timely communication with all of our stakeholders, including shareholders.
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| Simplicity | Our remuneration structure comprises straightforward and well-understood components. The purpose, structure and strategic alignment of each element is clearly laid out in the remuneration policy summary table:
• fixed pay: base salary, pension and benefits that are consistent with role and location and are designed to attract and retain talent;
• short-term incentive: annual performance-related bonus which incentivises and rewards the delivery of financial and non-financial strategic objectives. For senior employees, a proportion of this bonus is paid in cash and the remainder deferred in shares for a period of at least three years; and
• long-term incentive: a share-based award which incentivises performance over a three-year period based on measures that drive long-term sustainable growth and value creation. |
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IHG | Annual Report and Form 20-F 2023 | 121 |
| Governance |
Directors’ Remuneration Report continued
Our approach to remuneration continued
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| Predictability | The range of possible values of rewards for Executive Directors is clearly disclosed in graphical form both at the time of approving the policy and in the annual implementation report.
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| Risk | Our DR Policy contains a number of elements to ensure that it drives the right behaviours to incentivise the Executive Directors to deliver long-term sustainable growth and shareholder returns and to reward them appropriately: | |||
| • the maximum short- and long-term incentive awards are capped as a % of salary; |
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| • the Committee has clear discretion policies, linked to specific measures where necessary, to override formulaic outcomes; |
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| • Executive Directors agree to clear and comprehensive malus and clawback provisions; and |
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| • significant shareholding requirements apply for Executive Directors, including the deferral of 30% to 50% of bonus in shares; a two-year post-vest holding period for LTIP shares and minimum shareholding requirements both during and after employment.
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| Proportionality | Individual rewards are aligned to the delivery of strategic business objectives. The Committee sets robust and stretching targets to ensure that there is a clear link between the performance of the Group and the awards made to Executive Directors and others.
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| Alignment to culture | IHG has a clear purpose and well-established values and behaviours. The alignment between remuneration incentives and our strategy for relentless focus on growth, and the KPIs that underpin the delivery of our strategy, is outlined below. Other elements of reward, such as salary reviews and, across the wider workforce, the short-term incentive plan and our global recognition scheme, reward employees for performance and actions that demonstrate our values and behaviours.
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Aligning variable elements of remuneration to strategy
Variable elements of remuneration are linked to our strategy, as shown below, in respect of the 2023 APP and 2023/25 LTIP cycle granted in 2023.
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• The strength and breadth of our portfolio, tailored services and solutions, as well as our technology and platforms drive consumer preference, owner returns and rooms growth; all contributing to our revenues and profit.
• Openings and signings are two of our key drivers of system size and central to our strategy of accelerating the growth of our brands in high-value markets.
• Performance on Global Metrics, including key ESG measures (Employee Engagement, Guest Love, Responsible Business), will be reviewed in considering the potential application of discretion to formulaic outcomes on APP strategic objective measures. |
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• Our strategy is intended to deliver unmatched guest experiences and unrivalled owner returns for our stakeholders, including competitive total shareholder returns.
• Our strategy is to accelerate the growth of our brands in high-value markets by using our global scale and expertise so it is important that this forms a key element of our management team’s Long Term Incentive Plan.
• Enhancing our customer and owner offer and accelerating the growth of our brands in high-value markets drives sustained growth in cash flows and profits over the long term, which can be reinvested in our business and returned to shareholders. |
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• Aligned to our people, communities, and planet strategy, new ESG measures (decarbonisation, and diversity, equity and inclusion) are included in our LTIP targets. |
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| Adjusted earnings per share (20%) |
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• EPS provides a measure of the efficiency of the capital structure, as well as promoting further alignment with shareholder experience and value. |
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| 122 | IHG | Annual Report and Form 20-F 2023 |
Remuneration at IHG – the wider context
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Our reward philosophy
Our reward arrangements are competitive, drive creation of value for stakeholders and make us think and act as one team.
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How our reward practices are aligned across all levels of the organisation
Our approach to fairness in reward is an important aspect of our overall reward philosophy and is designed to attract, retain, motivate and engage top talent. It is supported by a robust governance approach that ensures our reward and recognition practices are fair and consistent across our employee and colleague population, regardless of gender and other aspects of diversity, as well as an alignment between the wider direct workforce and executive remuneration. We regularly review our approach externally, ensuring we are competitive in the different markets in which we operate and meet the needs of employees by offering market-driven reward packages.
Examples of alignment and implementation of wider workforce reward strategy in 2023
| Elements of reward | Participants | Commentary | ||||||||
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Salary | All | In the 2023 base salary review process, we continued to put our managers at the heart of the process, allowing them to use their discretion in pay decisions. We also included an additional 25% on top of the standard merit budget in order to address equity and recognise talent. With continuous improvements on our external benchmarking capability, we provided additional line manager support with market data analysis and guidance so that the budget could be targeted in areas where it would have the most impact. Our managers are reminded of our diversity, equity and inclusion statement on making fair reward decisions consistent with our Code of Conduct to ensure all employees are rewarded fairly and according to their contribution, skills and experience, with tips on avoiding any conscious and unconscious bias. For 2024, an additional merit budget will again be made available to address individual equity and talent recognition.
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Benefits | All | In 2023, we introduced an electric car salary sacrifice scheme allowing UK corporate colleagues to obtain an electric car and receive both tax and national insurance savings, whilst at the same time supporting our Journey to Tomorrow environmental commitments. So far, 5.8% of those eligible for the scheme have ordered vehicles to date, which is 16.8% of those who have registered interest in the scheme. We also understand the demands faced by working parents and carers when it comes to balancing their work and home life, so we partnered with Busy Bees to provide our UK corporate colleagues, along with our UK managed hotels, a 20% discount on childcare fees. A key element of our employer brand and beloved colleague benefits is our Employee Room Rate programme, which enables employees to book hotels across many of our brands at a reduced rate. This year, we enabled colleagues to earn IHG One Reward points on Employee Rate stays, and are working on additional enhancements to the programme in the future. The levels of healthcare cover on offer in the UK continued to align across all UK corporate colleagues.
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Pension benefit | All | Pension and retirement benefits are provided in the UK and US in line with market practice.
UK: the contribution rate for corporate and eligible hotel employees in the IHG UK pension plan is aligned across the eligible population with a 2:1 matching ratio up to a maximum of 6% of salary from employees and 12% from the Company.
US: US retirement saving plans are made up of a 401(k) plan which has a 1:1 matching contribution ratio up to a maximum of 6% of salary for eligible corporate employees and a Deferred Compensation Plan (DCP) that provides for supplementary company contributions of up to 16% provided at senior levels (a historic grandfathered rate of 20% applies for a small number of employees who were already receiving this rate when it was removed effective 1 January 2017).
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Annual Performance Plan (APP) | All | All corporate employees share the same corporate performance metrics with the Executive Committee and Executive Directors. For senior management (generally at Executive Committee (EC) level and their direct reports), a proportion of bonus is deferred into shares for a three-year period. The weightings of metrics for all corporate employees below EC level are aligned and a greater portion of an award can be achieved through an employee’s individual performance and contribution to the Company. In addition, in view of the strong performance in 2023, approximately 15% is being added to the amount budgeted for the personal performance element to increase awards for those employees who performed the strongest during 2023.
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Long Term Incentive Plan (LTIP) | Executive Directors and senior management | Senior/mid-management and certain specialist roles are eligible to participate in a Long Term Incentive Plan (LTIP). Performance-based LTIP awards largely apply at the level of Executive Committee and their direct reports; Restricted Stock Units typically apply for eligible employees below this level (see below). In 2023, at the same time as levels for Executive Directors were increased under the new DR Policy, LTIP levels for senior management were adjusted for market competitiveness and to better facilitate internal progression and relieve compression.
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Restricted Stock Units (RSU) | Excludes Executive Directors | In line with typical market practice, particularly in the US, and due to line-of-sight over performance measures, a gradually greater proportion of the LTIP award is made as RSUs (which are not subject to performance conditions but still align employee interests with those of shareholders) for eligible roles from Executive Committee level down.
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Colleague Share Plan | Wider workforce only | IHG matches the number of shares purchased by employees, up to a value of USD 1,000 per year, on a 1-for-1 basis. We expanded the offering of our Colleague Share Plan to include those in our Corporate Reservations offices, as well as a small number of corporate colleagues in countries that were not previously eligible, making the plan available to approximately 98% of our corporate employees below the senior/mid-management level (who receive LTIP and/or RSU awards). The registration for 2024 was open to eligible colleagues in Q4 2023, and the take-up rate for the 2024 plan, including the newly eligible population is 34.8%. For a similar comparison on previous disclosures, the take-up rate excluding the new population is 51.2% (vs. 50.3% for the 2023 plan). Over 26,100 matching shares vested from the 2021 Colleague Share Plan in January 2023; the 2022 plan’s matching share awards vested in January 2024 with over 30,900 shares vesting between 2,028 employees. | |||||||
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| Directors’ Remuneration Report |
IHG | Annual Report and Form 20-F 2023 | 123 |
| Governance |
| Directors’ Remuneration Report continued Our approach to remuneration continued |
| Elements of reward | Participants | Commentary | ||||||
| ∎ Recognition schemes |
All | Colleagues who are below Senior Leader level can be nominated for a cash award through our Bravo recognition scheme, they can be nominated for going above and beyond in their jobs while displaying exceptional IHG behaviours. All of the corporate workforce, including Executive Directors, are eligible to receive a Long-Term Service Award, of varying value, once the employee reaches certain service milestones. In 2023, 3,834 one-off cash recognition awards were made to corporate colleagues and 3,438 to hotel colleagues globally; 814 corporate colleagues and 995 hotel colleagues globally received cash long-term service awards. | ||||||
Employee engagement on pay
We have several forums available for employees to share their thoughts, including employee resource groups (ERGs), a designated Non-Executive Director for workforce engagement and our employee engagement survey, known as Colleague HeartBeat, which allows employees to express their views on key aspects of working at IHG. As the charts below show, the 2023 employee engagement scores for participating hotel and reservations employees and general managers on the questions relating to reward and recognition exceeded our survey provider’s top quartile benchmark.
Wellbeing
We have continued to promote myWellbeing – a framework to support employees across their health, lifestyle and workplace. The myWellbeing suite of resources, which includes an employee Wellbeing Handbook and guidelines for people managers, has been designed to provide a holistic wellbeing offering. Employees also have access to a global Employee Assistance Programme, which offers counselling, practical guidance on topics such as legal, financial and work matters, and additional health and wellbeing resources.
In the UK, we introduced a network of Mental Health First Aiders. This is part of our commitment to ensure the right support is in place to help everyone feel at their best and forms part of our approach to make mental health support more accessible and further unlock the stigma. We trained a small number of people in 2023, with the potential to roll out more widely at IHG across other markets, including our UK managed hotel estate. We increased our focus on financial education, providing our UK corporate colleagues with free expert information and guidance to stay on track to achieve both financial goals and objectives and to support them on their personal financial journeys by offering group webinar sessions and wellbeing articles.
We have also continued to champion initiatives such as Focused Fridays, where we limit meetings, and Recharge Days, where corporate colleagues can spend the day doing whatever they need to unwind. In 2023, all corporate colleagues were given three recharge days to spend as they please, on top of any contracted annual leave they are eligible to receive. These initiatives have helped us achieve a 3% increase in our Wellbeing Index scores for all of our colleagues, and a 2% increase to 89% for our hotel colleagues on last year’s scores.
UK leased hotel employees
As previously reported, following the acquisition of a number of UK hotels in 2019, employing entities for the estate’s hotels were transferred to IHG. Employment terms, including remuneration and benefits, largely remained in place on their pre-acquisition basis. As with the model for leased hotels generally, IHG provides hotel management support to the owners of these UK leased hotels and makes recommendations on matters, including pay, based on market insight and experience. Decisions on implementing pay changes are ultimately determined by the hotel estate owner in the context of their own commercial position and equities across the wider portfolio.
| • | Salary increases for 2023 ranged from 5% to 8%, with higher increases applicable for frontline employees. The Real Living Wage will continue to be applied as a minimum for all staff in line with the Real Living Wage Foundation level and zero-hour contracts are not utilised in the UK leased estate. |
| • | Hotel colleagues receive similar benefits to corporate employees, including enrolment into a workplace pension, employee room rates, Employee Assistance Programme, Bravo recognition programme, retail discount vouchers, the myWellbeing programme and refer-a-friend bonus. Frontline colleagues can also receive incentives and performance-driven bonuses and eligible managers receive an annual performance bonus. In April 2023, enhanced maternity and paternity pay was launched for all hotel colleagues and we also teamed up with Busy Bees Nurseries to offer our managed hotel colleagues a 20% discount on childcare fees. |
Championing a diverse culture where everyone can thrive
One of our 2030 commitments is to drive gender balance and a doubling of under-represented groups across our leadership, and we are building on the significant progress we have made over the past decade towards achieving gender balance, with 35% of our leaders (VP and above) being female (vs. an ambition of 39% by 2025), and a gender-balanced employee population, of which 52% is female. We are delighted to be recognised by Forbes as one of the world’s top companies for women, and we were rated second on the Financial Times Diversity Leaders in 2024. We have reduced our Gender Pay gap in the UK by 16% since 2017, our first year of reporting.
| g Our latest Gender Pay report is available on IHG’s website at ihgplc.com/en/responsible-business/reporting under Reporting. | ||
| 124 | IHG | Annual Report and Form 20-F 2023 |
Remuneration Committee details
2023 focus areas Review and approval of 2022 remuneration outcomes and 2023 incentive plan structures and targets. In-year performance and relative performance tracking. Wider workforce remuneration matters. ESG in incentives. Review, approval and implementation of the 2023 DR Policy. Review, approval and implementation of the Deferred Award Plan (DAP) rules. Shareholder engagement prior to, and following, the AGM vote. CEO remuneration package.
Key objectives and summary of responsibilities
The Remuneration Committee agrees, on behalf of the Board, all aspects of remuneration for the Executive Directors, the Executive Committee and the Chair of the Board, and also agrees the strategy, direction and policy for the remuneration of the senior executives who have a significant influence over the Group’s ability to meet its strategic objectives. Additionally, the Committee reviews wider workforce pay policies and practice to ensure alignment with strategy, values and behaviours and takes this into account when setting Executive Director remuneration. The Committee’s role and responsibilities are set out in its Terms of Reference (ToR), which are reviewed annually and approved by the Board.
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g |
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| The ToR are available on IHG’s website at ihgplc.com/investors under Corporate governance. |
Membership and attendance at meetings
Details of the Committee membership and meeting attendance are set out on pages 96 and 118.
During 2023, the Committee was supported internally by the Company Chair, the Group’s CEO and CFO, and the heads of Human Resources and Reward as necessary. All attend by invitation to provide further background information and context to assist the Committee in its duties. They are not present for any discussions that relate directly to their own remuneration or where their attendance would not be appropriate.
Reporting to the Board
The Committee Chair updates the Board on all key issues raised at Committee meetings. Papers and minutes for each meeting are also circulated to all Board members for review and comment.
Non-Executive Directors’ letters of appointment and notice periods
Non-Executive Directors have letters of appointment, which are available upon request from the Company Secretary’s office.
Deanna Oppenheimer, Non-Executive Chair, is subject to 12 months’ notice and is in compliance with Provision 19 of the UK Corporate Governance Code. No other Non-Executive Directors are subject to notice periods; all Non-Executive Directors are subject to an annual re-election by shareholders at the AGM.
Effectiveness of the Committee
The effectiveness of the Committee is monitored and assessed regularly by the Chair of the Committee and the Chair of the Board.
Remuneration advisers
IHG appointed Deloitte LLP to act as independent adviser to the Committee in 2019 following a competitive tender process undertaken by the Committee. Deloitte is a member of the Remuneration Consultants Group and, as such, operates under the code of conduct in relation to executive remuneration consulting in the UK.
Fees of £159,400 were paid to Deloitte in respect of advice provided to the Committee in 2023, which included significant input into the review and implementation of the DR Policy during the year. This was in the form of an agreed fee for support in the preparation of papers and attendance at meetings, with work on additional items charged at hourly rates. The terms of engagement for Deloitte are available from the Company Secretary’s office upon request. Separately, other parts of Deloitte LLP also advised the Company in relation to corporation tax, mobility and consulting services. The Committee is satisfied that the advice received is objective and independent.
Approach to target setting
Targets are set by the Committee and senior management, taking into account IHG’s growth ambitions and long-range business plan, market expectations and the circumstances and relative performance at the time, to set stretching achievement targets for senior executives that will reflect successful outcomes for the business based on its strategic and financial objectives for the period.
Absolute targets may be set relative to budget and/or by reference to prior results, generally containing a performance range with additional stretch to incentivise outperformance and minimum performance levels for payout. Relative targets are set against an appropriate comparator group of companies for the relevant measure, for example, relative NSSG in the LTIP was set against our six largest competitors with over 500k rooms to reflect our strategy of accelerating the growth of our brands in high-value markets.
Performance will be reviewed throughout the period in which it is applicable for, and, if any corrections are required, this will be disclosed in the Directors’ Remuneration Report for the year in which the correction has been agreed. Details on a correction for the 2023/25 LTIP calculation can be found on page 132.
Shareholder engagement
The Chair of the Committee engaged extensively with shareholders during 2023 in respect of the DR Policy, both in advance of the AGM and following the vote of less than 80% support at the AGM, in order to understand the range of views held by shareholders and to take these into account when setting and implementing the policy as well as outline the rationale for the changes made.
At the October 2023 meetings, in addition to follow-up comments on the 2023 DRR and DR Policy, Angie Risley was introduced to shareholders as the Committee Chair designate, effective 1 January 2024, and new CEO pay arrangements were discussed for Elie Maalouf, following his appointment to the role. In January 2024, shortly after Angie commenced her role as Committee Chair, she held meetings with shareholders for more comprehensive two-way introductions and discussions about current IHG-specific remuneration challenges and shareholder views and expectations. Further information on shareholder engagement is contained in the Chair’s Statement on pages 116 to 118.
| Directors’ Remuneration Report | IHG | Annual Report and Form 20-F 2023 | 125 |
| Governance |
| Directors’ Remuneration Report continued Our approach to remuneration continued |
Board changes
During the year, Byron Grote and Graham Allan replaced Ian Dyson and Jill McDonald as Chair of the Audit Committee and Chair of the Responsible Business Committee with effect from 1 March 2023 after Ian and Jill retired from the Board. Jo Harlow also stepped down from the Board and as Chair of the Remuneration Committee at the end of 2023. Angie Risley was appointed as a Non-Executive Director prior to assuming the Chair of the Remuneration Committee role effective 1 January 2024 and Sir Ron Kalifa was appointed to the Board from 1 January 2024. The remuneration arrangements in respect of all changes were in line with the approved DR Policy.
As announced by the Company on 5 May 2023 and the s430(2B) of the Companies Act 2006 declaration released on 28 June 2023, Keith Barr stepped down from the role of Chief Executive Officer, and from the Board, on 30 June 2023. Elie Maalouf succeeded Keith Barr as Group CEO with effect from 1 July 2023, Elie was already a member of IHG’s Board in leading IHG’s Americas business as regional CEO.
Paul Edgecliffe-Johnson stepped down from the role of Chief Financial Officer & Group Head of Strategy, and from the Board, leaving IHG on 19 March 2023. Michael Glover succeeded Paul as Chief Financial Officer with effect from 20 March 2023.
Details of the arrangements for all Executive Directors are as follows:
| AUDITED |
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| Remuneration component | How this was implemented in 2023 | |||
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| Elie Maalouf | ||||
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| Salary, pension and benefits
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Elie’s base salary for the role of CEO from 1 July 2023 is £990,000 and he will not be eligible for a salary increase until April 2025. Elie’s pension cash allowance is 12% of salary, which is within the maximum opportunity of the 2023 DR Policy and aligns to the wider IHG UK pension plan participants. Elie’s benefits are in line with the DR Policy. | |||
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| Annual Performance Plan (APP)
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Elie’s APP levels are in line with the maximum opportunity of the DR Policy. His 2023 APP award will be pro-rated using the respective salaries for the respective periods before and after his appointment as Group CEO. | |||
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| Long Term Incentive Plan (LTIP)
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Elie’s LTIP award levels align with the maximum opportunity shown in the DR Policy. | |||
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| Other | Elie relocated from the CEO, Americas role based out of the Atlanta office to the Group CEO role, which is primarily based out of the UK office. On appointment, and in line with how we treat other international moves, Elie received a one-off net cash payment of £50,000 towards costs associated with setting up a UK base. The grossed up value of this payment has been disclosed in the single total figure of remuneration table on page 128.
To facilitate Elie to carry out his UK-based role while maintaining his US home and IHG’s significant business, government and industry interests in the US, he also receives a net amount of £10,000 per month towards UK housing costs. The actual net cost per month on housing for 2023 was, on average, lower than this but will be adjusted to allow for rental market dynamics over the longer term. |
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| Michael Glover | ||||
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| Salary, pension and benefits
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Michael’s base salary from 20 March 2023 is £620,000 and he was not eligible for a merit increase in April 2023. His pension and other benefits are in line with the DR Policy. | |||
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| Annual Performance Plan (APP)
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Michael’s APP levels are in line with the DR Policy. His 2023 APP award will be pro-rated using the respective salaries and targets for the respective periods before and after his appointment as Group CFO. | |||
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| Long Term Incentive Plan (LTIP)
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Michael’s LTIP award levels are in line with the DR Policy. He was granted an award at Executive Director level for the full 2023/25 cycle, however, did not receive an uplift into in-flight cycles at the increased Executive Director levels. | |||
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| Other | Michael relocated from his CFO, Americas, role based out of the Atlanta office to the Group CFO role in the UK head office. In line with how we treat other international moves, a series of one-off payments to cover relocation and associated costs apply for the first three years: £150,000 payments both on appointment and on the first anniversary of appointment and £100,000 on the second anniversary of appointment. | |||
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| Keith Barr | ||||
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| Salary, pension and benefits
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Keith received his base salary, pension cash allowance and benefits to 30 June 2023, details of which are included in the single total figure of remuneration table on page 128. After he stepped down from the Board, he remained an employee of the Company on his existing terms of employment until 31 December 2023 to ensure an orderly handover. As an employee, he continued to be paid a salary and receive his existing benefits through to that date, apart from healthcare provision, which will continue for up to three months after this date. | |||
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| Annual Performance Plan (APP)
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Keith is eligible to receive an APP award in respect of the full 2023 financial year, which is assessed and paid in the usual way and in accordance with the terms of the plan. Half of any APP earned will be delivered in cash following the end of the performance year, with the other half deferred into shares for three years. The pro-rated element for the 2023 period in which he served as Group CEO can be found in the single total figure table. The Remuneration Committee exercised its discretion to determine that he would be treated as a ‘good leaver’. Accordingly, his unvested deferred APP shares will not be forfeited on departure and will vest in full on their original vesting dates. | |||
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| Long Term Incentive Plan (LTIP)
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Keith’s share awards, granted in 2021 and 2022, under the LTIP are preserved in accordance with the ‘good leaver’ provisions, subject to the achievement of the relevant performance conditions, adjusted for pro-ration until the date he ceased employment with the Company, and vesting on their original vesting dates. In accordance with the DR Policy, they will be subject to a two-year post-vest holding period. The LTIP 2021/23 cycle award is disclosed in the 2023 single total figure of remuneration table on page 128. He has not received an LTIP award in respect of the 2023/25 cycle. | |||
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| Minimum Shareholding Policy
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The post-employment shareholding policy approved at the time of Keith’s termination has been applied. He is required to hold shares equivalent to his minimum shareholding requirement of 500% of salary for six months post-cessation and 50% of the minimum shareholding requirement for a further six months. | |||
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| Other | IHG also agreed to settle fees of £13,850 plus VAT for legal advice to Keith on his leaving arrangements. | |||
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| 126 | IHG | Annual Report and Form 20-F 2023 |
| AUDITED |
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| Remuneration component | How this was implemented in 2023 | |||
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| Paul Edgecliffe-Johnson | ||||
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| Salary, pension and benefits
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Paul’s salary, pension and benefits were paid up until 19 March 2023, details of which are included in the single total figure of remuneration table on page 128. In line with our previous commitment, his pension had been reduced to the rate of all other IHG UK pension plan participants, which is 12% of salary, from 1 January 2023. No further payments in respect of these elements were paid beyond 19 March 2023, given he was taking up new employment. | |||
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| Annual Performance Plan (APP)
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Paul remained eligible to receive an APP award in respect of the full 2022 performance year. In line with our termination policy, the cash element was paid in the usual way, but the deferred share awards portion was forfeited. He was not eligible to receive an APP award in respect of 2023. All outstanding APP shares that had not vested on 19 March 2023 were forfeited. | |||
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| Long Term Incentive Plan (LTIP)
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Paul’s LTIP 2020/22 award was assessed in the same way as for the other Executive Directors and it vested on 22 February 2023, and is subject to a two-year holding period. He was not eligible to receive an LTIP award in respect of 2023. All outstanding LTIP awards that had not vested on 19 March 2023 were forfeited. | |||
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| Minimum Shareholding Policy
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The post-employment shareholding policy approved at the time of Paul’s termination has been applied. He is required to hold shares equivalent to his minimum shareholding requirement of 300% of salary as at the date of leaving for six months post-cessation and 50% of the minimum shareholding requirements for a further six months. He remained compliant with this policy throughout 2023. | |||
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| Other | No other payments have been made in connection with his leaving. | |||
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Wider workforce remuneration and employee engagement
As outlined on pages 123 to 124, IHG operates an aligned approach to remuneration throughout the organisation. During the year, the Committee reviewed aspects of the Company’s wider workforce remuneration approach as part of its regular meeting agenda.
The Company engaged with the workforce through its employee engagement survey, which covers a number of areas, including pay and benefits competitiveness, wellness and inclusion. Our overall employee engagement increased to 87% (+1% on 2022), placing IHG as a Global Best Employer by Kincentric. As noted on page 124, perceptions of reward and recognition gained strong results across our hotel, reservations and general manager populations.
During 2023, the Chair of the Committee joined IHG’s designated Non-Executive Director responsible for workforce engagement in a Voice of the Employee session. These sessions are held throughout the year to engage directly with members of IHG’s corporate and hotel workforce, with the aim of collating and sharing such feedback with the Board for consideration in its decision-making. No concerns were raised regarding Executive Director remuneration or how it aligns with the wider IHG remuneration principles. Further details about the 2023 Voice of the Employee engagement sessions can be found on page 113. Further sessions are planned for 2024 for Angie to attend as the new Chair of the Committee.
Deferred Award Plan rules
In 2023, the new DAP rules were approved by shareholders at the May AGM. The DAP replaced both the previous APP and LTIP rules as a simplified, combined set of plan rules to govern the share awards made under the Company’s discretionary incentive arrangements.
The rules for both the APP and LTIP were due to expire in 2024, and the Committee considered it appropriate to renew them a year early to coincide with the adoption of the new DR Policy. Following approval at the 2023 AGM, LTIP share awards were granted under the DAP with effect from the 2023/25 cycle, and future APP share awards will be granted under the DAP with effect from the 2024 plan year. All awards granted under previous cycles will remain subject to the APP and LTIP rules that were previously in place.
Service contracts and notice periods for Executive Directors
The Committee’s policy is for all Executive Directors to have service contracts with a notice period of 12 months from the Company and a notice period of 6 months for the employee, unless, on an exceptional basis to complete an external recruitment successfully, a longer initial notice period reducing to 12 months is used. This is in accordance with the UK Corporate Governance Code.
All Executive Directors’ appointments and subsequent re-appointments to the Board are subject to election and annual re-election by shareholders at the AGM.
Details of current Executive Directors’ contracts (available upon request from the Company Secretary’s office):
| Executive Director | Date of original appointment to the Board |
Notice Period | ||
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| Elie Maalouf | 1 January 2018 | 12 months | ||
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| Michael Glover | 20 March 2023 | 12 months | ||
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Voting at the Company’s AGM
The 2022 Directors’ Remuneration Report and the new DR Policy were approved at the 2023 AGM. Further details regarding the action taken by the Committee in response to the level of support received for these resolutions can be found in the Chair’s Statement on pages 116 to 118.
The outcome of the votes in respect of the DR Policy and Report for 2023 are shown below:
| Directors’ Remuneration Policy (binding vote) | Directors’ Remuneration Report (advisory vote) | |||||||||||||||||||||||
| AGM |
Votes for | Votes against | Abstentions | Votes for | Votes against | Abstentions | ||||||||||||||||||
| 5 May 2023 | 103,155,928 | 34,661,408 | 2,043,591 | 103,932,823 | 31,147,109 | 4,780,994 | ||||||||||||||||||
| (74.85%) | (25.15%) | (76.94%) | (23.06%) | |||||||||||||||||||||
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| Directors’ Remuneration Report | IHG | Annual Report and Form 20-F 2023 | 127 |
| Governance |
| Directors’ Remuneration Report continued Annual Report on Directors’ Remuneration |
The Annual Report on Directors’ Remuneration explains how the Directors’ Remuneration Policy (DR Policy) was implemented in 2023 and the resulting payments each of the Executive Directors received.
The Directors’ Remuneration Report is subject to an advisory vote by shareholders at the 2024 AGM. The notes to the single total figure table provide further detail, where relevant, for each of the elements that make up the total single figure of remuneration for each of the Executive Directors.
| AUDITED |
| Single total figure of remuneration – Executive Directors |
|
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| Fixed pay | Variable pay | |||||||||||||||||||||||||||||||||||||||
| Executive Directors |
Year | ∎ Salary £000 |
∎ Benefits £000 |
∎ Pension benefit £000 |
Subtotal £000 |
∎ APP £000 |
∎ LTIP £000a |
Subtotal £000 |
Other £000f |
∎ Total £000 |
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| Elie Maaloufb | 2023 | 849 | 203 | 133 | 1,185 | 1,403 | 1,178 | 2,581 | 84 | 3,850 | ||||||||||||||||||||||||||||||
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| 2022 | 700 | 58 | 136 | 894 | 1,349 | 1,096 | 2,445 | – | 3,339 | |||||||||||||||||||||||||||||||
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| Michael Gloverc | 2023 | 487 | 47 | 58 | 592 | 797 | 293 | 1,090 | 150 | 1,832 | ||||||||||||||||||||||||||||||
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| 2022 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
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| Keith Barrd | 2023 | 456 | 45 | 55 | 556 | 750 | 2,150 | 2,900 | – | 3,456 | ||||||||||||||||||||||||||||||
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| 2022 | 889 | 43 | 222 | 1,154 | 1,719 | 1,400 | 3,119 | – | 4,273 | |||||||||||||||||||||||||||||||
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| Paul Edgecliffe-Johnsone | 2023 | 144 | 14 | 17 | 175 | – | – | – | – | 175 | ||||||||||||||||||||||||||||||
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| 2022 | 654 | 21 | 163 | 838 | 1,264 | 1,029 | 2,293 | – | 3,131 | |||||||||||||||||||||||||||||||
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| a | LTIP figures for 2022 relate to the 2020/22 LTIP cycle and have been restated using actual share price on date of vesting. Figures for 2023 relate to the value of shares for the 2021/23 cycle. |
| b | Elie Maalouf’s 2023 figure combines his CEO, Americas role for the period 1 January to 30 June, and his Group CEO role for the period 1 July to 31 December. Elie was paid in USD for his CEO, Americas role and the sterling equivalent is calculated using an exchange rate of $1 = £0.80 in 2023 and $1 = £0.81 in 2022 (page 173). In line with 2023, the 2022 benefits figure has been restated to reduce the residual value of UK tax paid in respect of UK duties while a US Director from £7k to nil due to subsequent foreign tax credit offsetting. |
| c | Michael Glover’s 2023 fixed pay elements relate to the period 20 March to 31 December 2023. His APP has been pro-rated for the period in which he was Executive Director and his LTIP award, inclusive of Restricted Stock Units, is for the full 2021/23 LTIP cycle. His LTIP and RSU 2021/23 awards were granted in May 2021 prior to becoming an Executive Director, the same performance conditions applied to the LTIP award as they did for the Executive Directors; the RSU awards were not subject to any performance conditions. No 2022 data has been provided because he was not in an Executive Director role at the time. |
| d | Keith Barr stepped down from the CEO role on 30 June 2023 so 2023 figures related to the period 1 January to 30 June 2023, with the exception of his LTIP 2021/23 which the full cycle value has been disclosed. Further details on the treatment of his remuneration on leaving IHG can be found on page 126. |
| e | Paul Edgecliffe-Johnson left the Company on 19 March 2023 and his fixed pay elements were paid up to this date. He was not eligible to receive an APP award for 2023 and his LTIP 2021/23 award was forfeited upon leaving IHG. Further details on the treatment of his remuneration on leaving IHG can be found on page 127. |
| f | Details of the ‘Other’ payments for Elie Maalouf and Michael Glover can be found in the notes to the single total figure table section below. |
Notes to the single total figure table
Fixed pay
| ∎ | Salary: salary paid for the year. Salary increases in 2023 were lower than the budget for the wider UK and US corporate workforce. See pages 126 to 127 for information on Executive Director changes during 2023. |
| ∎ | Benefits: for Executive Directors, this includes, but is not limited to, taxable benefits such as company car or allowance and healthcare. |
As disclosed on page 126, to facilitate Elie Maalouf to carry out his UK-based role whilst maintaining his US home and IHG’s significant business, government and industry interests in the US, he also receives a net amount of £10,000 per month towards UK housing costs. The 2023 benefits figure for Elie also includes travel and accommodation costs in relation to his relocation.
| ∎ | Pension benefit: for current Executive Directors, in line with the DR Policy, includes the value of IHG contributions and any cash allowances paid in lieu of pension contributions. |
Elie Maalouf and Michael Glover both relocated to the UK for their Group CEO and Group CFO roles; they did not participate in the IHG UK pension plan in 2023 and instead received cash allowances of 12% of salary. Keith Barr and Paul Edgecliffe-Johnson also did not participate in any IHG pension plan in 2023 for their respective periods of employment and instead received cash allowances of 12% of base salary. This is in line with the maximum level available to all other participants in the UK pension plan.
Life assurance cover for all Executive Directors was provided at four times base salary.
Elie Maalouf participated in the US 401(k) Plan and the US Deferred Compensation Plan (DCP) for the period 1 January to 30 June 2023 whilst in his role as CEO, Americas. The US 401(k) Plan is a tax-qualified plan providing benefits on a defined contribution basis, with the member and company both contributing.
Contributions made by, and in respect of, Elie Maalouf in these plans for the year ended 31 December 2023 were:
|
|
£ | a | ||
| Director’s contributions to US Deferred Compensation Plan | 364,001 | |||
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| Director’s contributions to US 401(k) Plan | 14,146 | |||
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| Company contributions to US Deferred Compensation Plan | 63,876 | |||
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| Company contributions to US 401(k) Plan | 9,413 | |||
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| Age of Director at 31 December 2023 | 59 | |||
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| a | Sterling values have been calculated using an exchange rate of $1 = £0.80. |
As outlined in last year’s report, Elie’s retirement benefits were in line with other senior US employees and comprised of a 6% of salary matched contribution (subject to IRS limits in respect of 401(k) contributions) and a 16% of salary supplemental employer DCP contribution.
Other
Elie Maalouf received a net payment of £50,000 in July 2023 to cover the transitional and transactional costs of setting up a UK base. The value of this one-off payment has been grossed up for disclosure in the single total figure of remuneration table above.
Michael Glover received a gross payment of £150,000 to cover relocation and associated costs.
| 128 | IHG | Annual Report and Form 20-F 2023 |
AUDITED
Variable pay
APP (50% cash and 50% deferred shares)
Operation
Disclosed award levels are determined based on salary as at 31 December 2023, other than for Elie Maalouf whose award was pro-rated based on his respective salaries and periods as CEO, Americas and Group CEO, and on a straight-line basis between threshold and target, and target and maximum, and are based on achievement vs target under each measure:
| • | threshold is the minimum level that must be achieved for there to be an award in relation to that measure; subject to Committee discretion, no award is made for achievement below threshold; |
| • | target is the target level of achievement and results in a target award for that measure; and |
| • | maximum is the level of achievement at which a maximum award for that measure is received (capped at 200% of salary). |
The Committee formally reviews performance against IHG’s Global Metrics as part of the APP structure in considering whether to apply discretion to adjust outcomes on the strategic measures. Any application of discretion to the APP outcome, would be disclosed in the relevant year’s Directors’ Remuneration Report.
For Executive Directors, 50% of the 2023 APP award will be made in the form of shares deferred for three years, subject to continued employment.
APP outcome for 2023
The performance measures for the 2023 APP were determined in accordance with the DR Policy and were:
| • | operating profit from reportable segments (70%); |
| • | room signings (15%); and |
| • | room openings (15%). |
Target award was 115% of salary and maximum was up to 200% of target for each measure, subject to an overall cap on the award of 200% of salary. The following chart and table shows threshold, target and maximum opportunity, as well as weighting and actual 2023 achievement.
APP measures – % of target award
The Committee reviewed the performance against IHG’s Global Metrics as well as relative to peers and was satisfied that no discretion needed to be applied to the formulaic outcomes of the APP measures.
| Weighted | ||||||||||||||||||
| Performance | Achievement | Weighting | achievement | |||||||||||||||
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| Operating profit from reportable segments: performance relative to target |
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| Threshold | $864m | 50% | ||||||||||||||||
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| Target | $960m | 100% | 70% | 118.5% | ||||||||||||||
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| Actual | $1,026.6m | 169.3% | ||||||||||||||||
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| Maximum | $1,056m | 200% | ||||||||||||||||
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| Room signings (k rooms) |
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| Threshold | 71.9 | 50% | ||||||||||||||||
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| Actual | 79.2 | 95.7% | ||||||||||||||||
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| Target | 79.9 | 100% | 15% | 14.4% | ||||||||||||||
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| Maximum | 87.9 | 200% | ||||||||||||||||
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| Room openings (k rooms) |
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| Threshold | 46.7 | 50% | ||||||||||||||||
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| Actual | 47.9 | 62.1% | 15% | 9.3% | ||||||||||||||
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| Target | 51.9 | 100% | ||||||||||||||||
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| Maximum | 57.0 | 200% | ||||||||||||||||
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| Total weighted achievement (as a % of target) |
|
142.2% | ||||||||||||||||
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Operating profit from reportable segments is a Non-GAAP measure and excludes certain items from operating profit. Additionally, in determining operating profit from reportable segments for APP purposes, budgeted exchange rates for the year are used to ensure like-for-like comparison with the APP target set at the start of the year.
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| Operating profit from reportable segments (at actual exchange rates) (see page 173) |
$1,019.0m | |||
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| Difference due to exchange rates | $7.6m | |||
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| Operating profit from reportable segments (at 2023 budget exchange rates) |
$1,026.6m | |||
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LTIP 2021/23 (granted in 2021)
Operation
Awards are made annually and eligible executives will receive shares at the end of the cycle, subject to achievement of the three-year performance conditions. These conditions and weightings are described on page 130.
TSR measures the return to shareholders by investing in IHG relative to a comparator group containing the following major globally branded competitors: Accor S.A., Choice Hotels International Inc., Hilton Worldwide Holdings Inc., Hyatt Hotels Corporation, Marriott International Inc., Melia Hotels International S.A., NH Hotels Group, and Wyndham Hotels & Resorts Inc., as per data provided by our corporate bankers sourced from Refinitiv Datastream. Maximum payout is for upper quartile relative performance, and threshold is median of the comparator group.
Any use of discretion, including the factors influencing the decision, will be clearly communicated in the Directors’ Remuneration Report for the year in which the decision is made.
The share price in respect of the 2020/22 LTIP cycle has been restated using the volume weighted average price of 5,467p for all Executive Directors on the date of actual vesting on 22 February 2023. The corresponding values shown in the 2022 report (prior to the actual vesting) were an estimate calculated using an average share price over the final quarter of 2022 of 4,687p.
| Directors’ Remuneration Report | IHG | Annual Report and Form 20-F 2023 | 129 |
| Governance |
| Directors’ Remuneration Report continued Annual Report on Directors’ Remuneration continued |
AUDITED
LTIP outcome for 2021/23 cycle
The performance measures for the 2021/23 three-year LTIP cycle were determined in accordance with the DR Policy and were:
| • | Total Shareholder Return (30%); |
| • | net system size growth (40%); and |
| • | cash flow (30%). |
The following tables show threshold and maximum opportunity, as well as weighting and actual achievement, based on the formulaic outcomes against the three-year targets set in 2021 for each performance measure.
| Performance targets | Achievement (% of maximum) |
Weighted achievement |
||||||||
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| Performance measure and weighting | Target | % Vesting | Result | |||||||
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| Total Shareholder Return: Three-year growth relative to average of competitors 30% |
Maximum 83.4%
|
Maximum 100%
|
Outcome 47.1% | 30.6% | 9.2% | |||||
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Threshold 41.6%
|
Threshold 20%
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| Relative net system size growth: Three-year growth relative to competitors 40% |
Maximum 5.1%
|
Maximum 100%
|
Outcome 3.42% | 46.6% | 18.6% | |||||
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Threshold 2.6%
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Threshold 20%
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| Absolute cash flow: Based on IHG’s performance against an absolute cash flow target 30% |
Maximum $1.41bn
|
Maximum 100%
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Outcome $2.81bn | 100% | 30.0% | |||||
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Threshold $1.06bn
|
Threshold 20%
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| Total % of maximum opportunity vested | 57.8% | |||||||||
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| Adjustments to absolute cash flow outcome Over the performance period of the 2021/23 LTIP award, there have been events that have impacted IHG’s cash flow that were unquantified or unforeseen when the original targets were set. In line with the adjustments reported in previous Directors’ Remuneration Reports, the table opposite shows the reconciliation between reported cash flow and the outcome for the 2021/23 LTIP. This includes adjustments agreed by the Committee to exclude the impact of the exit from Russia, as described on page 128 of the 2022 Directors’ Remuneration Report, and consider adjustment for the Holiday Inn and Crowne Plaza quality review to the extent the final programme differed from what was reflected in the LTIP target. These adjustments had no effect on the vesting outcome. |
||||||
| Reconciliation | |
Cash flow $bn |
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| Reported cash flow from operations | 3.03 | |||||
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| Net cash from investing activities | (0.23 | ) | ||||
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| Reported outcome per definition | 2.80 | |||||
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| Other adjustments (see text opposite) | 0.01 | |||||
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| Adjusted outcome | 2.81 | |||||
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Adjustment to other measures
As disclosed in the 2022 Directors’ Remuneration Report, IHG announced the decision to cease all operations in Russia. Net system size growth performance for IHG and all companies in the peer set for this relative measure has been adjusted to remove the Russia system size from all companies for all years. The formulaic NSSG LTIP outcome also includes an adjustment to exclude room removals incremental to our normal level due to the Holiday Inn and Crowne Plaza estate review in 2021.
These events were not budgeted for at the time of setting the 2021/23 targets, and the Committee, in its judgement, considered it was appropriate to adjust for them on the basis of its view that LTIP participants should not have been disincentivised from making these decisions in the long-term interest of shareholders.
The Committee considered performance against the ROCE underpin. The underpin level of 20% was met, with the final ROCE average of the three years being 23.7%, therefore the Committee did not need to consider adjusting the NSSG vesting level in respect of this.
| 130 | IHG | Annual Report and Form 20-F 2023 |
AUDITED
Result of LTIP 2021/23 outcome
Achievement against target is measured by reference to the three years ended 31 December 2023. This cycle will vest on 21 February 2024 and Executive Directors are subject to a two-year post-vest holding period. The individual outcomes for this cycle are shown below. The share price of 6,265p used to calculate the 2021/23 LTIP cycle value shown in the single total figure table is the average over the final quarter of 2023.
| Value of award | ||||||||||||||||||||||||||
| Maximum | % of maximum | Outcome | Total value | attributable to share | ||||||||||||||||||||||
| Executive Director |
|
|
Award cycle |
|
|
opportunity at grant (number of shares) |
|
|
opportunity vested |
|
|
(number of shares awarded at vest) |
|
|
of award £000 |
|
|
price appreciation £000 |
|
|||||||
| Elie Maalouf | LTIP 2021/23 | 32,525 | 57.8% | 18,799 | 1,178 | 221 | ||||||||||||||||||||
| Michael Glovera | LTIP 2021/23 | 3,161 | 57.8% | 1,827 | 114 | 22 | ||||||||||||||||||||
| Keith Barr | LTIP 2021/23 | 59,385 | 57.8% | 34,324 | 2,150 | 404 | ||||||||||||||||||||
| a | Michael Glover also received an RSU award of 2,845 shares in the 2021/23 cycle prior to his appointment to the Board. All RSU shares are due to vest and the value, which has been calculated on the same basis as the LTIP shares, is £178k of which £33k is attributable to share price appreciation. The combined value of his RSU and LTIP awards is shown in the LTIP column of the single total figure table on page 128 rounded to the nearest £000. |
Other outstanding awards
Long Term Incentive Plan (LTIP) – scheme interests awarded during 2022 and 2023
During 2022, awards were granted under the LTIP cycle and made to each Executive Director over shares with a maximum value of 350% of salary for the CEO and 275% of salary for all other Executive Directors using an average of the closing mid-market share price for the five days prior to grant, as shown in the table below. These are in the form of conditional awards over Company shares and do not carry the right to dividends or dividend equivalents during the vesting period. The vesting date for the 2022/24 LTIP award is the day after the announcement of our financial year 2024 Preliminary Results in February 2025. These awards will vest to the extent performance targets are met and will then be held in a nominee account for a further two years, transferring to the award-holder in February 2027 in accordance with the two-year post-vest holding requirement.
| Executive Director | Award date | Maximum shares awarded |
Market price per share at grant £ |
Face value of award at grant £000 |
Number of shares received if minimum performance achieved (20%) |
|||||||||||||||||
| 2022/24 cycle | ||||||||||||||||||||||
| Elie Maalouf | 13 May 2022 | 40,101 | 48.42 | 1,942 | 8,020 | |||||||||||||||||
| Michael Glovera | 13 May 2022 | 3,860 | 48.42 | 187 | 772 | |||||||||||||||||
| Keith Barrb | 13 May 2022 | 43,268 | 48.42 | 2,095 | 8,653 | |||||||||||||||||
| a | Michael Glover was also granted an RSU award of 3,474 shares, under our LTIP for his role prior to becoming CFO, on 13 May 2022. RSU awards are not subject to performance conditions. |
| b | Keith Barr stepped down from the role of CEO, and from the Board, on 30 June 2023 and the treatment of his unvested awards is described on page 126. He was originally awarded 64,903 shares, pro-rated to 24/36 months at 31 December 2023. |
During 2023, awards were granted under the LTIP cycle and made to each Executive Director over shares with a maximum value of 500% of salary for the CEO and 300% of salary for the CFO using an average of the closing mid-market share price for the five days prior to grant, as shown in the table below. These are in the form of conditional awards over Company shares and do not carry the right to dividends or dividend equivalents during the vesting period. The vesting date for the 2023/25 LTIP award is the day after the announcement of our financial year 2025 Preliminary Results in February 2026. These awards will vest to the extent performance targets are met and will then be held in a nominee account for a further two years, transferring to the award-holder in February 2028 in accordance with the two-year post-vest holding requirement.
| Executive Director |
|
Award date | Maximum shares awarded |
Market price per share at grant £ |
Face value of award at grant £000 |
Number of shares received if minimum performance achieved (20%) |
||||||||||||||||
| 2023/25 cycle | ||||||||||||||||||||||
| Michael Glover | 10 May 2023 | 33,812 | 55.01 | 1,860 | 6,762 | |||||||||||||||||
| Elie Maaloufa | 10 May 2023 | 65,512 | 55.01 | 3,604 | 13,102 | |||||||||||||||||
| Elie Maaloufa | 8 August 2023 | 19,770 | 56.74 | 1,122 | 3,954 | |||||||||||||||||
| a | Elie Maalouf was granted his original LTIP 2023/25 in May 2023 based on his CEO, Americas base salary. He received a pro-rated top up award following his appointment as Group CEO based on the difference between his old and new salary. |
Annual Performance Plan (APP) deferred shares awarded in 2023
One half of the bonus earned in respect of the 2022 APP was deferred into shares, as detailed below:
| Executive Directorb | Award – deferred shares portion |
|
Number of shares granted |
|
Award date | |
Market price per share at grant £ |
|
|
Face value of award at grant £000 |
|
Vesting date | ||||||||||||
| Elie Maalouf | 2022 APPa |
12,542 | 1 March 2023 | 55.17 | 692 | 27 February 2026 | ||||||||||||||||||
| Keith Barr | 2022 APPa |
15,575 | 1 March 2023 | 55.17 | 859 | 27 February 2026 |
| a | Annual bonus shares are deferred shares which are subject to continued employment, but are not subject to further performance conditions. |
| b | Michael Glover was not an Executive Director for the periods to which these awards relate; Paul Edgecliffe-Johnson was not granted a deferred APP award in respect of FY2022 since his departure was known in advance of the award grant date of 1 March 2023. |
| Directors’ Remuneration Report | IHG | Annual Report and Form 20-F 2023 | 131 |
| Governance |
|
Directors’ Remuneration Report continued Annual Report on Directors’ Remuneration continued |
AUDITED
Performance measures
The performance measures for the 2022/24 LTIP cycle are as outlined below for the three years ending 31 December 2024. NSSG is a relative measure and is measured to 30 September 2024, rather than 31 December 2024, due to the timing of the publication of competitor data.
| Measure and weighting | Threshold target (20% of vesting) |
Maximum target (100% vesting) |
||||||||
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|
|
|
||||||||
| Relative TSR (30%) | Median | Upper quartile | ||||||||
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|
|
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||||||||
| Relative NSSG with ROCE underpina (40%) | Ranked 4th | Ranked 1st | ||||||||
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|
|
|
||||||||
| Absolute cash flow (30%) | 1.58bn USD | 2.11bn USD | ||||||||
|
|
|
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||||||||
| a | This measure is subject to the achievement of a Return on Capital Employed (ROCE) underpin of 20%, below which the Committee has the discretion to reduce the outcome for the measure. |
The performance measures for the 2023/25 LTIP cycle are as outlined below for the three years ending 31 December 2025. NSSG is a relative measure and is measured to 30 September 2025, rather than 31 December 2025, due to the timing of the publication of competitor data.
| Measure and weighting | Threshold target (20% of vesting) |
Maximum target (100% vesting) |
||||||||
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||||||||
| Relative TSR (20%) | Median | Upper quartile | ||||||||
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||||||||
| Relative NSSG (20%) | Ranked 4th | Ranked 1st | ||||||||
|
|
|
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||||||||
| Absolute cash flow (20%) | 1.667bn USD | 2.565bn USD | ||||||||
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||||||||
| ESG (20%) – split between four equally weighted measures | ||||||||||
|
|
|
|
||||||||
| Expected energy reduction from introduction of new energy conservation measuresa | 4.5% reduction | 10.0% reduction | ||||||||
| (new-build hotels) | (new-build hotels) | |||||||||
| 2.8% reduction | 6.3% reduction | |||||||||
| (existing estate) | (existing estate) | |||||||||
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|
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||||||||
| Adoption of existing ECMs in owned, leased, managed and managed lease hotels | 80% of hotels | 100% of hotels | ||||||||
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|
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||||||||
| Gender representation in senior management (% of females in roles) | 37% | 40% | ||||||||
|
|
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||||||||
| Ethnicity representation in senior management (% of colleagues in roles) | 24% | 27% | ||||||||
|
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||||||||
| Adjusted EPS (20%) | 5% absolute CAGR | 12% absolute CAGR | ||||||||
|
|
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|
||||||||
| a | Following a disclosure of this measure in the 2023 DR Policy, a calculation error was identified in the configuration of one aspect of the target for this metric. The Committee has agreed to the correction of this mathematical error, which means the threshold and maximum targets for this metric are as disclosed above. It is important to note that this correction, resulting from a technical modelling error in incentive plan target configuration, does not alter the intended level of stretch inherent in performance required to meet targets as anticipated at the outset, nor does it impact the Company’s wider carbon reduction goals. |
Consideration of discretion
Following Keith Barr’s 30 years with IHG, culminating in serving the last six as Group CEO and ensuring a smooth transition to Elie Maalouf after stepping down from the Board, the Committee exercised its discretion to treat Keith as a ‘good leaver’ for the purpose of his unvested share awards. In line with the UK Corporate Governance Code, the Committee has adopted a robust, formal framework that it will use to determine whether to exercise discretion. Some of the key factors the Committee considers are shown below.
Relative importance of spend on pay
The chart below sets out the actual expenditure of the Group in 2023 and 2022, showing the differences between those years. Operating profit from reportable segments is included as this is a significant constituent of the Annual Performance Plan. Further information, including where 2022 figures have been restated, can be found in the Group Financial Statements starting on page 154 and the accompanying notes.
| 132 | IHG | Annual Report and Form 20-F 2023 |
AUDITED
Executive Directors’ shareholdings and share interests
The Committee believes that share ownership by Executive Directors and senior executives strengthens the link between the individuals’ personal interests and those of shareholders.
Guideline Executive Director shareholding requirement
Executive Directors are required to hold shares equal to 500% of salary for the Chief Executive Officer and any US-based Executive Directors, and 300% for other Executive Directors. Executive Directors are expected to hold all net shares earned until the previous guideline shareholding requirement is achieved (300% for the CEO and any US-based Executive Directors, and 200% for other Executive Directors) and at least 50% of all subsequent net shares earned until the current guideline shareholding is met. The number of shares held outright includes all Directors’ beneficial interests and those held by their spouses and other connected persons. It also includes the net value of unvested shares that are not subject to any further performance conditions.
Percentages are calculated using the 29 December 2023 share price of 7,090p.
We increased our post-employment shareholding requirement with effect from the approval of our current DR Policy, approved at the 2023 AGM, so that the full guideline minimum shareholding requirement continues for two years post-cessation of employment.
As part of this requirement, since 2019, shares have been granted and all unvested awards held in a nominee account with Executive Directors required to electronically sign an agreement to the terms of the grant, including the post-employment shareholding requirement.
Shares and awards held by Executive Directors
at 31 December 2023: % of salary
Percentages have been calculated using base salary in GBP at 31 December 2023. A combined tax and social security rate of 47% is used for both Michael Glover and Elie Maalouf.
Current Directors’ shareholdings
The APP deferred share awards are not subject to additional performance conditions. Details on the performance conditions to which the unvested LTIP awards are still subject can be found on page 132. There have been no changes in the shareholding interests of any of the Directors since the end of the financial year up to the publication of this report.
Shares and awards held by Executive Directors at 31 December 2023:
| Number of shares held outright, including those subject to post-vest holding |
APP deferred share awards | LTIP share awards (unvested) | Total number of shares and awards held |
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| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
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| Michael Glovera | 13,307 | – | 3,247 | – | 47,152 | – | 63,706 | – | ||||||||||||||||||||||||
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| Elie Maalouf | 99,265 | 83,340 | 24,833 | 21,308 | 157,908 | 111,089 | 282,006 | 215,737 | ||||||||||||||||||||||||
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| Keith Barrbd | 60,318 | 93,263 | 17,270 | 29,090 | 102,653 | 173,441 | 180,241 | 295,794 | ||||||||||||||||||||||||
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| Paul Edgecliffe-Johnsoncd | 15,844 | 66,869 | – | 21,389 | – | 107,945 | 15,844 | 196,203 | ||||||||||||||||||||||||
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| a | We have not included 2022 comparison figures for Michael Glover as he was not in an Executive Director role at the time. |
| b | Keith Barr stepped down from the Board on 30 June 2023, however, we are disclosing the number of shares held for him as at 31 December 2023. Keith Barr’s 2023 APP deferred share awards number is net of tax and his 2023 LTIP share awards number includes the LTIP 2022/24 award pro-rated to the date he left IHG (31 December 2023). |
| c | Paul Edgecliffe-Johnson stepped down from the Board on 19 March 2023, however, we are disclosing the number of shares held for him as at 31 December 2023. His unvested LTIP and APP awards were forfeited upon leaving IHG. |
| d | Where shares were sold after stepping down from their Executive Director role, the balance of remaining shares were within the post-cessation shareholding requirement. |
Other information relating to Directors’ remuneration
Dividends paid to Executive Directors
A final dividend for 2022 of 76.08p per ordinary share (94.5¢ per ADR) was paid on 16 May 2023 to shareholders on the Register of members at the close of business on 31 March 2023.
An interim dividend of 38.7p per ordinary share (48.3¢ per ADR) was paid on 5 October 2023 to shareholders on the Register of members at the close of business on 1 September 2023.
Dividends are payable on vested shares held outright, including those subject to a post-vest holding period, and deferred APP shares.
| Directors’ Remuneration Report | IHG | Annual Report and Form 20-F 2023 | 133 |
| Governance |
| Directors’ Remuneration Report continued Annual Report on Directors’ Remuneration continued |
Relative performance graph
InterContinental Hotels Group PLC is a member of the FTSE 100 share index and the graph below shows the Company’s TSR performance from 31 December 2013 to 31 December 2023, assuming dividends are reinvested, compared with the TSR performance achieved by the FTSE 100.
Chief Executive Officer’s remuneration
The table below shows the Chief Executive Officer’s single figure of total remuneration for the 10 years to 31 December 2023.
| Single figure |
CEO |
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |||||||||||||||||||||||||||||||
| Single figure of remuneration (£000) |
Elie Maalouf | 2,786 | d | |||||||||||||||||||||||||||||||||||||||
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| Keith Barr | 2,161 | 3,143 | a | 3,376 | 1,484 | 3,199 | 4,273 | 3,456 | e | |||||||||||||||||||||||||||||||||
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| Richard Solomons | 6,611 | b | 3,197 | 3,662 | 2,207 | c | ||||||||||||||||||||||||||||||||||||
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| Annual incentive received (% of maximum) |
Elie Maalouf | 81.8 | ||||||||||||||||||||||||||||||||||||||||
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| Keith Barr | 69.7 | 84.1 | 58.7 | 0 | 100.0 | 95.7 | 81.8 | |||||||||||||||||||||||||||||||||||
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| Richard Solomons | 74.0 | 75.0 | 63.9 | 66.8 | ||||||||||||||||||||||||||||||||||||||
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| Shares received under the LTIP (% of maximum) |
Elie Maalouf | 57.8 | ||||||||||||||||||||||||||||||||||||||||
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| Keith Barr | 46.1 | 45.4 | 78.9 | 30.6 | 20.0 | 52.1 | 57.8 | |||||||||||||||||||||||||||||||||||
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| Richard Solomons | 56.1 | 50.0 | 49.4 | 46.1 | ||||||||||||||||||||||||||||||||||||||
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| a | For Keith Barr, the 2018 figure includes a one-off cash payment for relocation costs in lieu of benefits received while on international assignment prior to CEO position, which was fully explained in the 2017 report. |
| b | For Richard Solomons, the 2014 figure includes a one-off cash payment in respect of pension entitlements, which was fully explained in the 2014 report. |
| c | In respect of period 1 January to 30 June 2017. |
| d | For Elie Maalouf, the 2023 figure includes a one-off cash payment for relocation costs, fully explained on page 126 of this report. All other elements included in the 2023 figure are in respect of the period 1 July to 31 December 2023 only, except for LTIP which is the full value of Elie’s 2021/23 award granted before he became Group CEO. |
| e | In respect of period 1 January to 30 June 2023 only (except for LTIP which is the full value of the LTIP 2021/23 award). |
AUDITED
Payments to past Directors
Sir Ian Prosser
Sir Ian Prosser, who retired as Director on 31 December 2003, had an ongoing healthcare benefit of £1,710 during the year.
Payments for loss of office
Keith Barr
Keith Barr stepped down from the Board of IHG on 30 June 2023. A statement to this effect was prepared pursuant to Section 430(2B) of the CA 2006 and can be found on the IHG PLC website. He remained an employee of the Company until 31 December 2023 and therefore continued to receive salary and benefits and remain eligible for a 2023 APP award. The Committee
exercised its discretion to treat Keith as a ‘good leaver’ for the purpose of his unvested share awards, pro-rated to his date of leaving for the LTIP and they will continue to vest according to the normal vesting schedule for the award. He did not receive a grant in the 2023/25 LTIP cycle. IHG also agreed to settle fees of £13,850 plus VAT in connection with legal advice to Keith on these arrangements. Full details of his arrangements on leaving and the use of discretion are shown on pages 126 and 132.
Pension entitlements
No Executive Director is entitled to any Defined Benefit pension or related benefit from IHG.
| 134 | IHG | Annual Report and Form 20-F 2023 |
CEO pay ratio
As we have noted in previous DRRs, pay ratios will differ significantly between companies, even within the same industry, depending on demographics and business models. The Group’s UK employee demographic, which primarily consisted of largely professional, management and senior corporate roles, changed in 2019 with the addition of a number of hotel employing entities, comprising the UK leased estate, which includes a large proportion of part-time and flexible-working support and service roles. As per our past disclosures, we show the ratio both including and excluding the UK hotel employing entities.
| Population excluding hotel | ||||||||||||||||||||||||||||||
| Full population | employing entities | |||||||||||||||||||||||||||||
| Year | Method | 25th | Median | 75th | 25th | Median | 75th | |||||||||||||||||||||||
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| Financial year ended 31 December 2023 | Option C |
212:1 | 136:1 | 68:1 | 82:1 | 62:1 | 40:1 | |||||||||||||||||||||||
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| Financial year ended 31 December 2022 | Option C |
193:1 | 113:1 | 67:1 | 71:1 | 56:1 | 35:1 | |||||||||||||||||||||||
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| Financial year ended 31 December 2021 | Option C |
163:1 | 65:1 | 41:1 | 59:1 | 42:1 | 27:1 | |||||||||||||||||||||||
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| Financial year ended 31 December 2020 | Option C |
89:1 | 44:1 | 25:1 | 35:1 | 26:1 | 18:1 | |||||||||||||||||||||||
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| Financial year ended 31 December 2019 | Option C |
180:1 | 122:1 | 59:1 | 71:1 | 49:1 | 32:1 | |||||||||||||||||||||||
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| Financial year ended 31 December 2018 | Option C |
– | – | – | 72:1 | 48:1 | 29:1 | |||||||||||||||||||||||
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The 2018-2022 figures have been restated to reflect the value of the CEO’s LTIP awards on the date of actual vesting rather than the estimated vesting levels used in the respective years’ DRRs.
What drives the difference in pay between our CEO and other employees?
Pay ratios reflect how remuneration arrangements differ as responsibility increases for more senior roles within the organisation, for example:
| • | this is the first year the increased LTIP quantum from the 2020 DR Policy vests for the CEO, the increase was deferred by a year so was not granted at the higher level until 2021. Although there was a strong APP outcome for both the CEO and wider corporate population, a greater proportion of performance-related variable pay and share-based incentives apply for the more senior executives, including Executive Directors, who will have a greater degree of influence over performance outcomes; |
| • | role-specific specialist plans apply in certain areas such as corporate reservations, sales, hotel development and General Managers of IHG managed, owned, leased and managed lease hotels. The target and maximum amounts that can be earned under these plans are typically a higher percentage of base salary for more senior employees, which in turn affect the pay ratio; and |
| • | incentive plans for other corporate employees are typically based on a combination of individual performance and the Group’s operating profit from reportable segments. |
The increase in ratio since 2020, reflects the strong performance of the business and the resulting increases in variable pay outcomes. The comparative CEO figure used for calculating this year’s ratio included some one-off costs associated with Elie Maalouf’s relocation.
The population demographics have also had a larger impact than in previous years as the full population in 2023 includes a greater number of hotel employees than it did in 2022. Overall, on this basis, the Company believes the median pay ratio for the relevant financial year is consistent with the pay, reward and progression for the Company’s UK employees taken as a whole.
Calculation methodology and supporting information
Option C has been selected for the identification of the percentile employees. IHG prefer to use this method as we are able to produce the most accurate total remuneration figure for all UK employees on a basis comparable with the statutory reporting for Executive Directors using the most recently available data at the time of producing the Annual Report. Specifically, this involves:
| • | compiling all monthly payroll data for all UK employees from 1 January to 31 December 2023 detailing complete variable and fixed remuneration, including pension and taxable benefits such as company car or allowance and healthcare; and |
| • | valuing APP for the corporate workforce based on actual 2023 company performance metrics but only target for the personal performance metric, as actual outcomes for this element of the award are not known at the time of writing this report, so that it reflects as much of the same input as for the CEO data as possible at the time of calculation. In practice, personal performance outcomes are subject to manager discretion and can be flexed between 0-200% of target. |
As noted on page 126, we had a change of CEO during 2023, so we have used pro-rated salary, benefits, pension and bonus amounts for Keith Barr and Elie Maalouf for the respective periods in which they were CEO for calculating the pay ratio this year. We have used the full value of Keith Barr’s LTIP 2021/23 award, however, as this award was granted at the full level available to the CEO as per the DR Policy at the time, and we believe it is the most accurate figure for this disclosure.
Option C requires three UK employees to be identified as the equivalent of the 25th, 50th and 75th percentile. Having identified these employees, the 2023 remuneration is calculated on the same basis as the CEO single total figure of remuneration.
The pay arrangements for the six employees, three from the full population and three from the population excluding hotel employing entities, were reviewed alongside those for the employees ranked immediately above and below them to confirm that they were representative of pay levels at these quartiles. The 2023 salary and total pay for the individuals identified at the lower, median and upper quartiles are set out below:
| 25th | 75th | |||||||||||||
| percentile | Median | percentile | ||||||||||||
| Year | pay ratio | pay ratio | pay ratio | |||||||||||
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| Financial year ended 31 December 2023 – Full population | Salary £ | 20,362a | 31,185 | 58,390 | ||||||||||
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| Total remuneration £ |
23,933 | 37,132 | 74,278 | |||||||||||
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| Financial year ended 31 December 2023 – Excluding hotel employing entities | Salary £ | 47,500 | 65,225 | 90,100 | ||||||||||
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Total remuneration £ |
61,434 | 81,843 | 125,842 | |||||||||||
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| a | The total salary figure used for the 25th percentile for the full population includes periods of unpaid absence and the base pay for the year excluding this would have been £23,463.23. |
In the 2022 Directors’ Remuneration Report, we confirmed that the Real Living Wage would be applied as a minimum for all staff from April 2023 and on reviewing the 25th percentile for this year’s ratio, we can see that the annual salary for the 25th percentile (full population) following April 2023 merit increases is £24,128. This is above the annualised Real Living Wage salary for 2022/23 of £22,672 (£11.60ph vs £10.90ph).
| Directors’ Remuneration Report | IHG | Annual Report and Form 20-F 2023 | 135 |
| Governance |
| Directors’ Remuneration Report continued Annual Report on Directors’ Remuneration continued |
AUDITED
Single total figure of remuneration: Non-Executive Directors
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Committee appointments |
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Fees £000 |
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Total Rounded to the nearest £000 |
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| Non-Executive Director | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||
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| Deanna Oppenheimer |
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01/06/2022 | 475 | 174 | 33 | 10 | 508 | 184 | ||||||||||||||||||||||||
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| Graham Allan |
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01/09/2020 | 132 | 116 | 4 | 2 | 136 | 118 | ||||||||||||||||||||||||
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| Daniela Barone Soares |
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01/03/2021 | 84 | 81 | 5 | 4 | 89 | 85 | ||||||||||||||||||||||||
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| Arthur de Haast |
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01/01/2020 | 84 | 81 | 6 | 5 | 90 | 86 | ||||||||||||||||||||||||
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| Ian Dyson |
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01/09/2013 | 19 | 108 | 5 | 5 | 23 | 113 | ||||||||||||||||||||||||
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| Duriya Farooqui |
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07/12/2020 | 84 | 81 | 15 | 14 | 99 | 95 | ||||||||||||||||||||||||
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| Byron Grote |
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01/07/2022 | 107 | 41 | 5 | 1 | 112 | 42 | ||||||||||||||||||||||||
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| Jo Harlow |
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01/09/2014 | 111 | 108 | 11 | 5 | 123 | 113 | ||||||||||||||||||||||||
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| Jill McDonald |
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01/06/2013 | 16 | 95 | 6 | 6 | 22 | 101 | ||||||||||||||||||||||||
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| Angie Risley |
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01/09/2023 | 28 | – | 6 | – | 34 | – | ||||||||||||||||||||||||
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| Sharon Rothstein |
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01/06/2020 | 84 | 81 | 8 | 9 | 92 | 90 | ||||||||||||||||||||||||
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| g |
See page 96 for Board and Committee membership key and attendance. |
Fees: Fees are paid in line with the DR Policy. Jill McDonald and Ian Dyson stepped down from the Board on 28 February 2023, so all fees and taxable benefits for these Directors ceased on this date. Angie Risley joined the Board on 1 September 2023, so all fees and taxable benefits for this Director began on their appointment date.
Benefits: For Non-Executive Directors, benefits include taxable travel and accommodation expenses to attend Board meetings away from the designated home location. Under UK income tax legislation, the non-UK based Non-Executive Directors are not subject to tax on some travel expenses; this is reflected in the taxable benefits for Deanna Oppenheimer, Duriya Farooqui and Sharon Rothstein.
Other: Non-Executive Directors are not eligible for any incentive awards or for any pension contribution/benefit.
Non-Executive Directors’ shareholding and share interests
The Non-Executive Directors who held shares are listed in the table below:
| Non-Executive Director | 2023b | 2022 | ||||||
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| Deanna Oppenheimera | 5,000 | – | ||||||
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| Graham Allan | 600 | – | ||||||
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| Daniela Barone Soares | 478 | 322 | c | |||||
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| Ian Dyson | 1,500 | 1,500 | ||||||
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| Arthur de Haast | 1,000 | 1,000 | ||||||
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| Duriya Farooquia | 200 | – | ||||||
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| Byron Grotea | 5,300 | 2,800 | ||||||
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| Jo Harlowa | 950 | 950 | ||||||
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| Jill McDonald | – | – | ||||||
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| Angie Risley | 848 | – | ||||||
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| Sharon Rothsteina | 2,000 | – | ||||||
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| a | Shares held in the form of American Depositary Receipts (ADRs). |
| b | Shares held as at 31 December 2023 or the date at which they ceased to be a Non-Executive Director. |
| c | The 2022 figure for Daniela Barone Soares has been restated due to additional shares being acquired pursuant to a standing instruction in relation to a Dividend Reinvestment Plan (DRIP). |
Where Directors have remained in role, there have been no changes in the shareholding interests of any of the Directors since the end of the financial year up to the publication of this report.
Fees: Non-Executive Directors
The fees for Non-Executive Directors are reviewed and agreed annually in line with the DR Policy; 2023 increases were lower than the budget for the wider UK and US corporate workforce and 2024 increases are in line with the wider workforce budget. The basis for setting fee levels for 2024 will be as follows, each element independently rounded to the nearest £000:
| Annual fee | ||||||||||||||||||
| Role | Increase | 2024 £000 |
2023 £000 |
|||||||||||||||
| Chair of the Board | 4% | 494 | 475 | |||||||||||||||
| Non-Executive Director | 4% | 87 | 84 | |||||||||||||||
| Additional fees | ||||||||||||||||||
| Chair of Audit Committee | 4% | 29 | 28 | |||||||||||||||
| Chair of Remuneration Committee | 4% | 29 | 28 | |||||||||||||||
| Chair of Responsible Business Committee | 4% | 15 | 15 | |||||||||||||||
| Senior Independent Director | 4% | 38 | 36 | |||||||||||||||
| 136 | IHG | Annual Report and Form 20-F 2023 |
Annual percentage change in remuneration of Directors compared to employees
The table below shows the percentage change in all Directors’ remuneration compared to that of an average employee between the financial years ended 31 December 2019 to 31 December 2023.
The 2023 remuneration figures for the Directors are taken from the data used to compile the single total figure of remuneration tables shown on pages 128 and 136, excluding any rounding up or down. No employees are directly employed by the Group’s Parent Company, so the average employee data for this year’s report is based on the same UK corporate employee population as that on which the CEO pay ratio is calculated.
Elie Maalouf became Group CEO on 1 July 2023 which involved a relocation to the UK. Elie’s salary in the previous year-on-year changes was calculated in USD with the equivalent single total figure table disclosures reported in GBP. From 1 July 2023, Elie’s salary has been in GBP so, to reduce any impact of the currency conversion, we are now calculating his percentage change in GBP. This is the currency in which his salary, bonus and a large sum of his benefits will be paid going forward, and therefore will provide a more meaningful indication of his year-on-year remuneration changes and align further with the intentions of this disclosure.
All corporate employees share the same corporate performance metrics with the Executive Directors; however, the weightings of these metrics differ for corporate employees below Executive Committee level and measures include an individual performance portion, the results of which are not available at the time of reporting. For average employee data, we assume that target performance is achieved. Non-Executive Directors are not eligible for a bonus.
Taxable benefits for Non-Executive Directors largely comprise travel expenses whereas Executive Director and average employee taxable benefits typically comprise elements of their reward package, such as company car or allowance and healthcare benefits.
| Year-on-year change 2023 vs 2022 |
Year-on-year change 2022 vs 2021 |
Year-on-year change 2021 vs 2020 |
Year-on-year change 2020 vs 2019 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Salary | Bonus | Benefits | Salary | Bonus | Benefits | Salary | Bonus | Benefits | Salary | Bonus | Benefits | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Executive Directors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Elie Maalouf | 21% | -14.6% | 247% | 4% | -0.47% | -1% | 22% | 100% | 91% | -15% | -100% | -9% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Michael Glover | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-Executive Directors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deanna Oppenheimer | – | N/A | – | – | N/A | – | – | N/A | – | – | N/A | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Graham Allan | 13% | N/A | 108% | 49% | N/A | 684% | a | – | N/A | – | – | N/A | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Daniela Barone Soares | 3% | N/A | 16% | – | N/A | – | – | N/A | – | – | N/A | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Arthur de Haast | 3% | N/A | 28% | 4% | N/A | 1,706% | a | 18% | N/A | -1% | – | N/A | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duriya Farooqui | 3% | N/A | 10% | 4% | N/A | 100% | a | – | N/A | – | – | N/A | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Byron Grote | – | N/A | – | – | N/A | – | – | N/A | – | – | N/A | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jo Harlow | 3% | N/A | 114% | 4% | N/A | 1,970% | a | 18% | N/A | 100% | -13% | N/A | -94% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Angie Risley | – | N/A | – | – | N/A | – | – | N/A | – | – | N/A | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sharon Rothstein | 3% | N/A | -10% | 4% | N/A | 100% | a | – | N/A | – | – | N/A | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average employee | 8% | -9.1% | 20% | 14% | -6.01% | 5% | 3% | 100% | -11% | -6% | -100% | -9% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| a | Please see notes below for further details on these percentage change anomalies. |
Notes to the annual percentage change in remuneration of Directors compared to employees table
| • | No data has been reported for Byron Grote and Deanna Oppenheimer as they both joined the Board during 2022 and therefore only part-year data is available, which does not enable a comparison with 2023. Similarly, Michael Glover and Angie Risley both joined the Board during 2023, so there will be no full-year data comparisons for them in 2023 and 2024. |
| • | Graham Allan was appointed as Chair of the Responsible Business Committee in addition to his role as Senior Non-Executive Director from 1 March 2023, so his salary percentage change increase incorporates the base fee increase and the addition of his role supplements. |
| • | As explained above, Elie Maalouf took on the role of Group CEO on 1 July 2023, therefore his salary percentage change increase incorporates his new remuneration package for part of 2023. Elie’s 2023 taxable benefits figure also includes additional relocation costs, including a one-off relocation payment and an ongoing housing allowance which were not applicable in 2022. The 2022 vs 2021 percentage change for Elie has been updated due to the 2022 benefits figure being restated as noted on page 128. |
| • | In 2023, more in-person Board Meetings were held than in 2022. Graham Allan incurred only £2,016.61 in expenses in 2022 but incurred £4,200.55 in 2023, hence the percentage change increase for 2023 vs 2022 is 108%. Similarly, Daniela Barone Soares, Arthur de Haast and Duriya Farooqui incurred an additional £734.70, £1,310.10 and £1,370.07 on 2022 figures respectively. As expected, the extreme fluctuations shown in percentage change in last year’s disclosure have already begun to reduce and we expect these to even out more going forward as Board meetings return to a more regular structure. |
| • | The bonus outcome for the average employee has fallen by a lower percentage than that of Executive Directors due to the difference in weightings for measures and additional budget being made available for the individual performance element for employees below Executive Committee level. |
| • | Any significant percentage changes in the previous year-on-year changes (2022 vs 2021, 2021 vs 2020 and 2020 vs 2019) are explained in the relevant year’s Directors’ Remuneration Report. |
| Directors’ Remuneration Report | IHG | Annual Report and Form 20-F 2023 | 137 |
| Governance |
| Directors’ Remuneration Report continued Annual Report on Directors’ Remuneration continued |
Implementation of Directors’ Remuneration Policy in 2024
This section explains how certain elements of the DR Policy will be applied in 2024.
Salary: Executive Directors
Directors’ salaries are agreed annually in line with the DR Policy.
The following salaries will apply from 1 April 2024:
| Increase % |
2024 | 2023 | ||||||||||||||||
| Executive Director | £ | £ | ||||||||||||||||
| Elie Maalouf | 0 | 990,000 | 990,000 | |||||||||||||||
| Michael Glover | 4 | 644,800 | 620,000 | |||||||||||||||
Elie Maalouf is not eligible for a merit increase in 2024 following his appointment as Group CEO on 1 July 2023. Further details regarding his appointment can be found on 126. The increase for the CFO is shown above and is in line with the budget for the wider corporate workforce. For Executive Director merit increases, we use a range of considerations including wider workforce merit increases, market data and external benchmarking. In addition to FTSE 100 data and other hotel comparators, we use the following US comparator group for CEO salary and overall pay benchmarking: Choice Hotels International Inc.; Hilton Worldwide Holdings Inc.; Hyatt Hotels Corporation; Marriott International Inc.; and Wyndham Hotels & Resorts Inc.
Measures for 2024 APP
The 2024 APP structure is in line with the approved DR Policy and will be based on a 70% weighting for a measure of operating profit from reportable segments and a 30% weighting for other key strategic measures that are reviewed annually and set in line with business priorities. The target award has been reduced from 115% to 100% of salary, and subject to meeting minimum shareholding requirements, up to 70% of the award may be paid in cash and at least 30% in deferred shares.
Operating profit from reportable segments is a focal measure of business performance for our shareholders and is a function of other critical measures, such as RevPAR, profit margin and fee revenues. The Committee has determined that for 2024, it remains important to the Company’s strategic objectives to focus on new room openings and new room signings in the APP. New room openings are critical to driving both short- and long-term profitable growth and are a recognised key performance measure across the industry, whilst new room signings provide the best gauge of future growth as they create the path for openings in future years, which will, in turn, drive profit and revenue growth. The two strategic measures will be evenly weighted, with each worth 15% of the overall APP. The targets are commercially sensitive and will be disclosed in the 2024 Annual Report.
| Measure | Definition |
Weighting |
Performance objective |
|||||||||
| Operating profit from reportable segments | A measure of IHG’s operating profit from reportable segments for the year |
70% |
Achievement against target |
|||||||||
| Room signings | Absolute number of new room signings |
15% |
Achievement against target |
|||||||||
| Room openings | Absolute number of new room openings |
15% |
Achievement against target |
Measures and targets for 2024/26 LTIP cycle
For the 2024/26 cycle, we will retain a net system size growth (NSSG) measure reflecting our strategy of accelerating the growth of our brands in high-value markets, this will have a relative performance target against our six largest competitors and the weighting for this measure will remain at 20%. The cash flow measure to deliver consistent and sustained growth remains in place with a weighting of 20%. Total Shareholder Return (TSR) continues to make up another 20% of the 2024/26 cycle measures; the TSR comparator group has been updated for the 2024/26 cycle. The existing comparator group (up to the 2023/25 LTIP cycle) can be found on page 129 of this report and the new TSR comparator group (with effect from the 2024/26 LTIP cycle) can be found within the table below. Alongside the new companies that have been added to the group, the existing member NH Hotels has been replaced with its majority shareholder, Minor International. Adjusted earnings per share (EPS) was introduced as a balancing measure to TSR with effect from the 2023/25 LTIP cycle, and this will remain in place with a 20% weighting as a balance to the more volatile and less controllable TSR measure.
Adjusted EPS targets incorporate assumed share buybacks as part of our ongoing shareholder return programme, so the Committee would not expect to adjust performance outcomes at the end of the performance period for buybacks made during the cycle. Following the introduction of an ESG measure in our 2023/25 LTIP cycle, we have continued to include ESG in the 2024/26 cycle with a weighting of 20% made up of four equally weighted measures based on IHG’s People and Planet goals. Further information, including on the underlying metrics for ESG, can be found on page 140.
The measures for the 2024/26 cycle are as follows:
| Measure | Definition |
Weighting |
Performance objective |
|||||||||
| Relative total shareholder return (TSR) | IHG’s performance against a comparator group of global hotel companies against which TSR outcomes are measured: Accor S.A.; Choice Hotels International Inc.; Dalata Hotel Group PLC; H World Group Limited; Hilton Worldwide Holdings Inc.; Hyatt Hotels Corporation; Indian Hotels Company Limited; Jin Jiang International Holdings Company Limited; Marriott International Inc.; Melia Hotels International S.A.; Minor International; Scandic Hotels Group AB; Shangri-La Hotel Public Company Limited; Whitbread plc.; and Wyndham Hotels & Resorts Inc. |
20% |
Threshold: median of comparator group (20% of TSR element vests);
Maximum: upper quartile of comparator group (100% of TSR element vests); and
Vesting will be on a straight-line basis in between the two points above. |
|||||||||
| 138 | IHG | Annual Report and Form 20-F 2023 |
| Measure | Definition |
Weighting |
Performance objective |
|||||||||
| Relative net system size growth | IHG’s aggregated compound annual growth rate (CAGR) against our six largest competitors with over 500k rooms: Marriott International Inc.; Hilton Worldwide Holdings Inc.; Accor S.A.; Jin Jiang International Holdings Company Limited; Wyndham Hotels & Resorts Inc.; and Choice Hotels International Inc.. Targets will be set based on increased room count that is consistent with the relevant company’s business plan objectives and practice as at the start of the LTIP cycle. |
20% |
Threshold: fourth ranked competitor excluding IHG (20% of NSSG element vests);
Maximum: first ranked competitor excluding IHG (100% of NSSG element vests); and
Vesting will be on a straight-line basis in between the two points above. |
|||||||||
| Absolute cash flow | Cumulative annual cash generation over the three-year performance period. Absolute cash flow includes reported cash flow from operations and net cash from investing activities. |
20% |
Threshold: US 2.395bn (20% of cash flow element vests);
Maximum: US 3.421bn (100% of cash flow element vests); and
Vesting will be on a straight-line basis in between the two points above. |
|||||||||
| Environmental, social and governance | 1. Adoption of existing energy conservation measures (ECMs) Adoption of agreed ECMs by existing Americas Essentials and Suites hotels that are the subject of licence renewal or conversion property improve plans – (including franchise – Scope 3).
2. Low/zero carbon hotels Development of hotels that operate at very low/zero carbon, focused primarily on new-build hotels, to support delivery of our carbon and energy goals.
3. Inclusion Improvement in ‘Inclusion Index’ scores for US and UK ethnically diverse hotel and corporate colleagues compared to all US and UK hotel and corporate colleagues.
4. Talent interventions Impact of our Journey to GM, Career Insights and RISE Talent programmes. |
20% |
1. Threshold vesting will occur if there is aggregate adoption of each of the five ECMs at 80% of hotels and maximum vesting will occur if there is aggregate adoption of each of the five ECMs at 100% of hotels. Vesting will be on a straight-line basis for achievement between threshold and maximum.
2. Threshold vesting will occur if 10 hotels are open or under construction globally and maximum vesting will occur if 15 hotels are open or under construction globally. Vesting will be on a straight-line basis for achievement between threshold and maximum.
3. Threshold vesting will occur if the average of Inclusion Index scores for US and UK ethnically diverse hotel and corporate colleagues is not more than 7% below that of the total population in the final year of the performance period and maximum vesting will occur if the average Inclusion Index scores for US and UK ethnically diverse hotel and corporate colleagues are at least in line with that of the total population in the final year of the performance period. Vesting will be on a straight-line basis between the above two points.
4. Threshold vesting will occur if 30% of talent who took part in the programmes between 2022 and 2024 have been promoted by 31 December 2026 and maximum vesting will occur if 50% of talent who took part in the programmes between 2022 and 2024 have been promoted by 31 December 2026. Vesting will be on a straight-line basis between the above two points.
For each of the above performance objectives, 20% of the element vests at threshold achievement and 100% of the element vests at maximum achievement. |
|||||||||
| Adjusted earnings per share (EPS) | Absolute compound annual growth rate (CAGR) |
20% |
Threshold vesting will occur if adjusted EPS CAGR is 5% per annum (20% of adjusted EPS element vests);
Maximum vesting will occur if adjusted EPS CAGR is 12% per annum or more (100% of adjusted EPS element vests); and
Vesting will be on a straight-line basis in between the two points above. |
|||||||||
| Directors’ Remuneration Report | IHG | Annual Report and Form 20-F 2023 | 139 |
| Governance |
| Directors’ Remuneration Report continued Annual Report on Directors’ Remuneration continued |
ESG measures
Our ESG measures for the 2024/26 LTIP cycle are again aligned to the Planet and People aspects of our Journey to Tomorrow responsible business plan. The new measures build on the 2023/25 LTIP cycle, with the Planet measures focusing on the ongoing rollout of new Energy Conservation Measures (ECMs) in the existing hotel estate as part of our brand standards and the development of hotels that operate at very low/zero carbon, a programme for which is expected to launch in 2024. Stretching targets have been set for these metrics, with full payout requiring 100% adoption of five ECMs, including in franchise hotels (Scope 3) and 15 new hotels that operate at low/zero carbon open or under construction. These are important areas within management control which support the delivery of our long-term carbon and energy goals.
The 2024/26 People measures build on and complement our representation measures in the 2023/25 cycle. They are focused on strengthening our inclusive culture and talent-driven approach to growth, as part of our commitment to our people. A challenging maximum target has been set to level up the average of ‘inclusion index’ scores, an aspect of our employee engagement survey (carried out by an external party), for ethnically diverse US and UK corporate and hotel colleagues to be at least in line with those of the respective full employee populations. Threshold for this measure has been set after careful consideration of the range of current differences in scores across these respective populations. The second People measure for the 2024/26 cycle supports our hotel growth agenda through existing talent intervention programmes targeted at developing the next generation of hotel managers. This includes the RISE programme, which aims to increase the number of female colleagues in hotel leadership roles across our managed and leased estates. The threshold for this measure is set in line with the average post-programme promotion rate for the three years to the end of 2023. The maximum target requires achievement of a very stretching 50% promotion rate from the 2022, 2023 and 2024 cohorts of the Journey to GM, Career Insights and RISE programmes by the end of the cycle in 2026.
Total Shareholder Return (TSR) comparator group
Our existing TSR comparator group was agreed in 2016 and originally included two additional companies that have since been removed due to a merger and delisting. The exit of these from public capital markets, and thus from the comparator group, resulted in a relatively small remaining comparator group. As a result, the Committee has made the decision to expand the comparator group from 8 to 15 global hotel companies. We believe that this mitigates the potential for the existing comparator group to become smaller due to industry consolidation or other factors.
The Committee applied a robust set of filters to select the additions to the comparator group and believe that the broadening of the comparator group reflects that IHG has an international footprint; competes with a wide range of hotel peers across the world; and that we have a diverse investor base, with some shareholders more focused on European and globally listed businesses, in addition to those with a US-listed business focus.
Angie Risley
Chair of the Remuneration Committee
19 February 2024
| 140 | IHG | Annual Report and Form 20-F 2023 |
Statement of compliance
Our Statement of compliance summarises how the Group has applied the principles of the 2018 UK Corporate Governance Code (available at frc.org.uk/library/standards-codes-policy/corporate-governance/uk-corporate-governance-code/ under UK Corporate Governance Code) as published in July 2018 (the Code) and comments on compliance with the Code’s provisions.
This should be read in conjunction with the Strategic Report on pages 2 to 88, and Governance, including the Directors’ Remuneration Report, on pages 89 to 140, as a whole.
The Board considers that the Group has complied in all material respects with the Code’s provisions for the year ended 31 December 2023, save as noted below in section 5 P (Remuneration policies and practices) in respect of provision 38.
| 1. | Board Leadership and Company Purpose |
| A. | The role of the Board |
| The Board continues to lead the Group’s strategic direction and long-term objectives. Further responsibilities of the Board are set out on page 100. |
| The Board met eight times during 2023 and all Directors continue to act in what they consider to be the best interests of the Company, consistent with their statutory duties. Further details of 2023 Board meetings, including information on matters discussed and decisions taken by the Board, are set out on pages 101 to 103; attendance information is on page 96; and skills and experience and biographical information is on pages 92 to 95. |
| A description of IHG’s business model is set out on pages 10 to 13. An assessment of the principal risks facing the Group is included on pages 42 to 49. |
| Potential conflicts of interest are reviewed annually and powers of authorisation are exercised in accordance with the Companies Act and the Company’s Articles of Association. |
| During the year, if any Director has unresolved concerns about the operation of the Board or the management of the Company, these would be recorded in the minutes of the meeting. |
| B. | The Company’s purpose, values and strategy |
| Our purpose is to provide True Hospitality for Good. A description of our culture, including an overview of our values and information on how the Board ensures alignment between our purpose, values and strategy and our culture, is included on pages 38 to 41. A summary of the Board’s activities in relation to the Voice of the Employee is included on page 113. Information on the Group’s approach to rewarding its workforce is contained on pages 29 to 30 and 123 and 124. |
| C. | Resources |
| The Board delegates oversight of the allocation of day-to-day resources to management (principally through the Executive Committee). |
| Information on the Group’s key performance indicators, including the measures used to monitor them, is included on pages 60 to 63. |
| A summary of the procedures for identifying and discussing emerging risks is set out on pages 42 to 49. |
| D. | Shareholders and stakeholders |
| The Board engaged actively throughout 2023 with shareholders and other stakeholders. The Chair held a number of meetings with major institutional shareholders to discuss the role of the Board and other general governance issues, following which the Chair ensured that their views were communicated to the Board as a whole. The (then) Chair of the Remuneration Committee also engaged extensively with shareholders during the year. Further details are on page 125. |
| Information on the Board’s consideration of and engagement with other stakeholders, including employees, suppliers, hotel owners and guests, is included on pages 36 and 37. |
| E. | Workforce policies and practices |
| The Board has overarching responsibility for the Group’s workforce policies and practices and delegates day-to-day responsibility to the CEO and Chief Human Resources Officer to ensure that they are consistent with the Company’s values and support its long-term success. |
| Employees are able to report matters of concern confidentially through our Confidential Disclosure Channel. The Board routinely reviews reports generated from the disclosures and ensures that arrangements are in place for investigation and follow-up action as appropriate. |
| 2. | Division of Responsibilities |
| F. | The Chair |
| Deanna Oppenheimer leads the operation and governance of the Board and its Committees. The Chair has been in post since September 2022 and was independent on appointment. |
| G. | Board composition |
| The size and composition of the Board and its Committees are kept under review by the Nomination Committee to ensure the appropriate combination of Executive and Non-Executive Directors. Details of the composition of the Board and Committees are available on pages 92 to 96. |
| At least half of the Board, excluding the Chair, are Independent Non-Executive Directors. Provision 10 of the Code considers the independence of Non-Executive Directors and circumstances that might impair their independence, including holding office for over nine years. Jo Harlow reached a nine-year tenure in September 2023, before retiring from the Board on 31 December 2023. In light of Jo’s role as Chair of the Remuneration Committee, the Board considered a slight extension to her nine-year tenure as appropriate to facilitate an orderly transition to Angie Risley, who succeeded Jo as Chair of the Remuneration Committee from 1 January 2024. |
| The Board carefully considered Jo’s contributions and commitments in light of her extended tenure, and concluded that she remained independent. |
| H. | Non-Executives |
| Non-Executive Director terms of appointment outline IHG’s time commitment expectations required to fulfil their role. |
| The commitments of each Director are included in the Directors’ biographical details on pages 92 to 95. Details of Non-Executive Director appointment terms are set out on page 125. |
| The Chair annually reviews the time each Non-Executive Director dedicates to IHG as part of the performance evaluation of Directors (see page 106) and is satisfied that their other duties and time commitments do not conflict with those as Directors. |
| Graham Allan is the Senior Independent Non-Executive Director (SID). The SID provides a sounding board for the Chair and serves as an intermediary for the other Directors and shareholders. Graham also led the annual performance review of the Chair (see page 106). |
| After each Board meeting, Non-Executive Directors and the Chair meet without Executive Directors being present. |
| Statement of compliance | IHG | Annual Report and Form 20-F 2023 | 141 |
| Governance |
| Statement of compliance continued |
| I. | Policies, processes, information and resources |
| The Chair and Company Secretary ensure that the Board and its Committees have the necessary policies and processes in place and that they receive timely, accurate and clear information. The Board and its Committees also have access to the Company Secretary, independent advice and other necessary resources, at the Company’s expense. They receive the administrative and logistical support of a full-time executive assistant. |
| 3. | Composition, Succession and Evaluation |
| J. | Appointments |
| Appointments to the Board are led by the Nomination Committee in accordance with its Terms of Reference (available on our website at ihgplc.com/investors under Corporate governance). |
| The Nomination Committee also supports the Board in succession planning for the Board and senior management. Further details of the role of the Nomination Committee and what it did in 2023 are in the Nomination Committee Report on pages 114 and 115. |
| The overall process of appointment and removal of Directors is overseen by the Board as a whole. |
| All of the Directors retire and seek election or re-election at each AGM. |
| K. | Skills |
| Details of the skills, experience and biographical information of the Board are set out on pages 92 to 95. |
| The Chair and Company Secretary ensure that new Directors receive a full induction, and that all Directors continually update their skills and have the requisite knowledge and familiarity with the Group to fulfil their role (see page 104). |
| The length of service of Non-Executive Directors is reviewed regularly. |
| L. | Annual evaluation |
| The Board undertakes either an internal or external annual Board effectiveness evaluation. In 2023, the Board undertook an external evaluation. Details of the process and results of the evaluation are included on pages 104 to 106. |
| Performance evaluations of Directors, including the Chair, are also carried out on an annual basis. Directors’ biographies are set out on pages 92 to 95, and details of performance evaluations carried out in 2023 are on page 106. |
| 4. | Audit, Risk and Internal Control |
| M. | Audit functions |
| The Audit Committee is comprised entirely of Independent Non-Executive Directors (see page 96 for membership details). |
| Byron Grote, the Audit Committee’s Chair, has recent and relevant financial experience, and the Committee as a whole has competence relevant to the sector in which we operate. Details of the Committee’s role, responsibilities and activities are set out on pages 107 to 111. |
| The Audit Committee reviewed the effectiveness of the Group’s Internal Audit function and also assessed PricewaterhouseCoopers LLP’s performance during 2023, including its independence, effectiveness and objectivity. Details of these reviews are set out in the Audit Committee Report on pages 107 to 109. |
| N. | Assessment of the Company’s position and prospects |
| The Statement of Directors’ Responsibilities (including the Board’s statement confirming that it considers that the Annual Report and Form 20-F, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s position, performance, business model and strategy) is set out on page 144. |
| The status of IHG as a going concern is set out in the Directors’ Report on page 241. An explanation of the Group’s performance, business model, strategy and the risks and uncertainties relating to IHG’s prospects, including the viability of the Group, is set out in the Strategic Report on pages 2 to 88. |
| O. | Risk management |
| The Board determines the nature and extent of the principal risks the organisation is willing to take to achieve its strategic objectives. The Board completed an assessment of the principal and emerging risks facing the Group during the year, including those risks that would threaten the Group’s business model, future performance, solvency or liquidity and reputation (see pages 42 to 49 for further details of the principal risks). The Board and Audit Committee monitor the Group’s risk management and internal controls systems and conduct an annual review of their effectiveness. Throughout the year, the Board has directly, and through delegated authority to the Executive Committee and the Audit Committee, overseen and reviewed all material controls, including financial, operational and compliance controls. See pages 42 to 49 and 107 to 109. |
| 5. | Remuneration |
| P. | Remuneration policies and practices |
| The Remuneration Committee is responsible for developing policy on executive remuneration and determining remuneration packages of Directors and senior management. The Directors’ Remuneration Report is set out on pages 116 to 140. Details of the Remuneration Committee’s focus areas during 2023 are set out on page 125 and its membership details are on page 96. |
| Provision 38 of the Code states that pension contribution rates for executive Directors should be aligned with those available to the workforce. As explained in the Annual Report and Form 20-F 2019, this was to be the case for new UK appointments and (then) existing UK Executive Directors from January 2023. US retirement benefit arrangements differ in a number of ways from the UK and include a Deferred Compensation Plan for senior employees. |
| Given the importance of the CEO, Americas’ role to the business and the market competitiveness concerns over Executive Director pay, the arrangements as they related to Elie Maalouf in his role as CEO, Americas were maintained up to the end of his tenure in that role on 30 June 2023. With effect from 1 July 2023, Elie was promoted to Group CEO and transferred to a UK pension basis. As such, effective from 1 July 2023, the pension arrangements for Executive Directors are now in line with Provision 38 of the Code. Further details can be found on page 123. |
| Q. | Procedure for developing policy on executive remuneration |
| Details of how the Directors’ Remuneration Policy (DR Policy) was implemented in 2023 are set out on pages 128 to 137. |
| During 2023, no individual Director was involved in deciding his or her own remuneration outcome. |
| R. | Independent judgement and discretion |
| The Remuneration Committee has formal discretions in place in relation to outcomes under the Deferred Award Plan rules, and these are disclosed as part of the DR Policy. When determining outcomes under incentive plans, the Committee considers whether it is appropriate to adjust outcomes under these discretions, taking account of the Group’s performance, relative performance against competitors and other relevant factors. Information on the Remuneration Committee’s consideration of the use of discretion during 2023 is set out on page 132. |
| 142 | IHG | Annual Report and Form 20-F 2023 |
| Group Financial Statements |
Statement of Directors’ Responsibilities
Financial Statements and accounting records
The Directors are required to prepare the Annual Report and Form 20-F and the Financial Statements for the Company and the Group at the end of each financial year in accordance with applicable law and regulations. Under company law, directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and the profit or loss of the Group for that period. The Directors have prepared the Consolidated Financial Statements in accordance with UK-adopted international accounting standards and International Financial Reporting Standards (‘IFRSs’) issued by the International Accounting Standards Board (‘IASB’). The Company Financial Statements have been prepared in accordance with UK accounting standards, comprising Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (‘FRS 101’), and applicable law.
In preparing these Financial Statements, IHG Directors are required to:
| • | select suitable accounting policies and apply them consistently; |
| • | make judgements and accounting estimates that are reasonable; |
| • | state whether the Consolidated Financial Statements have been prepared in accordance with UK-adopted international accounting standards; |
| • | state for the Company Financial Statements whether applicable UK accounting standards, comprising FRS 101, have been followed; and |
| • | prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business. |
The Directors have responsibility for ensuring that the Company and the Group keep adequate accounting records sufficient to show and explain the Company’s and the Group’s transactions, and which disclose with reasonable accuracy the financial position of the Company and the Group to enable them to ensure that the Financial Statements and the Directors’ Remuneration Report comply with the Companies Act 2006.
The Directors are also responsible for the system of internal control, for safeguarding the assets of the Company and the Group, and taking reasonable steps to prevent and detect fraud and other irregularities.
Disclosure Guidance and Transparency Rules
The Board confirms that to the best of its knowledge:
| • | The Consolidated Financial Statements have been prepared in accordance with UK-adopted international accounting standards, and IFRSs as issued by the IASB, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group taken as a whole; |
| • | The Company Financial Statements have been prepared in accordance with UK accounting standards, comprising FRS 101, and give a true and fair view of the assets, liabilities and financial position of the Company; and |
| • | The Annual Report, including the Strategic Report, includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principal risks and uncertainties that it faces. |
UK Corporate Governance Code
Having taken advice from the Audit Committee, the Board considers that this Annual Report and Form 20-F, taken as a whole, is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company’s and the Group’s position and performance, business model and strategy.
Disclosure of information to Auditor
The Directors who held office as at the date of approval of this report confirm that they have taken steps to make themselves aware of relevant audit information (as defined by Section 418(3) of the Companies Act 2006). None of the Directors are aware of any relevant audit information that has not been disclosed to the Company’s and Group’s Auditor.
Management’s report on internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Group, as defined in Rule 13a–15(f) and 15d–15(f) under the Securities Exchange Act of 1934 as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRSs.
The Group’s internal control over financial reporting includes policies and procedures that:
| • | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the Group’s transactions and dispositions of assets; |
| • | are designed to provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the Consolidated Financial Statements in accordance with UK-adopted international accounting standards and IFRSs as issued by the IASB, and that receipts and expenditure are being made only in accordance with authorisation of management and the Directors of the Company; and |
| • | provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Group’s assets that could have a material effect on the Consolidated Financial Statements. |
Any internal control framework has inherent limitations and internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
Management has undertaken an assessment of the effectiveness of the Group’s internal control over financial reporting at 31 December 2023 based on criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).
Based on this assessment, management has concluded that as at 31 December 2023 the Group’s internal control over financial reporting was effective.
During the period covered by this document there were no changes in the Group’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect the effectiveness of the internal controls over financial reporting.
The Group’s internal control over financial reporting at 31 December 2023, together with the Group’s Consolidated Financial Statements, were audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm. Their auditor’s report can be found on page 151.
For and on behalf of the Board
|
|
|
| Elie Maalouf | Michael Glover | |
| Chief Executive Officer | Chief Financial Officer | |
| 19 February 2024 | 19 February 2024 |
| 144 | IHG | Annual Report and Form 20-F 2023 |
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
| IHG | Annual Report and Form 20-F 2023 | 145 |
Group Financial Statements
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
| 146 | IHG | Annual Report and Form 20-F 2023 |
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
| IHG | Annual Report and Form 20-F 2023 | 147 |
Group Financial Statements
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
| 148 | IHG | Annual Report and Form 20-F 2023 |
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
| IHG | Annual Report and Form 20-F 2023 | 149 |
Group Financial Statements
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
| 150 | IHG | Annual Report and Form 20-F 2023 |
Independent Auditor’s US Report
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of InterContinental Hotels Group PLC
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying Group statements of financial position of InterContinental Hotels Group PLC and its subsidiaries (the “Group”) as of 31 December 2023 and 31 December 2022 and the related Group income statements and Group statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended 31 December 2023, including the accounting policies and the related notes (collectively referred to as the “Group Financial Statements”). We also have audited the Group’s internal control over financial reporting as of 31 December 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the Group Financial Statements referred to above present fairly, in all material respects, the financial position of the Group as of 31 December 2023 and 2022 and the results of its operations and its cash flows for each of the three years in the period ended 31 December 2023 in conformity with (i) International Financial Reporting Standards as issued by the International Accounting Standards Board and (ii) UK-adopted International Accounting Standards. Also in our opinion, the Group maintained, in all material respects, effective internal control over financial reporting as of 31 December 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Group’s management is responsible for these Group Financial Statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management’s report on internal control over financial reporting on page 144. Our responsibility is to express opinions on the Group Financial Statements and on the Group’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the Group Financial Statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the Group Financial Statements included performing procedures to assess the risks of material misstatement of the Group Financial Statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the Group Financial Statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Group Financial Statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over
Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the Group Financial Statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the Group Financial Statements and (ii) involved our especially challenging, subjective or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the Group Financial Statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| Independent Auditor’s US Report | IHG | Annual Report and Form 20-F 2023 | 151 |
| Group Financial Statements |
| Independent Auditor’s US Report continued |
Breakage assumption used to estimate IHG One Rewards loyalty programme deferred revenue
As described in the Estimates section of the Accounting policies and in Note 3 to the Group Financial Statements, deferred revenue relating to the IHG One Rewards loyalty programme was $1,529m as of 31 December 2023. The hotel loyalty programme, IHG One Rewards, enables members to earn points during each qualifying stay at an IHG branded hotel and through other partnerships and programmes. Members are able to consume those points at a later date for free or reduced accommodation or other benefits. Points revenue includes hotel assessments, revenue from third-party partners and proceeds from points purchased directly by members. The Group recognises deferred revenue in an amount that reflects the Group’s unsatisfied performance obligations, valued at the stand-alone selling price of the future benefit to the member. The amount of revenue recognised and deferred is impacted by the estimate of breakage (points that will never be consumed). On an annual basis, the Group engages an external actuary who uses statistical formulae to assist in the estimate of breakage. Significant estimation uncertainty exists in projecting members’ future consumption activity. In 2022 and 2021, the breakage estimate was formed using pre Covid-19 behaviour patterns as a base, but giving some weight to activity since 2020 and incorporating the impact of 2022 programme changes. In 2023, the breakage estimate has been formed without any equivalent adjustment, reflecting normalising patterns of redemption behaviour. If future member behaviour deviates significantly from expectations, breakage estimates could increase or decrease.
The principal considerations for our determination that performing procedures relating to the breakage assumption used to estimate IHG One Rewards loyalty programme deferred revenue is a critical audit matter are (i) the significant judgement by management when projecting members’ future consumption of points; (ii) a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating management’s breakage assumption; and (iii) the audit effort involved the use of professionals with specialised skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the Group Financial Statements. These procedures included testing the effectiveness of controls relating to management’s determination of the breakage assumption. These procedures also included, among others, (i) testing a sample of data used by management’s external actuary in deriving the breakage assumption to underlying records; (ii) assessing the competence and objectivity of management’s actuary and understanding the methods and assumptions adopted by it in determining breakage; (iii) developing an independent expectation of a reasonably possible range for deferred revenue based on independently determined breakage assumptions; (iv) comparing the deferred revenue balance, which no longer includes a Covid-19 adjustment, with our independently calculated range; and (v) assessing the appropriateness of the related disclosures including sensitivity analysis in the Group Financial Statements. Professionals with specialised skill and knowledge were used to assist in the evaluation of the breakage assumption.
Allocation of expenses to the System Fund
As described in the System Fund and other co-brand revenues section of the Accounting policies and in Note 32 to the Group Financial Statements, the Group recorded System Fund expenses of $1,545m for the year ended 31 December 2023. The Group operates a System Fund to collect and administer cash assessments from hotel owners for specified purposes of use including marketing, reservations and the Group’s loyalty programme, IHG One Rewards. Costs are incurred and allocated to the System Fund in accordance with the principles agreed with the IHG Owners Association.
The principal considerations for our determination that performing procedures relating to the allocation of expenses to the System Fund is a critical audit matter are (i) the significant judgement by management when developing the Group’s internal policies in order to apply the principles agreed with the IHG Owners Association to expenses incurred; and (ii) a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating the appropriateness of management’s classification of expenses to the System Fund in line with the agreed principles.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the Group Financial Statements. These procedures included testing the effectiveness of controls relating to allocation of expenses to the System Fund. These procedures also included, among others, (i) understanding and assessing the internal policies that the Group has put in place in order to apply the principles agreed with the IHG Owners Association to expenses incurred; (ii) inspecting correspondence and minutes of meetings with the IHG Owners Association to identify whether allocations have been challenged or disputed; (iii) validating for a sample of cost centres the basis for any changes in the proportion of costs allocated to the System Fund compared to the prior year; (iv) testing a sample of expenses that had been allocated to the System Fund to assess whether they were accurately calculated, in compliance with the Group’s internal policies and consistent with historical practice; (v) checking whether there were any manual journal entries that transferred expenses to the System Fund to evaluate whether there was an appropriate rationale for any such journals; and (vi) determining whether the resulting classification of the expenses was in line with the principles agreed with the IHG Owners Association.
| 152 | IHG | Annual Report and Form 20-F 2023 |
Recognition of the UK deferred tax asset
As described in the Taxes section of the Accounting policies and in Note 8 to the Group Financial Statements, a deferred tax asset of $113m was recognised related to the UK tax group as of 31 December 2023. Judgement is used when assessing the extent to which deferred tax assets, particularly in respect of tax losses, should be recognised. Deferred tax assets are only recognised to the extent that it is regarded as probable that there will be sufficient and suitable taxable profits or deferred tax liabilities in the relevant legal entity or tax group against which such assets can be utilised in the future. Tax assumptions are overlaid to profit forecasts to estimate future taxable profits. This process has demonstrated that the UK deferred tax asset should reverse over a seven to ten year period, with the lower end of the range based on the Group’s base case forecast and the upper end of the range based on the Group’s severe downside case forecast. The losses do not expire, although they can only be offset against 50% of annual UK taxable profits. The Group’s TCFD disclosures describe how physical and transitional climate risks present both risks and opportunities for IHG. The potential downside risks have been considered in the context of the UK deferred tax asset recoverability assessment, without taking account of opportunities or mitigating actions.
The principal considerations for our determination that performing procedures relating to recognition of the UK deferred tax asset is a critical audit matter are (i) the significant judgement by management involved in determining the future taxable profits of the UK tax group including the impact of climate risk; (ii) a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating the reasonableness of management’s forecast of a seven to ten year period to recover this asset; and (iii) the audit effort involved the use of professionals with specialised skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the Group Financial Statements. These procedures included testing the effectiveness of controls relating to the recognition of deferred tax assets and the Group’s forecasting process. These procedures also included, among others, (i) evaluating the appropriateness of the assumptions reflected in the UK forecasts, including assessing the reasonableness of growth predictions compared to historical experience and industry data, benchmarking management’s estimates to third-party sources and considering how climate risk has been incorporated; (ii) assessing the appropriateness of tax overlay adjustments applied to the forecasts by reference to the requirements of tax principles, including the restriction of losses to 50% of annual UK taxable profits; (iii) assessing whether the UK deferred tax asset meets the recognition criteria of IAS 12; (iv) assessing the appropriateness of the forecast recovery period of seven to ten years; and (v) assessing the appropriateness of the related disclosures in the Group Financial Statements. Professionals with specialised skills and knowledge were used to assist in the evaluation of recognition of the UK deferred tax asset.
/s/PricewaterhouseCoopers LLP
London, United Kingdom
19 February 2024
We have served as the Group’s auditor since 2021.
| Independent Auditor’s US Report | IHG | Annual Report and Form 20-F 2023 | 153 |
For the year ended 31 December 2023 |
Note |
|
2023 $m |
|
|
2022 Re-presented $m |
a |
|
2021 Re-presented $m |
a | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Revenue from fee business |
3 |
1,672 |
1,434 |
1,144 |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Revenue from owned, leased and managed lease hotels |
3 |
471 |
394 |
237 |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Revenue from insurance activities |
3, 21 |
21 |
15 |
9 |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
System Fund and reimbursable revenues |
32 |
2,460 |
2,049 |
1,517 |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Total revenue |
2 |
4,624 |
3,892 |
2,907 |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Cost of sales |
(742 |
) |
(648 |
) |
(486 |
) | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
System Fund and reimbursable expenses |
32 |
(2,441 |
) |
(2,154 |
) |
(1,528 |
) | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Administrative expenses |
(338 |
) |
(353 |
) |
(292 |
) | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Insurance expenses |
21 |
(23 |
) |
(11 |
) |
(8 |
) | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Share of profits/(losses) of associates and joint ventures |
6, 15 |
31 |
(59 |
) |
(8 |
) | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Other operating income |
21 |
29 |
11 |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Depreciation and amortisation |
2 |
(67 |
) |
(68 |
) |
(98 |
) | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Impairment reversal/(loss) on financial assets |
1 |
(5 |
) |
– |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Other net impairment reversals/(charges) |
6 |
– |
5 |
(4 |
) | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Operating profit |
2 |
1,066 |
628 |
494 |
||||||||||||||||||||
| Operating profit analysed as: |
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Operating profit before System Fund, reimbursables and exceptional items |
|
|
|
1,019 |
828 |
534 |
||||||||||||||||||
| System Fund and reimbursable result |
|
|
|
19 |
(105 |
) |
(11 |
) | ||||||||||||||||
| Operating exceptional items |
6 |
28 |
(95 |
) |
(29 |
) | ||||||||||||||||||
1,066 |
628 |
494 |
||||||||||||||||||||||
Financial income |
7 |
39 |
22 |
8 |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Financial expenses |
7 |
(91 |
) |
(118 |
) |
(147 |
) | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Fair value (losses)/gains on contingent purchase consideration |
25 |
(4 |
) |
8 |
6 |
|||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Profit before tax |
1,010 |
540 |
361 |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Tax |
8 |
(260 |
) |
(164 |
) |
(96 |
) | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Profit for the year from continuing operations |
750 |
376 |
265 |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Attributable to: |
||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| Equity holders of the parent |
750 |
375 |
266 |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| Non-controlling interest |
– |
1 |
(1 |
) | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
750 |
376 |
265 |
||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Earnings per ordinary share |
10 |
|||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| Basic |
443.8¢ |
207.2¢ |
145.4¢ |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| Diluted |
441.2¢ |
206.0¢ |
144.6¢ |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
a |
Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’ and to combine System Fund revenues and reimbursables (see New accounting standards and other presentational changes). |
|
Accounting policies and notes on pages 161 to 216 form an integral part of these Group Financial Statements.
| ||
154 |
IHG |
For the year ended 31 December 2023 |
|
2023 $m |
|
|
2022 Re-presented $m |
a |
|
2021 $m |
| |||||||||
Profit for the year |
750 |
376 |
265 |
|||||||||||||||
Other comprehensive (loss)/income |
||||||||||||||||||
Items that may be subsequently reclassified to profit or loss: |
||||||||||||||||||
| (Losses)/gains on cash flow hedges, including related tax of $nil (2022: $2m credit, 2021: $7m charge) |
(30 |
) |
35 |
(69 |
) | |||||||||||||
| Gains/(losses) on net investment hedges |
15 |
(6 |
) |
– |
||||||||||||||
| Costs of hedging |
– |
3 |
2 |
|||||||||||||||
| Hedging losses/(gains) reclassified to financial expenses |
28 |
(43 |
) |
96 |
||||||||||||||
| Exchange (losses)/gains on retranslation of foreign operations, including related tax charge of $4m (2022: $5m credit, 2021: $4m charge) |
(137 |
) |
187 |
18 |
||||||||||||||
(124 |
) |
176 |
47 |
|||||||||||||||
Items that will not be reclassified to profit or loss: |
||||||||||||||||||
| (Losses)/gains on equity instruments classified as fair value through other comprehensive income, including related tax charge of $1m (2022: $2m credit, 2021: $1m charge) |
(3 |
) |
1 |
14 |
||||||||||||||
| Re-measurement (losses)/gains on defined benefit plans, including related tax of $nil (2022: $6m charge, 2021: $
nil) |
(2 |
) |
15 |
7 |
||||||||||||||
| Tax related to pension contributions |
– |
– |
1 |
|||||||||||||||
(5 |
) |
16 |
22 |
|||||||||||||||
Total other comprehensive (loss)/ income for the year |
(129 |
) |
192 |
69 |
||||||||||||||
Total comprehensive income for the year |
621 |
568 |
334 |
|||||||||||||||
Attributable to: |
||||||||||||||||||
| Equity holders of the parent |
621 |
568 |
335 |
|||||||||||||||
| Non-controlling interest |
– |
– |
(1 |
) | ||||||||||||||
621 |
568 |
334 |
||||||||||||||||
a |
In 2023, gains/(losses) on net investment hedges have been presented on a separate line. The 2022 amount was previously presented within ‘Exchange (losses)/gains on retranslation of foreign operations’. |
|
Accounting policies and notes on pages 161 to 216 form an integral part of these Group Financial Statements.
| ||
Group Financial Statements |
IHG |
155 |
| Equity share capital $m |
Capital redemption reserve $m |
Shares held by employee share trusts $m |
Other reserves $m |
Fair value reserve $m |
Cash flow hedge reserves $m |
Currency translation reserve $m |
Retained earnings $m |
IHG share- holders’ equity $m |
Non- controlling interest $m |
Total equity $m |
||||||||||||||||||||||||||||||||||||||
At 1 January 2023 |
137 |
10 |
(37 |
) |
(2,856 |
) |
26 |
– |
498 |
607 |
(1,615 |
) |
7 |
(1,608 |
) | |||||||||||||||||||||||||||||||||
Profit for the year |
– |
– |
– |
– |
– |
– |
– |
750 |
750 |
– |
750 |
|||||||||||||||||||||||||||||||||||||
Other comprehensive loss |
||||||||||||||||||||||||||||||||||||||||||||||||
Items that may be subsequently reclassified to profit or loss: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Losses on cash flow hedges |
– |
– |
– |
– |
– |
(30 |
) |
– |
– |
(30 |
) |
– |
(30 |
) | ||||||||||||||||||||||||||||||||||
| Gains on net investment hedges |
– |
– |
– |
– |
– |
– |
15 |
– |
15 |
– |
15 |
|||||||||||||||||||||||||||||||||||||
| Hedging losses reclassified to financial expenses |
– |
– |
– |
– |
– |
28 |
– |
– |
28 |
– |
28 |
|||||||||||||||||||||||||||||||||||||
| Exchange losses on retranslation of foreign operations |
– |
– |
– |
– |
– |
– |
(137 |
) |
– |
(137 |
) |
– |
(137 |
) | ||||||||||||||||||||||||||||||||||
– |
– |
– |
– |
– |
(2 |
) |
(122 |
) |
– |
(124 |
) |
– |
(124 |
) | ||||||||||||||||||||||||||||||||||
Items that will not be reclassified to profit or loss: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Losses on equity instruments classified as fair value through other comprehensive income |
– |
– |
– |
– |
(3 |
) |
– |
– |
– |
(3 |
) |
– |
(3 |
) | ||||||||||||||||||||||||||||||||||
| Re-measurement losses on defined benefit plans |
– |
– |
– |
– |
– |
– |
– |
(2 |
) |
(2 |
) |
– |
(2 |
) | ||||||||||||||||||||||||||||||||||
– |
– |
– |
– |
(3 |
) |
– |
– |
(2 |
) |
(5 |
) |
– |
(5 |
) | ||||||||||||||||||||||||||||||||||
Total other comprehensive loss for the year |
– |
– |
– |
– |
(3 |
) |
(2 |
) |
(122 |
) |
(2 |
) |
(129 |
) |
– |
(129 |
) | |||||||||||||||||||||||||||||||
Total comprehensive income for the year |
– |
– |
– |
– |
(3 |
) |
(2 |
) |
(122 |
) |
748 |
621 |
– |
621 |
||||||||||||||||||||||||||||||||||
Repurchase of shares, including transaction costs |
(3 |
) |
3 |
– |
– |
– |
– |
– |
(765 |
) |
(765 |
) |
– |
(765 |
) | |||||||||||||||||||||||||||||||||
Purchase of own shares by employee share trusts |
– |
– |
(8 |
) |
– |
– |
– |
– |
– |
(8 |
) |
– |
(8 |
) | ||||||||||||||||||||||||||||||||||
Transfer of treasury shares to employee share trusts |
– |
– |
(21 |
) |
– |
– |
– |
– |
21 |
– |
– |
– |
||||||||||||||||||||||||||||||||||||
Release of own shares by employee share trusts |
– |
– |
32 |
– |
– |
– |
– |
(32 |
) |
– |
– |
– |
||||||||||||||||||||||||||||||||||||
Equity-settled share-based cost |
– |
– |
– |
– |
– |
– |
– |
51 |
51 |
– |
51 |
|||||||||||||||||||||||||||||||||||||
Tax related to share schemes |
– |
– |
– |
– |
– |
– |
– |
11 |
11 |
– |
11 |
|||||||||||||||||||||||||||||||||||||
Equity dividends paid |
– |
– |
– |
– |
– |
– |
– |
(245 |
) |
(245 |
) |
(3 |
) |
(248 |
) | |||||||||||||||||||||||||||||||||
Exchange adjustments |
7 |
1 |
(1 |
) |
(7 |
) |
– |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||||
At 31 December 2023 |
141 |
14 |
(35 |
) |
(2,863 |
) |
23 |
(2 |
) |
376 |
396 |
(1,950 |
) |
4 |
(1,946 |
) | ||||||||||||||||||||||||||||||||
|
Accounting policies and notes on pages 161 to 216 form an integral part of these Group Financial Statements.
| ||
156 |
IHG |
| Equity share capital $m |
Capital redemption reserve $m |
Shares held by employee share trusts $m |
Other reserves $m |
Fair value reserve $m |
Cash flow hedge reserves $m |
Currency translation reserve $m |
Retained earnings $m |
IHG share- holders’ equity $m |
Non- controlling interest $m |
Total equity $m |
||||||||||||||||||||||||||||||||||||||
At 1 January 2022 |
154 |
10 |
(22 |
) |
(2,873 |
) |
25 |
5 |
316 |
904 |
(1,481 |
) |
7 |
(1,474 |
) | |||||||||||||||||||||||||||||||||
Profit for the year |
– |
– |
– |
– |
– |
– |
– |
375 |
375 |
1 |
376 |
|||||||||||||||||||||||||||||||||||||
Other comprehensive income |
||||||||||||||||||||||||||||||||||||||||||||||||
Items that may be subsequently reclassified to profit or loss: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Gains on cash flow hedges |
– |
– |
– |
– |
– |
35 |
– |
– |
35 |
– |
35 |
|||||||||||||||||||||||||||||||||||||
| Losses on net investment hedges a
|
– |
– |
– |
– |
– |
– |
(6 |
) |
– |
(6 |
) |
– |
(6 |
) | ||||||||||||||||||||||||||||||||||
| Costs of hedging |
– |
– |
– |
– |
– |
3 |
– |
– |
3 |
– |
3 |
|||||||||||||||||||||||||||||||||||||
| Hedging gains reclassified to financial expenses |
– |
– |
– |
– |
– |
(43 |
) |
– |
– |
(43 |
) |
– |
(43 |
) | ||||||||||||||||||||||||||||||||||
| Exchange gains on retranslation of foreign operations a
|
– |
– |
– |
– |
– |
– |
188 |
– |
188 |
(1 |
) |
187 |
||||||||||||||||||||||||||||||||||||
– |
– |
– |
– |
– |
(5 |
) |
182 |
– |
177 |
(1 |
) |
176 |
||||||||||||||||||||||||||||||||||||
Items that will not be reclassified to profit or loss: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Gains on equity instruments classified as fair value through other comprehensive income |
– |
– |
– |
– |
1 |
– |
– |
– |
1 |
– |
1 |
|||||||||||||||||||||||||||||||||||||
| Re-measurement gains on defined benefit plans |
– |
– |
– |
– |
– |
– |
– |
15 |
15 |
– |
15 |
|||||||||||||||||||||||||||||||||||||
– |
– |
– |
– |
1 |
– |
– |
15 |
16 |
– |
16 |
||||||||||||||||||||||||||||||||||||||
Total other comprehensive income for the year |
– |
– |
– |
– |
1 |
(5 |
) |
182 |
15 |
193 |
(1 |
) |
192 |
|||||||||||||||||||||||||||||||||||
Total comprehensive income for the year |
– |
– |
– |
– |
1 |
(5 |
) |
182 |
390 |
568 |
– |
568 |
||||||||||||||||||||||||||||||||||||
Repurchase of shares, including transaction costs |
(1 |
) |
1 |
– |
– |
– |
– |
– |
(513 |
) |
(513 |
) |
– |
(513 |
) | |||||||||||||||||||||||||||||||||
Purchase of own shares by employee share trusts |
– |
– |
(1 |
) |
– |
– |
– |
– |
– |
(1 |
) |
– |
(1 |
) | ||||||||||||||||||||||||||||||||||
Transfer of treasury shares to employee share trusts |
– |
– |
(26 |
) |
– |
– |
– |
– |
26 |
– |
– |
– |
||||||||||||||||||||||||||||||||||||
Release of own shares by employee share trusts |
– |
– |
12 |
– |
– |
– |
– |
(12 |
) |
– |
– |
– |
||||||||||||||||||||||||||||||||||||
Equity-settled share-based cost |
– |
– |
– |
– |
– |
– |
– |
44 |
44 |
– |
44 |
|||||||||||||||||||||||||||||||||||||
Tax related to share schemes |
– |
– |
– |
– |
– |
– |
– |
1 |
1 |
– |
1 |
|||||||||||||||||||||||||||||||||||||
Equity dividends paid |
– |
– |
– |
– |
– |
– |
– |
(233 |
) |
(233 |
) |
– |
(233 |
) | ||||||||||||||||||||||||||||||||||
Exchange adjustments |
(16 |
) |
(1 |
) |
– |
17 |
– |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||||
At 31 December 2022 |
137 |
10 |
(37 |
) |
(2,856 |
) |
26 |
– |
498 |
607 |
(1,615 |
) |
7 |
(1,608 |
) | |||||||||||||||||||||||||||||||||
a |
‘Losses on net investment hedges’ previously presented within ‘Exchange gains on retranslation of foreign operations’. |
|
Accounting policies and notes on pages 161 to 216 form an integral part of these Group Financial Statements.
| ||
Group Financial Statements |
IHG |
157 |
| Equity share capital $m |
Capital redemption reserve $m |
Shares held by employee share trusts $m |
Other reserves $m |
Fair value reserve $m |
Cash flow hedge reserves $m |
Currency translation reserve $m |
Retained earnings $m |
IHG share- holders’ equity $m |
Non- controlling interest $m |
Total equity $m |
||||||||||||||||||||||||||||||||||||||
At 1 January 2021 |
156 |
10 |
(1 |
) |
(2,875 |
) |
11 |
(24 |
) |
298 |
568 |
(1,857 |
) |
8 |
(1,849 |
) | ||||||||||||||||||||||||||||||||
Profit for the year |
– |
– |
– |
– |
– |
– |
– |
266 |
266 |
(1 |
) |
265 |
||||||||||||||||||||||||||||||||||||
Other comprehensive income |
||||||||||||||||||||||||||||||||||||||||||||||||
Items that may be subsequently reclassified to profit or loss: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Losses on cash flow hedges |
– |
– |
– |
– |
– |
(69 |
) |
– |
– |
(69 |
) |
– |
(69 |
) | ||||||||||||||||||||||||||||||||||
| Costs of hedging |
– |
– |
– |
– |
– |
2 |
– |
– |
2 |
– |
2 |
|||||||||||||||||||||||||||||||||||||
| Hedging losses reclassified to financial expenses |
– |
– |
– |
– |
– |
96 |
– |
– |
96 |
– |
96 |
|||||||||||||||||||||||||||||||||||||
| Exchange gains on retranslation of foreign operations |
– |
– |
– |
– |
– |
– |
18 |
– |
18 |
– |
18 |
|||||||||||||||||||||||||||||||||||||
– |
– |
– |
– |
– |
29 |
18 |
– |
47 |
– |
47 |
||||||||||||||||||||||||||||||||||||||
Items that will not be reclassified to profit or loss: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Gains on equity instruments classified as fair value through other comprehensive income |
– |
– |
– |
– |
14 |
– |
– |
– |
14 |
– |
14 |
|||||||||||||||||||||||||||||||||||||
| Re-measurement gains on defined benefit plans |
– |
– |
– |
– |
– |
– |
– |
7 |
7 |
– |
7 |
|||||||||||||||||||||||||||||||||||||
| Tax related to pension contributions |
– |
– |
– |
– |
– |
– |
– |
1 |
1 |
– |
1 |
|||||||||||||||||||||||||||||||||||||
– |
– |
– |
– |
14 |
– |
– |
8 |
22 |
– |
22 |
||||||||||||||||||||||||||||||||||||||
Total other comprehensive income for the year |
– |
– |
– |
– |
14 |
29 |
18 |
8 |
69 |
– |
69 |
|||||||||||||||||||||||||||||||||||||
Total comprehensive income for the year |
– |
– |
– |
– |
14 |
29 |
18 |
274 |
335 |
(1 |
) |
334 |
||||||||||||||||||||||||||||||||||||
Transfer of treasury shares to employee share trusts |
– |
– |
(34 |
) |
– |
– |
– |
– |
34 |
– |
– |
– |
||||||||||||||||||||||||||||||||||||
Release of own shares by employee share trusts |
– |
– |
13 |
– |
– |
– |
– |
(13 |
) |
– |
– |
– |
||||||||||||||||||||||||||||||||||||
Equity-settled share-based cost |
– |
– |
– |
– |
– |
– |
– |
39 |
39 |
– |
39 |
|||||||||||||||||||||||||||||||||||||
Tax related to share schemes |
– |
– |
– |
– |
– |
– |
– |
2 |
2 |
– |
2 |
|||||||||||||||||||||||||||||||||||||
Exchange adjustments |
(2 |
) |
– |
– |
2 |
– |
– |
– |
– |
– |
– |
– |
||||||||||||||||||||||||||||||||||||
At 31 December 2021 |
154 |
10 |
(22 |
) |
(2,873 |
) |
25 |
5 |
316 |
904 |
(1,481 |
) |
7 |
(1,474 |
) | |||||||||||||||||||||||||||||||||
|
Accounting policies and notes on pages 161 to 216 form an integral part of these Group Financial Statements.
| ||
158 |
IHG |
31 December 2023 |
Note |
2023 $m |
2022 Re-presented
a
$m | |||||||||||
ASSETS |
||||||||||||||
Goodwill and other intangible assets |
12 |
1,099 |
1,144 | |||||||||||
Property, plant and equipment |
13 |
153 |
157 | |||||||||||
Right-of-use |
14 |
273 |
280 | |||||||||||
Investment in associates and joint ventures |
15 |
48 |
36 | |||||||||||
Retirement benefit assets |
27 |
3 |
2 | |||||||||||
Other financial assets |
16 |
185 |
156 | |||||||||||
Derivative financial instruments |
24 |
20 |
7 | |||||||||||
Deferred compensation plan investments |
250 |
216 | ||||||||||||
Non-current other receivables |
17 |
13 |
3 | |||||||||||
Deferred tax assets |
8 |
134 |
126 | |||||||||||
Contract costs |
3 |
82 |
75 | |||||||||||
Contract assets |
3 |
424 |
336 | |||||||||||
Total non-current assets |
2,684 |
2,538 | ||||||||||||
Inventories |
5 |
4 | ||||||||||||
Trade and other receivables |
17 |
740 |
646 | |||||||||||
Current tax receivable |
15 |
16 | ||||||||||||
Other financial assets |
16 |
7 |
– | |||||||||||
Cash and cash equivalents |
18 |
1,322 |
976 | |||||||||||
Contract costs |
3 |
5 |
5 | |||||||||||
Contract assets |
3 |
35 |
31 | |||||||||||
Total current assets |
2,129 |
1,678 | ||||||||||||
Total assets |
4,813 |
4,216 | ||||||||||||
LIABILITIES |
||||||||||||||
Loans and other borrowings |
22 |
(599) |
(55) | |||||||||||
Lease liabilities |
14 |
(30) |
(26) | |||||||||||
Derivative financial instruments |
24 |
(25) |
– | |||||||||||
Trade and other payables |
19 |
(711) |
(697) | |||||||||||
Deferred revenue |
3 |
(752) |
(681) | |||||||||||
Provisions |
20 |
(10) |
(44) | |||||||||||
Insurance liabilities |
21 |
(12) |
(9) | |||||||||||
Current tax payable |
(51) |
(32) | ||||||||||||
Total current liabilities |
(2,190) |
(1,544) | ||||||||||||
Loans and other borrowings |
22 |
(2,567) |
(2,341) | |||||||||||
Lease liabilities |
14 |
(396) |
(401) | |||||||||||
Derivative financial instruments |
24 |
– |
(11) | |||||||||||
Retirement benefit obligations |
27 |
(66) |
(66) | |||||||||||
Deferred compensation plan liabilities |
(250) |
(216) | ||||||||||||
Trade and other payables |
19 |
(75) |
(81) | |||||||||||
Deferred revenue |
3 |
(1,096) |
(1,043) | |||||||||||
Provisions |
20 |
(26) |
(20) | |||||||||||
Insurance liabilities |
21 |
(25) |
(23) | |||||||||||
Deferred tax liabilities |
8 |
(68) |
(78) | |||||||||||
Total non-current liabilities |
(4,569) |
(4,280) | ||||||||||||
Total liabilities |
(6,759) |
(5,824) | ||||||||||||
Net liabilities |
(1,946) |
(1,608) | ||||||||||||
EQUITY |
||||||||||||||
IHG shareholders’ equity |
(1,950) |
(1,615) | ||||||||||||
Non-controlling interest |
4 |
7 | ||||||||||||
Total equity |
(1,946) |
(1,608) | ||||||||||||
a |
Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’ (see New accounting standards and other presentational changes). |
|
Accounting policies and notes on pages 161 to 216 form an integral part of these Group Financial Statements.
| ||
Group Financial Statements |
IHG |
159 |
For the year ended 31 December 2023 |
Note |
2023 $m |
2022 $m |
2021 $m |
||||||||||||||
Profit for the year |
750 |
376 |
265 |
|||||||||||||||
Adjustments reconciling profit for the year to cash flow from operations |
26 |
469 |
585 |
583 |
||||||||||||||
Cash flow from operations |
1,219 |
961 |
848 |
|||||||||||||||
Interest paid |
(119) |
(126) |
(134) |
|||||||||||||||
Interest received |
36 |
22 |
8 |
|||||||||||||||
Tax paid |
8 |
(243) |
(211) |
(86) |
||||||||||||||
Net cash from operating activities |
893 |
646 |
636 |
|||||||||||||||
Cash flow from investing activities |
||||||||||||||||||
Purchase of property, plant and equipment |
(28) |
(54) |
(17) |
|||||||||||||||
Purchase of intangible assets |
(54) |
(45) |
(35) |
|||||||||||||||
Investment in associates |
(3) |
(1) |
– |
|||||||||||||||
Investment in other financial assets |
(60) |
– |
(5) |
|||||||||||||||
Deferred purchase consideration paid |
25 |
– |
– |
(13) |
||||||||||||||
Lease incentives received |
– |
6 |
– |
|||||||||||||||
Disposal of property, plant and equipment |
– |
3 |
– |
|||||||||||||||
Disposal of hotel assets, net of costs and cash disposed |
11 |
– |
– |
44 |
||||||||||||||
Repayments of other financial assets |
8 |
13 |
14 |
|||||||||||||||
Net cash from investing activities |
(137) |
(78) |
(12) |
|||||||||||||||
Cash flow from financing activities |
||||||||||||||||||
Repurchase of shares, including transaction costs |
29 |
(790) |
(482) |
– |
||||||||||||||
Purchase of own shares by employee share trusts |
(8) |
(1) |
– |
|||||||||||||||
Dividends paid to shareholders |
9 |
(245) |
(233) |
– |
||||||||||||||
Dividend paid to non-controlling interest |
(3) |
– |
– |
|||||||||||||||
Repayment of commercial paper |
– |
– |
(828) |
|||||||||||||||
Issue of long-term bonds, including effect of currency swaps |
23 |
657 |
– |
– |
||||||||||||||
Repayment of long-term bonds |
23 |
– |
(209) |
– |
||||||||||||||
Principal element of lease payments |
23 |
(28) |
(36) |
(32) |
||||||||||||||
Net cash from financing activities |
(417) |
(961) |
(860) |
|||||||||||||||
Net movement in cash and cash equivalents in the year |
339 |
(393) |
(236) |
|||||||||||||||
Cash and cash equivalents at beginning of the year |
18 |
921 |
1,391 |
1,624 |
||||||||||||||
Exchange rate effects |
18 |
(77) |
3 |
|||||||||||||||
Cash and cash equivalents at end of the year |
18 |
1,278 |
921 |
1,391 |
||||||||||||||
|
Accounting policies and notes on pages 161 to 216 form an integral part of these Group Financial Statements.
|
||
160 |
IHG |
Accounting policies |
IHG |
161 |
• |
power over an investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee); |
• |
exposure, or rights, to variable returns from its involvement with the investee; and |
• |
the ability to use its power over the investee to affect its returns. |
• |
The assets and liabilities of foreign operations of the Group’s subsidiaries with a functional currency other than US dollars are translated into US dollars at the relevant rates of exchange ruling on the last day of the period. The revenues and expenses of foreign operations are translated into US dollars at average rates of exchange for each month of the reporting period. The Group treats specific intercompany loan balances, which are not intended to be repaid in the foreseeable future, as part of its net investment. The exchange differences arising on retranslation are taken to the currency translation reserve; and |
• |
Exchange differences arising from the translation of borrowings that are designated as a hedge against a net investment in a foreign operation are taken to the currency translation reserve. |
162 |
IHG |
Accounting policies |
IHG |
163 |
a) |
Arranging for the provision of future benefits to members who have earned points or free night certificates; |
b) |
Marketing services; and |
c) |
Providing the co-brand partner with the right to access the loyalty programme. |
164 |
IHG |
Accounting policies |
IHG |
165 |
• |
The ability and intention to complete the project; |
• |
That the completed software will generate probable future economic benefits; |
• |
The availability of adequate technical, financial and other resources to complete the project; and |
• |
The ability to measure the expenditure. |
• |
Buildings – over a maximum of 50 years; and |
• |
Fixtures, fittings and equipment – to 25 years. |
166 |
IHG |
• |
Short-term lease payments, payments for leases of low-value assets and variable lease payments that are not included in the measurement of the lease liabilities are presented within cash flows from operating activities; |
• |
Payments for the interest element of recognised lease liabilities are included in interest paid within cash flows from operating activities; and |
• |
Payments for the principal element of recognised lease liabilities are presented within cash flows from financing activities. |
• |
Receipts from operating leases and investment properties are presented within cash flows from operating activities; and |
• |
Receipts from finance leases are presented within cash flows from investing activities. |
Accounting policies |
IHG |
167 |
168 |
IHG |
• |
Financial assets and liabilities measured at FVTPL; |
• |
Financial assets measured at FVOCI; and |
• |
Derivative financial instruments. |
Level 1: |
Quoted (unadjusted) prices in active markets for identical assets or liabilities. |
Level 2: |
Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. |
Level 3: |
Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. |
Accounting policies |
IHG |
169 |
• |
strength of technical argument, impact of case law and clarity of legislation; |
• |
professional advice; |
• |
experience of interactions, and precedents set, with the particular taxing authority; and |
• |
agreements previously reached in other jurisdictions on comparable issues. |
170 |
IHG |
• |
has a continuing managerial involvement to the degree associated with asset ownership; |
• |
has transferred the significant risks and rewards associated with asset ownership; and |
• |
can reliably measure and will actually receive the proceeds. |
• |
Cash flow hedge reserve: the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition in profit or loss; and |
• |
Cost of hedging reserve: the gain or loss which is excluded from the designated hedging instrument relating to the foreign currency basis spread of currency swaps. |
Accounting policies |
IHG |
171 |
• |
In the case of goodwill and brands, the carrying value is recovered in less than 5 years under the Base Case forecasts and is not susceptible to medium-term risks. |
• |
In the case of the InterContinental Boston, for which the lease expires in 2105, the last impairment test performed indicates headroom above recoverable value of approximately 25% of the asset value before the asset would be impaired. |
• |
In the case of other hotel assets (within property, plant and equipment, right-of-use |
• |
In the case of contract assets, the term of the management agreement and the significant headroom of fee income over the asset carrying value. |
• |
The period of coverage of performance guarantees and owner loan guarantees, together with caps on the Group’s exposure. |
• |
In the case of the recoverability of the UK deferred tax asset, the impact of the potential downside risk on the Group’s forecasts (see disclosure on page 18 5 ). |
• |
The Group’s insurance reserves relating to managed hotels (previously included within provisions) are now included in the Group statement of financial position as insurance liabilities. As at 31 December 2022, current insurance liabilities of $9m and non-current insurance liabilities of $23m have been reclassified. |
• |
Insurance revenue (previously presented within revenue from fee business) and insurance expenses (previously presented within administrative expenses) are now presented separately within the Group income statement. For the year ended 31 December 2022, these amounts totalled $15m and $11m (2021: $9m and $8m) respectively. |
• |
a mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules; and |
• |
disclosure requirements to help users of the financial statements better understand the Group’s exposure to Pillar Two income taxes arising from that legislation, particularly before its effective date. |
• |
IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies; |
• |
IAS 8 – Definition of Accounting Estimates; and |
• |
IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction. |
• |
IAS 1 – Classification of Liabilities as Current or Non-current; |
• |
IAS 1 – Non-current Liabilities with Covenants; |
• |
IFRS 16 – Lease Liability in a Sale and Leaseback; and |
• |
IAS 7 and IFRS 7 – Supplier Finance Arrangements. |
• |
IAS 21 – Lack of Exchangeability |
172 |
IHG |
2023 |
2022 |
2021 |
||||||||||||||||||||||||||||||||||||||||||||
$1 equivalent |
Average |
Closing |
Average |
Closing |
Average |
Closing |
||||||||||||||||||||||||||||||||||||||||
Sterling |
£0.80 |
£0.78 |
£0.81 |
£0.83 |
£0.73 |
£0.74 |
||||||||||||||||||||||||||||||||||||||||
Euro |
€0.92 |
€0.90 |
€ 0.95 |
€ 0.94 |
€ 0.85 |
€ 0.88 |
||||||||||||||||||||||||||||||||||||||||
Year ended 31 December |
2023 $m |
2022 Re-presented
a
$m |
2021 Re-presented
a
$m |
|||||||||
Americas |
1,105 |
1,005 |
774 |
|||||||||
EMEAA |
677 |
552 |
303 |
|||||||||
Greater China |
161 |
87 |
116 |
|||||||||
Central |
221 |
199 |
197 |
|||||||||
Revenue from reportable segments |
2,164 |
1,843 |
1,390 |
|||||||||
System Fund and reimbursable revenues |
2,460 |
2,049 |
1,517 |
|||||||||
Total revenue |
4,624 |
3,892 |
2,907 |
|||||||||
a |
Re-presented to combine System Fund and reimbursable revenues (see New accounting standards and other presentational changes). |
Year ended 31 December |
2023 $m |
2022 $m |
2021 $m |
|||||||||
Americas |
815 |
761 |
559 |
|||||||||
EMEAA |
215 |
152 |
5 |
|||||||||
Greater China |
96 |
23 |
58 |
|||||||||
Central |
(107) |
(108) |
(88) |
|||||||||
Operating profit from reportable segments |
1,019 |
828 |
534 |
|||||||||
System Fund and reimbursable result |
19 |
(105) |
(11) |
|||||||||
Operating exceptional items (note 6) |
28 |
(95) |
(29) |
|||||||||
Operating profit |
1,066 |
628 |
494 |
|||||||||
Net financial expenses |
(52) |
(96) |
(139) |
|||||||||
Fair value (losses)/gains on contingent purchase consideration |
(4) |
8 |
6 |
|||||||||
Profit before tax |
1,010 |
540 |
361 |
|||||||||
Tax |
(260) |
(164) |
(96) |
|||||||||
Profit for the year |
750 |
376 |
265 |
|||||||||
Notes to the Group Financial Statements |
IHG |
173 |
Year ended 31 December 2023 |
Americas $m |
EMEAA $m |
Greater China $m |
Central $m |
Group $m |
|||||||||||||||||
Depreciation and amortisation a
|
24 |
12 |
4 |
27 |
67 |
|||||||||||||||||
Contract assets deduction in revenue |
21 |
15 |
1 |
– |
37 |
|||||||||||||||||
Equity-settled share-based payments cost |
9 |
4 |
2 |
16 |
31 |
|||||||||||||||||
Share of profit of associates and joint ventures (excluding exceptional items) |
(5 |
) |
(8 |
) |
– |
– |
(13) |
|||||||||||||||
Year ended 31 December 2022 |
Americas $m |
EMEAA $m |
Greater China $m |
Central $m |
Group $m |
|||||||||||||||||
Depreciation and amortisation a
|
23 |
13 |
4 |
28 |
68 |
|||||||||||||||||
Contract assets deduction in revenue |
18 |
13 |
1 |
– |
32 |
|||||||||||||||||
Equity-settled share-based payments cost |
8 |
4 |
2 |
14 |
28 |
|||||||||||||||||
Share of profit of associates (excluding exceptional items) |
(1 |
) |
– |
– |
– |
(1) |
||||||||||||||||
Year ended 31 December 2021 |
Americas $m |
EMEAA $m |
Greater China $m |
Central $m |
Group $m |
|||||||||||||||||
Depreciation and amortisation a
|
30 |
18 |
6 |
44 |
98 |
|||||||||||||||||
Contract assets deduction in revenue |
17 |
17 |
1 |
– |
35 |
|||||||||||||||||
Equity-settled share-based payments cost |
8 |
4 |
3 |
11 |
26 |
|||||||||||||||||
Share of losses of associates |
7 |
1 |
– |
– |
8 |
|||||||||||||||||
a |
Includes $17m (2022: $15m, 2021: $20m) relating to cost of sales in owned, leased and managed lease hotels and $50m (2022: $53m, 2021: $78m) relating to other assets. A further $83m (2022: $86m, 2021: $94m) was recorded within System Fund and reimbursable expenses. |
Year ended 31 December 2023 |
Americas $m |
EMEAA $m |
Greater China $m |
Central $m |
Group $m |
|||||||||||||||||
Capital expenditure per management reporting |
128 |
35 |
3 |
87 |
253 |
|||||||||||||||||
Contract acquisition costs |
(74 |
) |
(31 |
) |
(3 |
) |
– |
(108) |
||||||||||||||
Timing differences and other adjustments |
1 |
(2 |
) |
– |
(7 |
) |
(8) |
|||||||||||||||
Additions per the Group Financial Statements |
55 |
2 |
– |
80 |
137 |
|||||||||||||||||
Comprising additions to: |
||||||||||||||||||||||
Goodwill and other intangible assets |
– |
– |
– |
53 |
53 |
|||||||||||||||||
Property, plant and equipment |
4 |
2 |
– |
15 |
21 |
|||||||||||||||||
Investment in associates |
3 |
– |
– |
– |
3 |
|||||||||||||||||
Other financial assets |
48 |
– |
– |
12 |
60 |
|||||||||||||||||
55 |
2 |
– |
80 |
137 |
||||||||||||||||||
Year ended 31 December 2022 |
|
Americas $m |
EMEAA $m |
Greater China $m |
Central $m |
Group $m |
||||||||||||||||
Capital expenditure per management reporting |
71 |
21 |
2 |
67 |
161 |
|||||||||||||||||
Contract acquisition costs |
(47 |
) |
(16 |
) |
(1 |
) |
– |
(64) |
||||||||||||||
Lease incentives received |
– |
– |
– |
6 |
6 |
|||||||||||||||||
Timing differences and other adjustments |
– |
– |
(1 |
) |
2 |
1 |
||||||||||||||||
Additions per the Group Financial Statements |
24 |
5 |
– |
75 |
104 |
|||||||||||||||||
Comprising additions to: |
||||||||||||||||||||||
Goodwill and other intangible assets |
– |
– |
– |
46 |
46 |
|||||||||||||||||
Property, plant and equipment |
23 |
5 |
– |
29 |
57 |
|||||||||||||||||
Investment in associates |
1 |
– |
– |
– |
1 |
|||||||||||||||||
24 |
5 |
– |
75 |
104 |
||||||||||||||||||
174 |
IHG |
Year ended 31 December |
2023 $m |
2022 $m |
2021 $m |
|||||||||||||||
Revenue |
||||||||||||||||||
United Kingdom |
263 |
243 |
142 |
|||||||||||||||
United States |
1,777 |
1,659 |
1,263 |
|||||||||||||||
Rest of World |
1,020 |
773 |
574 |
|||||||||||||||
3,060 |
2,675 |
1,979 |
||||||||||||||||
System Fund revenues (note 32) |
1,564 |
1,217 |
928 |
|||||||||||||||
4,624 |
3,892 |
2,907 |
||||||||||||||||
31 December |
2023 $m |
2022 $m |
||||||||||
Non-current assets |
||||||||||||
United Kingdom |
100 |
102 |
||||||||||
United States |
1,332 |
1,308 |
||||||||||
Rest of World |
660 |
621 |
||||||||||
2,092 |
2,031 |
|||||||||||
Year ended 31 December 2023 |
|
Americas $m |
|
|
EMEAA $m |
|
|
Greater China $m |
|
|
Central $m |
|
|
Group $m |
|
|||||||||||||||
Franchise and base management fees |
936 |
253 |
115 |
– |
1,304 |
|||||||||||||||||||||||||
Incentive management fees |
21 |
101 |
46 |
– |
168 |
|||||||||||||||||||||||||
Central revenue |
– |
– |
– |
200 |
200 |
|||||||||||||||||||||||||
Revenue from fee business |
957 |
354 |
161 |
200 |
1,672 |
|||||||||||||||||||||||||
Revenue from owned, leased and managed lease hotels |
148 |
323 |
– |
– |
471 |
|||||||||||||||||||||||||
Revenue from insurance activities |
– |
– |
– |
21 |
21 |
|||||||||||||||||||||||||
1,105 |
677 |
161 |
221 |
2,164 |
||||||||||||||||||||||||||
System Fund revenues (note 32) |
1,564 |
|||||||||||||||||||||||||||||
Reimbursable revenues (note 32) |
896 |
|||||||||||||||||||||||||||||
Total revenue |
4,624 |
|||||||||||||||||||||||||||||
Year ended 31 December 2022 |
|
Americas $m |
|
|
EMEAA $m |
|
|
Greater China $m |
|
|
Central Re-presented $m |
a |
|
Group Re-presented $m |
a |
|||||||||||||||
Franchise and base management fees |
861 |
215 |
71 |
– |
1,147 |
|||||||||||||||||||||||||
Incentive management fees |
18 |
69 |
16 |
– |
103 |
|||||||||||||||||||||||||
Central revenue |
– |
– |
– |
184 |
184 |
|||||||||||||||||||||||||
Revenue from fee business |
879 |
284 |
87 |
184 |
1,434 |
|||||||||||||||||||||||||
Revenue from owned, leased and managed lease hotels |
126 |
268 |
– |
– |
394 |
|||||||||||||||||||||||||
Revenue from insurance activities |
– |
– |
– |
15 |
15 |
|||||||||||||||||||||||||
1,005 |
552 |
87 |
199 |
1,843 |
||||||||||||||||||||||||||
|
System Fund revenues (note 32
)
|
1,217 |
|||||||||||||||||||||||||||||
Reimbursable revenues (note 32) |
832 |
|||||||||||||||||||||||||||||
Total revenue |
3,892 |
|||||||||||||||||||||||||||||
a |
Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’ (see New accounting standards and other presentational changes). |
Notes to the Group Financial Statements |
IHG |
175 |
Year ended 31 December 2021 |
|
Americas $m |
|
|
EMEAA $m |
|
|
Greater China $m |
|
|
Central Re-presented $m |
a |
Group Re-presented
a
$m |
|||||||||||||||
Franchise and base management fees |
683 |
120 |
91 |
– |
894 |
|||||||||||||||||||||||
Incentive management fees |
8 |
29 |
25 |
– |
62 |
|||||||||||||||||||||||
Central revenue |
– |
– |
– |
188 |
188 |
|||||||||||||||||||||||
Revenue from fee business |
691 |
149 |
116 |
188 |
1,144 |
|||||||||||||||||||||||
Revenue from owned, leased and managed lease hotels |
83 |
154 |
– |
– |
237 |
|||||||||||||||||||||||
Revenue from insurance activities |
– |
– |
– |
9 |
9 |
|||||||||||||||||||||||
774 |
303 |
116 |
197 |
1,390 |
||||||||||||||||||||||||
System Fund revenues (note 32) |
928 |
|||||||||||||||||||||||||||
Reimbursable revenues (note 32) |
589 |
|||||||||||||||||||||||||||
Total revenue |
2,907 |
|||||||||||||||||||||||||||
a |
Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’ (see New accounting standards and other presentational changes). |
|
2023 $m |
2022 $m |
|||||||
Trade receivables (note 17) |
580 |
493 |
||||||
Contract assets |
459 |
367 |
||||||
Deferred revenue |
(1,848) |
(1,724) |
||||||
|
2023 $m |
2022 $m |
|||||||
At 1 January |
367 |
346 |
||||||
Additions |
129 |
70 |
||||||
Recognised as a deduction to revenue |
(37) |
(32) |
||||||
Impairment charges (note 6) |
– |
(5) |
||||||
Impairment reversals (note 6) |
– |
3 |
||||||
Repayments |
(7) |
(3) |
||||||
Exchange and other adjustments |
7 |
(12) |
||||||
At 31 December |
459 |
367 |
||||||
Analysed as: |
||||||||
Current |
35 |
31 |
||||||
Non-current |
424 |
336 |
||||||
459 |
367 |
|||||||
176 |
IHG |
Loyalty programme $m |
Other co-brand
fees $m |
Application & re-licensing
fees $m |
Other $m |
Total $m |
||||||||||||||||
At 1 January 2022 |
1,292 |
44 |
163 |
114 |
1,613 |
|||||||||||||||
Increase in deferred revenue |
532 |
– |
27 |
44 |
603 |
|||||||||||||||
Recognised as revenue |
(413 |
) |
(11 |
) |
(23 |
) |
(44 |
) |
(491) |
|||||||||||
Exchange and other adjustments |
– |
– |
– |
(1 |
) |
(1) |
||||||||||||||
At 31 December 2022 |
1,411 |
33 |
167 |
113 |
1,724 |
|||||||||||||||
Increase in deferred revenue |
672 |
– |
27 |
63 |
762 |
|||||||||||||||
Recognised as revenue |
(554 |
) |
(11 |
) |
(23 |
) |
(48 |
) |
(636) |
|||||||||||
Exchange and other adjustments |
– |
– |
– |
(2 |
) |
(2) |
||||||||||||||
At 31 December 2023 |
1,529 |
22 |
171 |
126 |
1,848 |
|||||||||||||||
Analysed as: |
||||||||||||||||||||
Current |
649 |
11 |
22 |
70 |
752 |
|||||||||||||||
Non-current |
880 |
11 |
149 |
56 |
1,096 |
|||||||||||||||
1,529 |
22 |
171 |
126 |
1,848 |
||||||||||||||||
At 31 December 2022: |
||||||||||||||||||||
Current |
584 |
11 |
23 |
63 |
681 |
|||||||||||||||
Non-current |
827 |
22 |
144 |
50 |
1,043 |
|||||||||||||||
1,411 |
33 |
167 |
113 |
1,724 |
||||||||||||||||
2023 |
2022 |
|||||||||||||||||||||||||
Loyalty and co-brand
$m |
Other $m |
Total $m |
Loyalty and co-brand
$m |
Other $m |
Total $m |
|||||||||||||||||||||
Less than one year |
660 |
92 |
752 |
595 |
86 |
681 |
||||||||||||||||||||
Between one and two years |
346 |
43 |
389 |
339 |
46 |
385 |
||||||||||||||||||||
Between two and three years |
195 |
32 |
227 |
199 |
32 |
231 |
||||||||||||||||||||
Between three and four years |
118 |
24 |
142 |
114 |
27 |
141 |
||||||||||||||||||||
Between four and five years |
73 |
20 |
93 |
70 |
22 |
92 |
||||||||||||||||||||
More than five years |
159 |
86 |
245 |
127 |
67 |
194 |
||||||||||||||||||||
1,551 |
297 |
1,848 |
1,444 |
280 |
1,724 |
|||||||||||||||||||||
2023 $m |
2022 $m |
|||||||||||
At 1 January |
80 |
77 |
||||||||||
Costs incurred |
15 |
13 |
||||||||||
Charged to income statement |
(8) |
(8) |
||||||||||
Exchange and other adjustments |
– |
(2) |
||||||||||
At 31 December |
87 |
80 |
||||||||||
Analysed as: |
||||||||||||
Current |
5 |
5 |
||||||||||
Non-current |
82 |
75 |
||||||||||
87 |
80 |
|||||||||||
Notes to the Group Financial Statements |
IHG |
177 |
Staff costs |
2023 $m |
|
2022 Re-presented $m |
a |
|
2021 Re-presented $m |
a |
|||||||||||||||||
Wages and salaries |
1,808 |
1,604 |
1,315 |
|||||||||||||||||||||
Social security costs |
143 |
117 |
86 |
|||||||||||||||||||||
Pension and other post-retirement benefits: |
||||||||||||||||||||||||
Defined benefit plans (note 27) |
4 |
2 |
2 |
|||||||||||||||||||||
Defined contribution plans |
58 |
53 |
41 |
|||||||||||||||||||||
2,013 |
1,776 |
1,444 |
||||||||||||||||||||||
Analysed as: |
||||||||||||||||||||||||
Costs borne by IHG b
|
747 |
646 |
569 |
|||||||||||||||||||||
Costs borne by the System Fund or reimbursed |
1,266 |
1,130 |
875 |
|||||||||||||||||||||
2,013 |
1,776 |
1,444 |
||||||||||||||||||||||
a |
Re-presented to combine System Fund and employees whose costs are reimbursed (see New accounting standards and other presentational changes). |
b |
In 2022, included $1m classified as exceptional relating to the costs of ceasing operations in Russia. |
Monthly average number of employees, including part-time employees |
2023 |
2022 Re-presented
|
a |
2021 Re-presented
|
a |
|||||||||||||||||||
Employees whose costs are borne by IHG: |
||||||||||||||||||||||||
Americas |
1,578 |
1,548 |
1,481 |
|||||||||||||||||||||
EMEAA |
3,642 |
3,638 |
2,808 |
|||||||||||||||||||||
Greater China |
352 |
333 |
299 |
|||||||||||||||||||||
Central |
1,720 |
1,528 |
1,425 |
|||||||||||||||||||||
7,292 |
7,047 |
6,013 |
||||||||||||||||||||||
Employees whose costs are borne by the System Fund or are reimbursed |
20,306 |
18,833 |
16,315 |
|||||||||||||||||||||
27,598 |
25,880 |
22,328 |
||||||||||||||||||||||
a |
Re-presented to combine System Fund and employees whose costs are reimbursed (see New accounting standards and other presentational changes) and to correct the allocation of 2022 between reportable segments. |
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||
Base salaries, fees, annual performance payments and benefits |
6.9 |
7.9 |
8.4 |
|||||||||||||||||||||
|
|
More detailed information on the remuneration including pensions, share awards and shareholdings for each Director is shown in the Directors’ Remuneration Report on pages 128 and 136. In addition, amounts received or receivable under long-term incentive schemes are shown on page 128. |
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||
Audit of the Financial Statements |
7 |
6 |
4 |
|||||||||||||||||||||
Audit of subsidiaries |
3 |
2 |
3 |
|||||||||||||||||||||
Other assurance services |
1 |
1 |
1 |
|||||||||||||||||||||
11 |
9 |
8 |
||||||||||||||||||||||
Under SEC regulations analysed as: |
||||||||||||||||||||||||
Audit |
10 |
8 |
7 |
|||||||||||||||||||||
Other audit-related |
1 |
1 |
1 |
|||||||||||||||||||||
11 |
9 |
8 |
||||||||||||||||||||||
178 |
IHG |
Note |
2023 $m |
2022 $m |
2021 $m |
|||||||||||||||||||||||
Administrative expenses: |
||||||||||||||||||||||||||
Costs of ceasing operations in Russia |
(a) |
– |
(12) |
– |
||||||||||||||||||||||
Commercial litigation and disputes |
(b) |
– |
(28) |
(25) |
||||||||||||||||||||||
– |
(40) |
(25) |
||||||||||||||||||||||||
Share of profits/(losses) of associate |
(c) |
18 |
(60) |
– |
||||||||||||||||||||||
Other operating income |
(d) |
10 |
– |
– |
||||||||||||||||||||||
Other net impairment reversals/(charges): |
||||||||||||||||||||||||||
Management agreements |
– reversal |
12 |
– |
12 |
– |
|||||||||||||||||||||
Property, plant and equipment |
– charge |
13 |
– |
(10) |
– |
|||||||||||||||||||||
– reversal |
13 |
– |
3 |
– |
||||||||||||||||||||||
Right-of-use |
– charge |
13 |
– |
(2) |
– |
|||||||||||||||||||||
– reversal |
14 |
– |
2 |
– |
||||||||||||||||||||||
Associates |
– charge |
– |
– |
(4) |
||||||||||||||||||||||
– reversal |
15 |
– |
2 |
– |
||||||||||||||||||||||
Contract assets |
– charge |
(e) |
– |
(5) |
– |
|||||||||||||||||||||
– reversal |
(e) |
– |
3 |
– |
||||||||||||||||||||||
– |
5 |
(4) |
||||||||||||||||||||||||
Operating exceptional items |
28 |
(95) |
(29) |
|||||||||||||||||||||||
Exceptional items before tax |
28 |
(95) |
(29) |
|||||||||||||||||||||||
Tax on exceptional items |
(f) |
(7) |
26 |
3 |
||||||||||||||||||||||
Exceptional tax |
(g) |
– |
– |
26 |
||||||||||||||||||||||
Tax |
(7) |
26 |
29 |
|||||||||||||||||||||||
Operating exceptional items analysed as: |
||||||||||||||||||||||||||
Americas |
27 |
(46) |
(22) |
|||||||||||||||||||||||
EMEAA |
1 |
(49) |
(7) |
|||||||||||||||||||||||
28 |
(95) |
(29) |
||||||||||||||||||||||||
|
|
The above items are defined by management as exceptional as further described on page 165. |
Notes to the Group Financial Statements |
IHG |
179 |
2023 |
2022 |
2021 |
||||||||||||||||||||||||||||||
|
Current tax $m |
Deferred tax $m |
Current tax $m |
Deferred tax $m |
Current tax $m |
Deferred tax $m |
|||||||||||||||||||||||||||
Costs of ceasing operations in Russia |
– |
– |
3 |
– |
– |
– |
||||||||||||||||||||||||||
Commercial litigation and disputes |
– |
– |
8 |
(2) |
– |
4 |
||||||||||||||||||||||||||
Share of (profits)/losses of associate |
– |
(4) |
15 |
– |
– |
– |
||||||||||||||||||||||||||
Other operating income |
(3 |
) |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||
Other net impairment reversals/(charges) |
– |
– |
1 |
(5) |
– |
1 |
||||||||||||||||||||||||||
Adjustments in respect of prior years a
|
– |
– |
6 |
– |
(2 |
) |
– |
|||||||||||||||||||||||||
(3 |
) |
(4) |
33 |
(7) |
(2 |
) |
5 |
|||||||||||||||||||||||||
Total current and deferred tax |
(7) |
26 |
3 |
|||||||||||||||||||||||||||||
a |
In 2022, related to the release of tax contingencies no longer needed; one of these was as a result of the closure of a tax audit of the 2014 US federal income tax return. In 2021, the tax charge related to the same audit. |
180 |
IHG |
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||
Financial income |
||||||||||||||||||
Financial income on deposits and money market funds |
33 |
17 |
2 |
|||||||||||||||
Interest income on loans and other assets |
6 |
5 |
6 |
|||||||||||||||
39 |
22 |
8 |
||||||||||||||||
Financial expenses |
||||||||||||||||||
Interest expense on external borrowings |
85 |
92 |
109 |
|||||||||||||||
Interest expense on lease liabilities |
29 |
29 |
29 |
|||||||||||||||
Unwind of discount on deferred purchase consideration |
1 |
– |
1 |
|||||||||||||||
Foreign exchange gains |
(35) |
(10) |
– |
|||||||||||||||
Other charges |
11 |
7 |
8 |
|||||||||||||||
91 |
118 |
147 |
||||||||||||||||
United Kingdom |
Other jurisdictions |
Total |
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2023 $m |
2022 $m |
2021 $m |
2023 $m |
2022 $m |
2021 $m |
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||||||||||||||||||||||||||
Current tax |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current period |
16 |
6 |
1 |
245 |
177 |
138 |
261 |
183 |
139 |
|||||||||||||||||||||||||||||||||||||||||||||
Adjustments in respect of prior periods |
– |
(2) |
– |
12 |
(5) |
4 |
12 |
(7) |
4 |
|||||||||||||||||||||||||||||||||||||||||||||
16 |
4 |
1 |
257 |
172 |
142 |
273 |
176 |
143 |
||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Origination and reversal of temporary differences |
1 |
(1) |
(7) |
(21) |
(6) |
(14) |
(20) |
(7) |
(21) |
|||||||||||||||||||||||||||||||||||||||||||||
Changes in tax rates and tax laws |
– |
– |
(25) |
2 |
– |
– |
2 |
– |
(25) |
|||||||||||||||||||||||||||||||||||||||||||||
Adjustments to unprovided or unrecognised deferred tax a
|
– |
(2) |
2 |
5 |
– |
– |
5 |
(2) |
2 |
|||||||||||||||||||||||||||||||||||||||||||||
Adjustments in respect of prior periods |
1 |
2 |
1 |
(1) |
(5) |
(4) |
– |
(3) |
(3) |
|||||||||||||||||||||||||||||||||||||||||||||
2 |
(1) |
(29) |
(15) |
(11) |
(18) |
(13) |
(12) |
(47) |
||||||||||||||||||||||||||||||||||||||||||||||
Income tax charge/(credit) for the year b
|
18 |
3 |
(28) |
242 |
161 |
124 |
260 |
164 |
96 |
|||||||||||||||||||||||||||||||||||||||||||||
a |
Represents a reassessment of the recovery of deferred taxes in line with the Group’s profit forecasts. |
b |
‘Other jurisdictions’ includes $172m (2022: $134m, 2021: $112m) in respect of US taxes. |
Notes to the Group Financial Statements |
IHG |
181 |
|
2023 % |
2022 % |
2021 % |
||||||||||||||||
Tax at UK blended rate |
23.5 |
19.0 |
19.0 |
|||||||||||||||
Tax credits |
(0.5) |
(0.1) |
(0.1) |
|||||||||||||||
System Fund a
|
(1.3) |
3.1 |
0.4 |
|||||||||||||||
Foreign exchange gains |
(1.0) |
(0.9) |
– |
|||||||||||||||
Other permanent differences b
|
0.9 |
0.5 |
1.4 |
|||||||||||||||
Non-recoverable foreign taxes |
1.3 |
3.5 |
3.5 |
|||||||||||||||
Net effect of different rates of tax c
|
1.5 |
6.3 |
6.8 |
|||||||||||||||
Effect of changes in UK tax rates and laws d
|
– |
– |
(7.0) |
|||||||||||||||
Effects of substantive enactment of UAE tax rates and laws e
|
(0.9) |
– |
– |
|||||||||||||||
Effect of changes in other tax rates and laws |
0.2 |
0.1 |
– |
|||||||||||||||
Reduction in current tax expense by previously unrecognised deferred tax assets |
– |
– |
(0.1) |
|||||||||||||||
Items on which deferred tax arose but where no deferred tax is recognised f
|
0.2 |
1.2 |
2.0 |
|||||||||||||||
Effect of adjustments to unprovided or unrecognised deferred taxes g
|
0.5 |
(0.4) |
0.5 |
|||||||||||||||
Adjustment to tax charge in respect of prior periods h
|
1.3 |
(1.9) |
0.2 |
|||||||||||||||
25.7 |
30.4 |
26.6 |
||||||||||||||||
a |
The System Fund is, in general, not subject to taxation. |
b |
Includes (0.6) percentage points (2022: (1.0) percentage points, 2021: (0.7) percentage points) in respect of the US Foreign-derived intangible income regime. |
c |
Includes 1.3 percentage points (2022: 6.9 percentage points, 2021: 7.1 percentage points) driven by the relatively high blended US rate, which includes US Federal and State taxes. |
d |
In 2021, the UK Government enacted an increase to the UK rate of Corporation Tax from 19% to 25%. |
e |
During 2023, law implementing a new corporate income tax regime was substantively enacted in the UAE. This resulted in the recognition of a deferred tax asset of $9m in the UAE. Absent further law change, this benefit is not likely to reoccur. |
f |
Predominantly in respect of losses arising in the year. |
g |
Entirely in respect of adjustments relating to estimated recoverable deferred tax assets other than 2023. In 2023, includes 0.7 percentage points respectively relating to the provision of previously unprovided deferred tax liabilities which arise on temporary differences in subsidiaries. |
h |
Relates to the finalisation of tax returns, activity from tax authorities such as tax audits and the reassessment of provisions for uncertain tax positions. |
182 |
IHG |
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||
China a
|
5 |
10 |
3 |
|||||||||||||||||||||
UK |
8 |
3 |
(2 |
) |
||||||||||||||||||||
US b
|
171 |
165 |
68 |
|||||||||||||||||||||
Other jurisdictions |
22 |
11 |
1 |
|||||||||||||||||||||
206 |
189 |
70 |
||||||||||||||||||||||
Taxes withheld at source |
37 |
22 |
16 |
|||||||||||||||||||||
Tax paid per cash flow |
243 |
211 |
86 |
|||||||||||||||||||||
a |
Tax payments are typically based upon the previous year’s profits. |
b |
Includes refunds in respect of earlier periods of $nil (2022: $nil, 2021: $15m). |
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||
Current tax charge in the Group income statement |
273 |
176 |
143 |
|||||||||||||||||||||
Current tax credit in the Group statement of comprehensive income |
(6 |
) |
(2 |
) |
– |
|||||||||||||||||||
Current tax credit taken directly to equity |
(5 |
) |
– |
– |
||||||||||||||||||||
Total current tax charge |
262 |
174 |
143 |
|||||||||||||||||||||
Movements to tax contingencies a
|
(2 |
) |
10 |
(4 |
) |
|||||||||||||||||||
Timing differences of cash tax paid and foreign exchange differences b
|
(17 |
) |
27 |
(53 |
) |
|||||||||||||||||||
Tax paid per cash flow |
243 |
211 |
86 |
|||||||||||||||||||||
a |
Tax contingency movements are included within the current tax charge but do not impact cash tax paid in the year. Settlements of tax contingencies are included within cash tax paid in the year but not recorded in the current year tax charge. |
b |
2021 included $20m of refunds in respect of earlier years, $12m of other receivables which have been allocated to payments that otherwise would have been due and $28m of payments due in 2022. |
Notes to the Group Financial Statements |
IHG |
183 |
|
|
Property, plant, equipment and software $m |
|
Application fees $m |
|
|
Deferred gains on loan notes $m |
a |
|
Associates $m |
|
|
Losses $m |
b |
|
Employee benefits $m |
|
Deferred compensation $m |
|
Expected credit losses on trade receivables $m |
|
|
Intangible assets excluding software $m |
|
|
Other short-term temporary differences $m |
c,d |
|
Total $m |
|
|||||||||||||||||||
At 1 January 2022 |
(81 |
) |
40 |
(34 |
) |
(55 |
) |
84 |
39 |
48 |
20 |
(16 |
) |
9 |
54 |
|||||||||||||||||||||||||||||||||
Group income statement |
32 |
1 |
– |
(4 |
) |
5 |
1 |
4 |
(5 |
) |
(21 |
) |
(1 |
) |
12 |
|||||||||||||||||||||||||||||||||
Group statement of comprehensive income |
– |
– |
– |
– |
(1 |
) |
(6 |
) |
– |
– |
– |
8 |
1 |
|||||||||||||||||||||||||||||||||||
Group statement of changes in equity |
– |
– |
– |
– |
– |
1 |
– |
– |
– |
– |
1 |
|||||||||||||||||||||||||||||||||||||
Exchange and other adjustments |
(4 |
) |
– |
– |
– |
(9 |
) |
(3 |
) |
– |
(1 |
) |
(3 |
) |
– |
(20 |
) |
|||||||||||||||||||||||||||||||
At 31 December 2022 |
(53 |
) |
41 |
(34 |
) |
(59 |
) |
79 |
32 |
52 |
14 |
(40 |
) |
16 |
48 |
|||||||||||||||||||||||||||||||||
Group income statement |
22 |
1 |
– |
(1 |
) |
– |
2 |
2 |
(3 |
) |
(9 |
) |
(1 |
) |
13 |
|||||||||||||||||||||||||||||||||
Group statement of comprehensive income |
– |
– |
– |
– |
(6 |
) |
– |
– |
– |
– |
(5 |
) |
(11 |
) |
||||||||||||||||||||||||||||||||||
Group statement of changes in equity |
– |
– |
– |
– |
– |
6 |
– |
– |
– |
– |
6 |
|||||||||||||||||||||||||||||||||||||
Exchange and other adjustments |
1 |
– |
– |
– |
3 |
1 |
– |
– |
3 |
2 |
10 |
|||||||||||||||||||||||||||||||||||||
At 31 December 2023 |
(30 |
) |
42 |
(34 |
) |
(60 |
) |
76 |
41 |
54 |
11 |
(46 |
) |
12 |
66 |
|||||||||||||||||||||||||||||||||
a |
Become due in 2025 unless prevailing law at that time allows further deferral. |
b |
Wholly in respect of revenue losses. |
c |
No balances exceeding $20m are contained within ‘Other short-term temporary differences’. |
d |
Primarily in respect of contract costs, right-of-use |
2023 $m |
2022 $m |
|||||||||||||||
Deferred tax assets |
134 |
126 |
||||||||||||||
Deferred tax liabilities |
(68 |
) |
(78 |
) |
||||||||||||
66 |
48 |
|||||||||||||||
Analysed as: |
||||||||||||||||
United Kingdom |
113 |
109 |
||||||||||||||
United States |
(53 |
) |
(73 |
) |
||||||||||||
Other |
6 |
12 |
||||||||||||||
66 |
48 |
|||||||||||||||
184 |
IHG |
Gross |
Unrecognised deferred tax |
|||||||||||||||||||||||||||||||
2023 $m |
2022 $m |
2023 $m |
2022 $m |
|||||||||||||||||||||||||||||
Revenue losses |
450 |
430 |
79 |
78 |
||||||||||||||||||||||||||||
Capital losses |
580 |
549 |
146 |
138 |
||||||||||||||||||||||||||||
1,030 |
979 |
225 |
216 |
|||||||||||||||||||||||||||||
Tax credits |
32 |
25 |
32 |
25 |
||||||||||||||||||||||||||||
Other a
|
16 |
31 |
5 |
8 |
||||||||||||||||||||||||||||
1,078 |
1,035 |
262 |
249 |
|||||||||||||||||||||||||||||
a |
Primarily relates to costs incurred for which tax relief has not been obtained. |
Gross |
Unrecognised deferred tax |
|||||||||||||||||||||||||||||||
Expiry date |
2023 $m |
2022 $m |
2023 $m |
2022 $m |
||||||||||||||||||||||||||||
2023 |
– |
1 |
– |
– |
||||||||||||||||||||||||||||
2024 |
6 |
4 |
1 |
1 |
||||||||||||||||||||||||||||
2025 |
11 |
9 |
2 |
1 |
||||||||||||||||||||||||||||
2026 |
7 |
18 |
1 |
4 |
||||||||||||||||||||||||||||
2027 |
7 |
3 |
1 |
– |
||||||||||||||||||||||||||||
2028 |
6 |
– |
1 |
– |
||||||||||||||||||||||||||||
2029 |
10 |
10 |
10 |
10 |
||||||||||||||||||||||||||||
After 2030 |
22 |
18 |
22 |
16 |
||||||||||||||||||||||||||||
Notes to the Group Financial Statements |
IHG |
185 |
2023 |
2022 |
2021 |
||||||||||||||||||||||||||||||||
Paid during the year |
cents per share |
$m |
cents per share |
$m |
cents per share |
$m |
||||||||||||||||||||||||||||
Final (declared for previous year) |
94.5 |
166 |
85.9 |
154 |
– |
– |
||||||||||||||||||||||||||||
Interim |
48.3 |
79 |
43.9 |
79 |
– |
– |
||||||||||||||||||||||||||||
142.8 |
245 |
129.8 |
233 |
– |
– |
|||||||||||||||||||||||||||||
Basic earnings per ordinary share |
2023 |
2022 |
2021 |
|||||||||||||||||||||
Profit available for equity holders ($m) |
750 |
375 |
266 |
|||||||||||||||||||||
Basic weighted average number of ordinary shares (millions) |
169 |
181 |
183 |
|||||||||||||||||||||
Basic earnings per ordinary share (cents) |
443.8 |
207.2 |
145.4 |
|||||||||||||||||||||
Diluted earnings per ordinary share |
||||||||||||||||||||||||
Profit available for equity holders ($m) |
750 |
375 |
266 |
|||||||||||||||||||||
Diluted weighted average number of ordinary shares (millions) |
170 |
182 |
184 |
|||||||||||||||||||||
Diluted earnings per ordinary share (cents) |
441.2 |
206.0 |
144.6 |
|||||||||||||||||||||
|
2023 millions |
2022 millions |
2021 millions |
||||||||||||||||||||||
Weighted average number of ordinary shares in issue |
177 |
187 |
187 |
|||||||||||||||||||||
Weighted average number of treasury shares |
(8 |
) |
(6 |
) |
(4 |
) |
||||||||||||||||||
Basic weighted average number of ordinary shares |
169 |
181 |
183 |
|||||||||||||||||||||
Dilutive potential ordinary shares |
1 |
1 |
1 |
|||||||||||||||||||||
Diluted weighted average number of ordinary shares |
170 |
182 |
184 |
|||||||||||||||||||||
186 |
IHG |
|
Goodwill $m |
Brands $m |
Software $m |
Management agreements $m |
Other intangibles $m |
Total $m |
|||||||||||||||||||||||
Cost |
||||||||||||||||||||||||||||
At 1 January 2022 |
532 |
439 |
878 |
122 |
26 |
1,997 |
||||||||||||||||||||||
Additions |
– |
– |
46 |
– |
– |
46 |
||||||||||||||||||||||
Fully amortised assets written off |
– |
– |
(94 |
) |
– |
– |
(94 |
) |
||||||||||||||||||||
Disposals |
(8 |
) |
– |
– |
– |
– |
(8 |
) |
||||||||||||||||||||
Exchange and other adjustments |
(11 |
) |
– |
(5 |
) |
– |
– |
(16 |
) |
|||||||||||||||||||
At 31 December 2022 |
513 |
439 |
825 |
122 |
26 |
1,925 |
||||||||||||||||||||||
Additions |
– |
– |
52 |
– |
1 |
53 |
||||||||||||||||||||||
Fully amortised assets written off |
– |
– |
(52 |
) |
– |
(3 |
) |
(55 |
) |
|||||||||||||||||||
Disposals |
– |
– |
(1 |
) |
– |
– |
(1 |
) |
||||||||||||||||||||
Exchange and other adjustments |
3 |
– |
1 |
– |
– |
4 |
||||||||||||||||||||||
At 31 December 2023 |
516 |
439 |
825 |
122 |
24 |
1,926 |
||||||||||||||||||||||
Amortisation and impairment |
||||||||||||||||||||||||||||
At 1 January 2022 |
(191 |
) |
– |
(485 |
) |
(113 |
) |
(13 |
) |
(802 |
) |
|||||||||||||||||
Provided |
– |
– |
(20 |
) |
– |
(3 |
) |
(23 |
) |
|||||||||||||||||||
System Fund expense |
– |
– |
(78 |
) |
– |
(1 |
) |
(79 |
) |
|||||||||||||||||||
Impairment reversal |
– |
– |
– |
12 |
– |
12 |
||||||||||||||||||||||
Fully amortised assets written off |
– |
– |
94 |
– |
– |
94 |
||||||||||||||||||||||
Disposals |
8 |
– |
– |
– |
– |
8 |
||||||||||||||||||||||
Exchange and other adjustments |
5 |
– |
3 |
– |
1 |
9 |
||||||||||||||||||||||
At 31 December 2022 |
(178 |
) |
– |
(486 |
) |
(101 |
) |
(16 |
) |
(781 |
) |
|||||||||||||||||
Provided |
– |
– |
(18 |
) |
(1 |
) |
(2 |
) |
(21 |
) |
||||||||||||||||||
System Fund expense |
– |
– |
(76 |
) |
– |
(1 |
) |
(77 |
) |
|||||||||||||||||||
Fully amortised assets written off |
– |
– |
52 |
– |
3 |
55 |
||||||||||||||||||||||
Disposals |
– |
– |
1 |
– |
– |
1 |
||||||||||||||||||||||
Exchange and other adjustments |
(2 |
) |
– |
(1 |
) |
(1 |
) |
– |
(4 |
) |
||||||||||||||||||
At 31 December 2023 |
(180 |
) |
– |
(528 |
) |
(103 |
) |
(16 |
) |
(827 |
) |
|||||||||||||||||
Net book value |
||||||||||||||||||||||||||||
At 31 December 2023 |
336 |
439 |
297 |
19 |
8 |
1,099 |
||||||||||||||||||||||
At 31 December 2022 |
335 |
439 |
339 |
21 |
10 |
1,144 |
||||||||||||||||||||||
At 1 January 2022 |
341 |
439 |
393 |
9 |
13 |
1,195 |
||||||||||||||||||||||
Analysed as: |
||||||||||||||||||||||||||||||||||||
|
At 1 January 2022 $m |
Exchange adjustments $m |
At 31 December 2022 $m |
Exchange adjustments $m |
At 31 December 2023 $m |
Goodwill $m |
Brands $m |
||||||||||||||||||||||||||||||
Americas (group of CGUs) |
419 |
– |
419 |
– |
419 |
132 |
287 |
|||||||||||||||||||||||||||||
EMEAA (group of CGUs) |
337 |
(6 |
) |
331 |
1 |
332 |
196 |
136 |
||||||||||||||||||||||||||||
Greater China |
24 |
– |
24 |
– |
24 |
8 |
16 |
|||||||||||||||||||||||||||||
780 |
(6 |
) |
774 |
1 |
775 |
336 |
439 |
|||||||||||||||||||||||||||||
Notes to the Group Financial Statements |
IHG |
187 |
2023 |
2022 |
|||||||||||||||||||||||
|
Terminal growth rate % |
Pre-tax discount rate % |
Terminal growth rate % |
Pre-tax discount rate % |
|||||||||||||||||||||
Americas |
1.6 |
13.0 |
1.9 |
13.7 |
||||||||||||||||||||
EMEAA |
2.4 |
15.1 |
2.5 |
16.2 |
||||||||||||||||||||
Greater China |
2.5 |
12.1 |
2.5 |
13.8 |
||||||||||||||||||||
188 |
IHG |
|
Land and buildings $m |
Fixtures, fittings and equipment $m |
Total $m |
||||||||||||||
Cost |
||||||||||||||||
At 1 January 2022 |
105 |
299 |
404 |
|||||||||||||
Additions |
15 |
42 |
57 |
|||||||||||||
Fully depreciated assets written off |
– |
(30 |
) |
(30 |
) |
|||||||||||
Disposals |
(7 |
) |
(5 |
) |
(12 |
) |
||||||||||
Exchange and other adjustments |
(1 |
) |
(14 |
) |
(15 |
) |
||||||||||
At 31 December 2022 |
112 |
292 |
404 |
|||||||||||||
Additions |
1 |
20 |
21 |
|||||||||||||
Fully depreciated assets written off |
– |
(15 |
) |
(15 |
) |
|||||||||||
Disposals |
(2 |
) |
(3 |
) |
(5 |
) |
||||||||||
Exchange and other adjustments |
– |
6 |
6 |
|||||||||||||
At 31 December 2023 |
111 |
300 |
411 |
|||||||||||||
Depreciation and impairment |
||||||||||||||||
At 1 January 2022 |
(53 |
) |
(214 |
) |
(267 |
) |
||||||||||
Provided |
(3 |
) |
(17 |
) |
(20 |
) |
||||||||||
System Fund expense |
– |
(4 |
) |
(4 |
) |
|||||||||||
Impairment charge |
– |
(10 |
) |
(10 |
) |
|||||||||||
Impairment reversal |
– |
3 |
3 |
|||||||||||||
Fully depreciated assets written off |
– |
30 |
30 |
|||||||||||||
Disposals |
4 |
5 |
9 |
|||||||||||||
Exchange and other adjustments |
1 |
11 |
12 |
|||||||||||||
At 31 December 2022 |
(51 |
) |
(196 |
) |
(247 |
) |
||||||||||
Provided |
(6 |
) |
(18 |
) |
(24 |
) |
||||||||||
System Fund expense |
– |
(4 |
) |
(4 |
) |
|||||||||||
Fully depreciated assets written off |
– |
15 |
15 |
|||||||||||||
Disposals |
2 |
3 |
5 |
|||||||||||||
Exchange and other adjustments |
1 |
(4 |
) |
(3 |
) |
|||||||||||
At 31 December 2023 |
(54 |
) |
(204 |
) |
(258 |
) |
||||||||||
Net book value |
||||||||||||||||
At 31 December 2023 |
57 |
96 |
153 |
|||||||||||||
At 31 December 2022 |
61 |
96 |
157 |
|||||||||||||
At 1 January 2022 |
52 |
85 |
137 |
|||||||||||||
|
Americas $m |
EMEAA $m |
Greater China $m |
|
Central $m |
Total $m |
|||||||||||||||||||||||||||||||||||
Land and buildings |
51 |
1 |
– |
5 |
57 |
|||||||||||||||||||||||||||||||||||
Fixtures, fittings and equipment |
31 |
4 |
– |
61 |
96 |
|||||||||||||||||||||||||||||||||||
82 |
5 |
– |
66 |
153 |
||||||||||||||||||||||||||||||||||||
Notes to the Group Financial Statements |
IHG |
189 |
|
Land and buildings $m |
Investment property $m |
Other $m |
Total $m |
|||||||||||||||||
Cost |
||||||||||||||||||||
At 1 January 2022 |
607 |
– |
3 |
610 |
||||||||||||||||
Additions and other re-measurements
|
40 |
– |
– |
40 |
||||||||||||||||
Transfers to investment property |
(50 |
) |
50 |
– |
– |
|||||||||||||||
Transfers to finance lease receivable |
(5 |
) |
– |
– |
(5 |
) |
||||||||||||||
Terminations |
(9 |
) |
– |
(1 |
) |
(10 |
) |
|||||||||||||
Exchange and other adjustments |
(12 |
) |
– |
– |
(12 |
) |
||||||||||||||
At 31 December 2022 |
571 |
50 |
2 |
623 |
||||||||||||||||
Additions and other re-measurements
|
15 |
– |
2 |
17 |
||||||||||||||||
Transfers to investment property |
(2 |
) |
2 |
– |
– |
|||||||||||||||
Terminations |
(51 |
) |
– |
(1 |
) |
(52 |
) |
|||||||||||||
Exchange and other adjustments |
1 |
– |
– |
1 |
||||||||||||||||
At 31 December 2023 |
534 |
52 |
3 |
589 |
||||||||||||||||
Depreciation and impairment |
||||||||||||||||||||
At 1 January 2022 |
(334 |
) |
– |
(2 |
) |
(336 |
) |
|||||||||||||
Provided |
(24 |
) |
– |
(1 |
) |
(25 |
) |
|||||||||||||
System Fund expense |
(3 |
) |
– |
– |
(3 |
) |
||||||||||||||
Impairment charge |
(2 |
) |
– |
– |
(2 |
) |
||||||||||||||
Impairment reversal |
2 |
– |
– |
2 |
||||||||||||||||
Transfers to investment property |
47 |
(47 |
) |
– |
– |
|||||||||||||||
Transfers to finance lease receivable |
3 |
– |
– |
3 |
||||||||||||||||
Terminations |
9 |
– |
1 |
10 |
||||||||||||||||
Exchange and other adjustments |
8 |
– |
– |
8 |
||||||||||||||||
At 31 December 2022 |
(294 |
) |
(47 |
) |
(2 |
) |
(343 |
) |
||||||||||||
Provided |
(22 |
) |
– |
– |
(22 |
) |
||||||||||||||
System Fund expense |
(2 |
) |
– |
– |
(2 |
) |
||||||||||||||
Transfers to investment property |
2 |
(2 |
) |
– |
– |
|||||||||||||||
Terminations |
51 |
– |
1 |
52 |
||||||||||||||||
Exchange and other adjustments |
(1 |
) |
– |
– |
(1 |
) |
||||||||||||||
At 31 December 2023 |
(266 |
) |
(49 |
) |
(1 |
) |
(316 |
) |
||||||||||||
Net book value |
||||||||||||||||||||
At 31 December 2023 |
268 |
3 |
2 |
273 |
||||||||||||||||
At 31 December 2022 |
277 |
3 |
– |
280 |
||||||||||||||||
At 1 January 2022 |
273 |
– |
1 |
274 |
||||||||||||||||
190 |
IHG |
Currency |
|
2023 $m |
|
2022 $m |
||||||||
US dollars |
357 |
363 |
||||||||||
Sterling |
32 |
31 |
||||||||||
Euros |
4 |
5 |
||||||||||
Other |
33 |
28 |
||||||||||
426 |
427 |
|||||||||||
Analysed as: |
||||||||||||
Current |
30 |
26 |
||||||||||
Non-current |
396 |
401 |
||||||||||
426 |
427 |
|||||||||||
|
|
2023 $m |
|
2022 $m |
|
2021 $m |
|||||||||||||
Depreciation of right-of-use |
22 |
25 |
27 |
|||||||||||||||
System Fund depreciation of right-of-use |
2 |
3 |
3 |
|||||||||||||||
System Fund impairment reversal |
– |
– |
(3 |
) |
||||||||||||||
Expense relating to variable lease payments |
62 |
47 |
31 |
|||||||||||||||
Expense relating to short-term leases and low-value assets |
2 |
1 |
1 |
|||||||||||||||
Income from operating subleases of right-of-use |
(2 |
) |
(1 |
) |
(1 |
) |
||||||||||||
Recognised in operating profit |
86 |
75 |
58 |
|||||||||||||||
Interest on lease liabilities |
29 |
29 |
29 |
|||||||||||||||
Total recognised in the Group income statement |
115 |
104 |
87 |
|||||||||||||||
Notes to the Group Financial Statements |
IHG |
191 |
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||
Operating activities |
92 |
72 |
55 |
|||||||||||||||||||||
Investing activities |
– |
(6 |
) |
– |
||||||||||||||||||||
Financing activities |
28 |
36 |
32 |
|||||||||||||||||||||
Net cash paid |
120 |
102 |
87 |
|||||||||||||||||||||
2023 $m |
2022 $m |
|||||||||||||||
Cost |
||||||||||||||||
At 1 January |
89 |
132 |
||||||||||||||
Additions |
3 |
1 |
||||||||||||||
Share of profits/(losses) a
|
13 |
(41 |
) |
|||||||||||||
System Fund share of losses |
(3 |
) |
(1 |
) |
||||||||||||
Dividends and distributions |
(1 |
) |
(1 |
) |
||||||||||||
Exchange and other adjustments |
– |
(1 |
) |
|||||||||||||
At 31 December |
101 |
89 |
||||||||||||||
Impairment |
||||||||||||||||
At 1 January |
(53 |
) |
(55 |
) |
||||||||||||
Impairment reversal |
– |
2 |
||||||||||||||
At 31 December |
(53 |
) |
(53 |
) |
||||||||||||
Net book value |
48 |
36 |
||||||||||||||
Analysed as: |
||||||||||||||||
Barclay associate |
3 |
– |
||||||||||||||
Other associates |
43 |
36 |
||||||||||||||
Joint ventures |
2 |
– |
||||||||||||||
48 |
36 |
|||||||||||||||
a |
In 2023 and 2022, the total share of profits/(losses) from associates and joint ventures in the Group income statement included $18m gain and $18m loss, respectively, due to the liability recognised in 2022 and its subsequent reversal (see note 6). In 2022, $42m was included within exceptional items in addition to the $18m above. |
192 |
IHG |
2023 $m |
2022 $m |
|||||||||||||||
Non-current assets |
462 |
472 |
||||||||||||||
Current assets |
86 |
64 |
||||||||||||||
Current liabilities |
(23 |
) |
(33 |
) |
||||||||||||
Non-current liabilities |
(256 |
) |
(250 |
) |
||||||||||||
Net assets |
269 |
253 |
||||||||||||||
Group’s share of reported net assets at 19.9% |
53 |
50 |
||||||||||||||
Adjustments to reflect impairment, capitalised costs and additional rights and obligations under the shareholder agreement |
(8 |
) |
(8 |
) |
||||||||||||
Effect of specially allocated expenses (note 6) |
(42 |
) |
(42 |
) |
||||||||||||
Carrying amount |
3 |
– |
||||||||||||||
2023 $m |
2022 $m |
|||||||||||||||
Revenue |
131 |
106 |
||||||||||||||
Profit from continuing operations and total comprehensive income for the year |
15 |
8 |
||||||||||||||
Group’s share of profit/(loss) for the year a
|
3 |
(42 |
) |
|||||||||||||
a |
Includes specially allocated expenses and the cost of funding owner returns. |
2023 $m |
2022 $m |
|||||||||||||||
Equity securities |
102 |
103 |
||||||||||||||
Restricted funds: |
||||||||||||||||
Ring-fenced amounts to satisfy insurance claims: |
||||||||||||||||
Cash |
2 |
2 |
||||||||||||||
Money market funds |
14 |
3 |
||||||||||||||
Bank accounts pledged as security |
32 |
39 |
||||||||||||||
Other |
2 |
1 |
||||||||||||||
50 |
45 |
|||||||||||||||
Trade deposits and loans |
40 |
8 |
||||||||||||||
192 |
156 |
|||||||||||||||
Analysed as: |
||||||||||||||||
Current |
7 |
– |
||||||||||||||
Non-current |
185 |
156 |
||||||||||||||
192 |
156 |
|||||||||||||||
2023 |
2022 |
|||||||||||||||||||||||
Fair value $m |
Dividend income $m |
Fair value $m |
Dividend income $m |
|||||||||||||||||||||
Investment in entity which owns: |
||||||||||||||||||||||||
InterContinental The Willard Washington DC |
27 |
1 |
27 |
– |
||||||||||||||||||||
InterContinental Grand Stanford Hong Kong |
37 |
– |
35 |
– |
||||||||||||||||||||
Notes to the Group Financial Statements |
IHG |
193 |
|
2023 $m |
2022 $m |
|||||||||||||||
Americas |
99 |
54 |
||||||||||||||
EMEAA |
56 |
62 |
||||||||||||||
Greater China |
37 |
40 |
||||||||||||||
192 |
156 |
|||||||||||||||
|
2023 $m |
2022 $m |
|||||||||||||||
Current |
||||||||||||||||
Trade receivables |
580 |
493 |
||||||||||||||
Other receivables |
68 |
49 |
||||||||||||||
Prepayments |
92 |
104 |
||||||||||||||
740 |
646 |
|||||||||||||||
Non-current |
||||||||||||||||
Finance lease receivables |
6 |
2 |
||||||||||||||
Other receivables |
3 |
1 |
||||||||||||||
Prepayments |
4 |
– |
||||||||||||||
13 |
3 |
|||||||||||||||
2023 |
2022 |
|||||||||||||||||||||||||||||||
|
Gross $m |
Credit loss allowance $m |
Net $m |
Gross $m |
Credit loss allowance $m |
Net $m |
|||||||||||||||||||||||||||
Not past due |
354 |
(1 |
) |
353 |
307 |
(1 |
) |
306 |
||||||||||||||||||||||||
Past due 1 to 30 days |
88 |
(5 |
) |
83 |
76 |
(7 |
) |
69 |
||||||||||||||||||||||||
Past due 31 to 90 days |
69 |
(6 |
) |
63 |
57 |
(6 |
) |
51 |
||||||||||||||||||||||||
Past due 91 to 180 days |
51 |
(8 |
) |
43 |
46 |
(9 |
) |
37 |
||||||||||||||||||||||||
Past due 181 to 360 days |
38 |
(11 |
) |
27 |
34 |
(11 |
) |
23 |
||||||||||||||||||||||||
Past due more than 361 days |
86 |
(75 |
) |
11 |
90 |
(83 |
) |
7 |
||||||||||||||||||||||||
686 |
(106 |
) |
580 |
610 |
(117 |
) |
493 |
|||||||||||||||||||||||||
194 |
IHG |
Movement in the allowance for expected credit losses |
2023 $m |
2022 $m |
||||||||||||||
At 1 January |
(117 |
) |
(133 |
) |
||||||||||||
Reclassification to other receivables |
– |
9 |
||||||||||||||
Impairment reversal/(loss) |
1 |
(5 |
) |
|||||||||||||
System Fund impairment loss |
– |
(7 |
) |
|||||||||||||
Amounts written off |
9 |
17 |
||||||||||||||
Exchange and other adjustments |
1 |
2 |
||||||||||||||
At 31 December |
(106 |
) |
(117 |
) |
||||||||||||
|
2023 $m |
2022 $m |
|||||||||||||||
Americas |
359 |
321 |
||||||||||||||
EMEAA |
199 |
152 |
||||||||||||||
Greater China |
99 |
72 |
||||||||||||||
657 |
545 |
|||||||||||||||
2023 $m |
2022 $m |
|||||||||||||||
Cash at bank and in hand |
179 |
165 |
||||||||||||||
Short-term deposits |
632 |
421 |
||||||||||||||
Money market funds |
375 |
360 |
||||||||||||||
Repurchase agreements |
136 |
30 |
||||||||||||||
Cash and cash equivalents as recorded in the Group statement of financial position |
1,322 |
976 |
||||||||||||||
Bank overdrafts |
(44 |
) |
(55 |
) |
||||||||||||
Cash and cash equivalents as recorded in the Group statement of cash flows |
1,278 |
921 |
||||||||||||||
|
2023 $m |
2022 $m |
|||||||||||||||
Countries with restrictions on repatriation |
30 |
24 |
||||||||||||||
Capital expenditure under lease agreements |
14 |
11 |
||||||||||||||
Other restrictions |
12 |
12 |
||||||||||||||
56 |
47 |
|||||||||||||||
Notes to the Group Financial Statements |
IHG |
195 |
|
2023 $m |
2022 $m |
|||||||||||||||
Current |
||||||||||||||||
Trade payables |
127 |
152 |
||||||||||||||
Other tax and social security payables |
47 |
37 |
||||||||||||||
Other payables |
135 |
173 |
||||||||||||||
Deferred purchase consideration |
13 |
– |
||||||||||||||
Accruals |
389 |
335 |
||||||||||||||
711 |
697 |
|||||||||||||||
Non-current |
||||||||||||||||
Other payables |
6 |
4 |
||||||||||||||
Deferred purchase consideration |
– |
12 |
||||||||||||||
Contingent purchase consideration (note 25) |
69 |
65 |
||||||||||||||
75 |
81 |
|||||||||||||||
|
Commercial litigation and disputes $m |
Self insurance reserves $m |
Dilapidations and other $m |
Total $m |
|||||||||||||||||
At 31 December 2022 a
|
33 |
18 |
13 |
64 |
||||||||||||||||
Provided |
6 |
7 |
3 |
16 |
||||||||||||||||
Utilised |
(32 |
) |
(11 |
) |
(2 |
) |
(45 |
) |
||||||||||||
Exchange and other adjustments |
– |
– |
1 |
1 |
||||||||||||||||
At 31 December 2023 |
7 |
14 |
15 |
36 |
||||||||||||||||
Analysed as: |
||||||||||||||||||||
Current |
– |
5 |
5 |
10 |
||||||||||||||||
Non-current |
7 |
9 |
10 |
26 |
||||||||||||||||
7 |
14 |
15 |
36 |
|||||||||||||||||
a |
Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’ (see New accounting standards and other presentational changes). Amounts reclassified as insurance liabilities are shown in note 21. |
196 |
IHG |
|
2023 $m |
2022 $m |
|||||||||||||||
At 1 January |
32 |
25 |
||||||||||||||
Insurance expenses |
21 |
9 |
||||||||||||||
Claims and other amounts paid |
(15 |
) |
(2 |
) |
||||||||||||
Impact of discounting and other changes |
(1 |
) |
– |
|||||||||||||
At 31 December |
37 |
32 |
||||||||||||||
Analysed as: |
||||||||||||||||
Current |
12 |
9 |
||||||||||||||
Non-current |
25 |
23 |
||||||||||||||
37 |
32 |
|||||||||||||||
Incurred but not reported claims (‘IBNR’) a
|
20 |
25 |
||||||||||||||
Reported but not settled claims |
17 |
7 |
||||||||||||||
37 |
32 |
|||||||||||||||
a |
Includes unallocated loss expenses. |
|
2023 $m |
2022 $m |
|||||||||||||||
Revenue from insurance activities |
21 |
15 |
||||||||||||||
Insurance expenses (inclusive of overhead costs) |
(23 |
) |
(11 |
) |
||||||||||||
Insurance result |
(2 |
) |
4 |
|||||||||||||
|
Maturity date |
Discount at issue % |
2023 $m |
2022 $m |
|||||||||||||||||||||
Current |
||||||||||||||||||||||||
Bank overdrafts (note 18) |
n/a |
n/a |
44 |
55 |
||||||||||||||||||||
€ 500m 1.625% bonds 2024 |
8 October 2024 |
0.437 |
555 |
– |
||||||||||||||||||||
599 |
55 |
|||||||||||||||||||||||
Non-current |
||||||||||||||||||||||||
€ 500m 1.625% bonds
|
8 October 2024 |
0.437 |
– |
534 |
||||||||||||||||||||
£300m 3.75% bonds
|
14 August 2025 |
0.986 |
387 |
365 |
||||||||||||||||||||
£350m 2.125% bonds
|
24 August 2026 |
0.550 |
449 |
423 |
||||||||||||||||||||
€ 500m 2.125% bonds
|
15 May 2027 |
0.470 |
559 |
539 |
||||||||||||||||||||
£400m 3.375% bonds
|
8 October 2028 |
1.034 |
509 |
480 |
||||||||||||||||||||
€ 600m 4.375% bonds
|
28 November 2029 |
0.098 |
663 |
– |
||||||||||||||||||||
2,567 |
2,341 |
|||||||||||||||||||||||
Total loans and other borrowings |
3,166 |
2,396 |
||||||||||||||||||||||
Denominated in the following currencies: |
||||||||||||||||||||||||
Sterling |
1,345 |
1,269 |
||||||||||||||||||||||
US dollars |
44 |
53 |
||||||||||||||||||||||
Euros |
1,777 |
1,073 |
||||||||||||||||||||||
Other |
– |
1 |
||||||||||||||||||||||
3,166 |
2,396 |
|||||||||||||||||||||||
Notes to the Group Financial Statements |
IHG |
197 |
|
2023 $m |
2022 $m |
|||||||||||||||||
Cash and cash equivalents |
1,322 |
976 |
||||||||||||||||
Loans and other borrowings |
– current |
(599 |
) |
(55 |
) |
|||||||||||||
– non-current
|
(2,567 |
) |
(2,341 |
) |
||||||||||||||
Lease liabilities |
– current |
(30 |
) |
(26 |
) |
|||||||||||||
– non-current
|
(396 |
) |
(401 |
) |
||||||||||||||
Principal amounts payable/receivable on maturity of derivative financial instruments (note 24) |
(2 |
) |
(4 |
) |
||||||||||||||
Net debt |
(2,272 |
) |
(1,851 |
) |
||||||||||||||
Movement in net debt |
2023 $m |
2022 $m |
||||||||||||||
Net increase/(decrease) in cash and cash equivalents, net of overdrafts |
339 |
(393 |
) |
|||||||||||||
Add back financing cash flows in respect of other components of net debt: |
||||||||||||||||
Principal element of lease payments |
28 |
36 |
||||||||||||||
(Issue)/repayment of long-term bonds |
(657 |
) |
209 |
|||||||||||||
(629 |
) |
245 |
||||||||||||||
Increase in net debt arising from cash flows |
(290 |
) |
(148 |
) |
||||||||||||
Other movements: |
||||||||||||||||
Lease liabilities |
(25 |
) |
(48 |
) |
||||||||||||
Increase in accrued interest |
(2 |
) |
(1 |
) |
||||||||||||
Exchange and other adjustments |
(104 |
) |
227 |
|||||||||||||
(131 |
) |
178 |
||||||||||||||
(Increase)/decrease in net debt |
(421 |
) |
30 |
|||||||||||||
Net debt at beginning of the year |
(1,851 |
) |
(1,881 |
) |
||||||||||||
Net debt at end of the year |
(2,272 |
) |
(1,851 |
) |
||||||||||||
198 |
IHG |
|
|
At 1 January 2023 $m |
|
|
Financing cash flows $m |
|
|
Exchange adjustments $m |
|
|
Other $m |
a,b |
|
At 31 December 2023 $m |
| ||||||||
Lease liabilities |
427 |
(28 |
) |
2 |
25 |
426 |
||||||||||||||||
€ 500m 1.625% bonds 2024 |
534 |
– |
20 |
1 |
555 |
|||||||||||||||||
£300m 3.75% bonds 2025 |
365 |
– |
22 |
– |
387 |
|||||||||||||||||
£350m 2.125% bonds 2026 |
423 |
– |
25 |
1 |
449 |
|||||||||||||||||
€ 500m 2.125% bonds 2027 |
539 |
– |
20 |
– |
559 |
|||||||||||||||||
£400m 3.375% bonds 2028 |
480 |
– |
28 |
1 |
509 |
|||||||||||||||||
€ 600m 4.375% bonds 2029 |
– |
657 |
8 |
(2 |
) |
663 |
||||||||||||||||
2,768 |
629 |
125 |
26 |
3,548 |
||||||||||||||||||
Currency swaps |
4 |
– |
– |
16 |
20 |
|||||||||||||||||
Currency forwards |
– |
– |
– |
(15 |
) |
(15 |
) | |||||||||||||||
2,772 |
629 |
125 |
27 |
3,553 |
||||||||||||||||||
|
|
At 1 January 2022 $m |
|
|
Financing cash flows $m |
|
|
Exchange adjustments $m |
|
|
Other $m |
b
|
|
At 31 December 2022 $m |
| ||||||||
Lease liabilities |
419 |
(36 |
) |
(4 |
) |
48 |
427 |
|||||||||||||||
£173m 3.875% bonds 2022 |
233 |
(209 |
) |
(24 |
) |
– |
– |
|||||||||||||||
€ 500m 1.625% bonds 2024 |
565 |
– |
(32 |
) |
1 |
534 |
||||||||||||||||
£300m 3.75% bonds 2025 |
408 |
– |
(45 |
) |
2 |
365 |
||||||||||||||||
£350m 2.125% bonds 2026 |
473 |
– |
(50 |
) |
– |
423 |
||||||||||||||||
€ 500m 2.125% bonds 2027 |
570 |
– |
(32 |
) |
1 |
539 |
||||||||||||||||
£400m 3.375% bonds 2028 |
537 |
– |
(57 |
) |
– |
480 |
||||||||||||||||
3,205 |
(245 |
) |
(244 |
) |
52 |
2,768 |
||||||||||||||||
Currency swaps |
62 |
– |
– |
(58 |
) |
4 |
||||||||||||||||
3,267 |
(245 |
) |
(244 |
) |
(6 |
) |
2,772 |
|||||||||||||||
a |
The non-cash increase in lease liabilities principally arises from additions and other re-measurements. |
b |
The change in value of currency swaps represents fair value movements and, in 2023, additions. |
Notes to the Group Financial Statements |
IHG |
199 |
Derivatives |
2023 $m |
2022 $m |
||||||||||||||
Currency swaps |
(20 |
) |
(4 |
) | ||||||||||||
Currency forwards |
15 |
– |
||||||||||||||
Analysed as: |
||||||||||||||||
| Non-current assets |
20 |
7 |
||||||||||||||
| Current liabilities |
(25 |
) |
– |
|||||||||||||
| Non-current liabilities |
– |
(11 |
) | |||||||||||||
(5 |
) |
(4 |
) | |||||||||||||
Date of designation |
Hedge type |
Pay leg |
Interest rate |
Receive leg |
Interest rate |
Maturity |
Risk |
Hedged item | ||||||||||
November 2018 |
Cash flow |
£436m |
3.5% |
€ 500m |
2.125% |
May 2027 |
Foreign exchange |
€ 500m 2.125% bonds 2027 | ||||||||||
October 2020 |
Cash flow |
£454m |
2.7% |
€ 500m |
1.625% |
October 2024 |
Foreign exchange |
€ 500m 1.625% bonds 2024 | ||||||||||
November 2023 |
Cash flow |
$657m |
6.0% |
€ 600m |
4.375% |
November 2029 |
Foreign exchange |
€ 600m 4.375% bonds 2029 | ||||||||||
October 2023 |
Net investment |
$425m |
n/a |
£344m |
n/a |
October 2028 |
Spot foreign exchange | Net assets of specified subsidiaries with US dollar foreign currency | ||||||||||
• |
Borrowings under the RCF; |
• |
Long-dated currency forward contracts; and |
• |
Certain short-dated foreign exchange swaps. |
200 |
IHG |
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||||
(Decrease)/increase in profit before tax |
||||||||||||||||||||||||||
Sterling: US dollar exchange rate |
$0.05 fall |
(14 |
) |
(3 |
) |
7 |
||||||||||||||||||||
Euro: US dollar exchange rate |
$0.05 fall |
(3 |
) |
– |
– |
|||||||||||||||||||||
US dollar interest rates |
1% increase |
2 |
4 |
7 |
||||||||||||||||||||||
Sterling interest rates |
1% increase |
9 |
4 |
5 |
||||||||||||||||||||||
(Increase)/decrease in net liabilities |
||||||||||||||||||||||||||
Sterling: US dollar exchange rate |
$0.05 fall |
(12 |
) |
27 |
29 |
|||||||||||||||||||||
Euro: US dollar exchange rate |
$0.05 fall |
49 |
50 |
50 |
||||||||||||||||||||||
Sterling: euro exchange rate |
€ 0.05 fall |
64 |
60 |
67 |
||||||||||||||||||||||
31 December 2023 and 2022 |
31 December 2021 |
|||||||||||||||
Covenant test levels for RCF |
||||||||||||||||
Leverage |
<4.0x |
waived |
||||||||||||||
Interest cover |
>3.5x |
waived |
||||||||||||||
Liquidity |
n/a |
$400m |
a |
|||||||||||||
a |
Defined as unrestricted cash and cash equivalents (net of bank overdrafts) plus undrawn facilities with a remaining term of at least six months. |
2023 |
2022 |
2021 a
|
||||||||||||||||||||||
Covenant measures |
||||||||||||||||||||||||
Covenant EBITDA ($m) |
1,086 |
896 |
601 |
|||||||||||||||||||||
Covenant net debt ($m) |
2,328 |
1,898 |
1,801 |
|||||||||||||||||||||
Covenant interest payable ($m) |
88 |
109 |
133 |
|||||||||||||||||||||
Leverage |
2.14 |
2.12 |
3.00 |
|||||||||||||||||||||
Interest cover |
12.34 |
8.22 |
4.52 |
|||||||||||||||||||||
Liquidity ($m) |
n/a |
n/a |
2,655 |
|||||||||||||||||||||
a |
At 31 December 2021, the leverage and interest covenants under the previous facilities were waived and replaced with a liquidity requirement of $400m. |
Notes to the Group Financial Statements |
IHG |
201 |
31 December 2023 |
Less than 1 year $m |
Between 1 and 2 years $m |
Between 2 and 5 years $m |
More than 5 years $m |
Total $m |
|||||||||||||||||||
Non-derivative financial liabilities: |
||||||||||||||||||||||||
Bank overdrafts |
44 |
– |
– |
– |
44 |
|||||||||||||||||||
€ 500m 1.625% bonds 2024 |
563 |
– |
– |
– |
563 |
|||||||||||||||||||
£300m 3.75% bonds 2025 |
14 |
397 |
– |
– |
411 |
|||||||||||||||||||
£350m 2.125% bonds 2026 |
9 |
9 |
456 |
– |
474 |
|||||||||||||||||||
€ 500m 2.125% bonds 2027 |
12 |
12 |
577 |
– |
601 |
|||||||||||||||||||
£400m 3.375% bonds 2028 |
17 |
17 |
561 |
– |
595 |
|||||||||||||||||||
€ 600m 4.375% bonds 2029 |
29 |
29 |
87 |
694 |
839 |
|||||||||||||||||||
Lease liabilities |
57 |
52 |
130 |
3,164 |
3,403 |
|||||||||||||||||||
Trade and other payables (excluding deferred and contingent purchase consideration) |
651 |
1 |
3 |
2 |
657 |
|||||||||||||||||||
Deferred and contingent purchase consideration |
13 |
– |
81 |
– |
94 |
|||||||||||||||||||
Financial guarantee contracts |
50 |
– |
– |
– |
50 |
|||||||||||||||||||
Derivative financial liabilities: |
||||||||||||||||||||||||
Currency swaps hedging € 500m 1.625% bonds 2024 outflows |
594 |
– |
– |
– |
594 |
|||||||||||||||||||
Currency swaps hedging € 500m 1.625% bonds 2024 inflows |
(563 |
) |
– |
– |
– |
(563 |
) |
|||||||||||||||||
Currency swaps hedging € 500m 2.125% bonds 2027 outflows |
19 |
19 |
585 |
– |
623 |
|||||||||||||||||||
Currency swaps hedging € 500m 2.125% bonds 2027 inflows |
(12 |
) |
(12 |
) |
(577 |
) |
– |
(601 |
) |
|||||||||||||||
Currency swaps hedging € 600m 4.375% bonds 2029 outflows |
40 |
40 |
119 |
696 |
895 |
|||||||||||||||||||
Currency swaps hedging € 600m 4.375% bonds 2029 inflows |
(29 |
) |
(29 |
) |
(87 |
) |
(694 |
) |
(839 |
) |
||||||||||||||
Forward currency contract 2028 inflows |
– |
– |
(438 |
) |
– |
(438 |
) |
|||||||||||||||||
Forward currency contract 2028 outflows |
– |
– |
425 |
– |
425 |
|||||||||||||||||||
31 December 2022 a
|
Less than 1 year $m |
Between 1 and 2 years $m |
Between 2 and 5 years $m |
More than 5 years $m |
Total $m |
|||||||||||||||||||
Non-derivative financial liabilities: |
||||||||||||||||||||||||
Bank overdrafts |
55 |
– |
– |
– |
55 |
|||||||||||||||||||
€ 500m 1.625% bonds 2024 |
9 |
543 |
– |
– |
552 |
|||||||||||||||||||
£300m 3.75% bonds 2025 |
14 |
14 |
375 |
– |
403 |
|||||||||||||||||||
£350m 2.125% bonds 2026 |
9 |
9 |
439 |
– |
457 |
|||||||||||||||||||
€ 500m 2.125% bonds 2027 |
11 |
11 |
568 |
– |
590 |
|||||||||||||||||||
£400m 3.375% bonds 2028 |
16 |
16 |
49 |
498 |
579 |
|||||||||||||||||||
Lease liabilities |
53 |
50 |
126 |
3,201 |
3,430 |
|||||||||||||||||||
Trade and other payables (excluding deferred and contingent purchase consideration) |
660 |
1 |
1 |
2 |
664 |
|||||||||||||||||||
Deferred and contingent purchase consideration |
– |
13 |
39 |
42 |
94 |
|||||||||||||||||||
Financial guarantee contracts |
50 |
– |
– |
– |
50 |
|||||||||||||||||||
Derivative financial liabilities: |
||||||||||||||||||||||||
Currency swaps hedging € 500m 1.625% bonds 2024 outflows |
14 |
561 |
– |
– |
575 |
|||||||||||||||||||
Currency swaps hedging € 500m 1.625% bonds 2024 inflows |
(9 |
) |
(543 |
) |
– |
– |
(552 |
) |
||||||||||||||||
Currency swaps hedging € 500m 2.125% bonds 2027 outflows |
18 |
18 |
571 |
– |
607 |
|||||||||||||||||||
Currency swaps hedging € 500m 2.125% bonds 2027 inflows |
(11 |
) |
(11 |
) |
(568 |
) |
– |
(590 |
) |
|||||||||||||||
a |
Re-presented for the application of IFRS 9 ‘Financial Instruments’ to financial guarantee contracts. |
202 |
IHG |
31 December 2023 |
AAA $m |
AA+ $m |
AA $m |
AA- $m |
A+ $m |
A $m |
A- $m |
BBB+ and below $m |
Total $m |
|||||||||||||||||||||||||||||||
Short-term deposits |
– |
– |
– |
129 |
147 |
258 |
77 |
21 |
632 |
|||||||||||||||||||||||||||||||
Money market funds |
375 |
– |
– |
– |
– |
– |
– |
– |
375 |
|||||||||||||||||||||||||||||||
Repurchase agreement collateral |
110 |
6 |
– |
20 |
– |
– |
– |
– |
136 |
|||||||||||||||||||||||||||||||
31 December 2022 |
AAA $m |
AA+ $m |
AA $m |
AA- $m |
A+ $m |
A $m |
A- $m |
BBB+ and below $m |
Total $m |
|||||||||||||||||||||||||||||||
Short-term deposits |
– |
– |
– |
66 |
127 |
141 |
50 |
37 |
421 |
|||||||||||||||||||||||||||||||
Money market funds |
360 |
– |
– |
– |
– |
– |
– |
– |
360 |
|||||||||||||||||||||||||||||||
Repurchase agreement collateral |
22 |
2 |
6 |
– |
– |
– |
– |
– |
30 |
|||||||||||||||||||||||||||||||
Notes to the Group Financial Statements |
IHG |
203 |
2023 |
2022 |
|||||||||||||||||||||||||||||||||||||||||||
| Hierarchy of fair value measurement |
|
|
Fair value a
$m |
|
|
Amortised cost $m |
|
|
Not categorised as a financial instrument $m |
|
|
Total $m |
|
|
Fair value a
$m |
|
|
Amortised cost $m |
|
|
Not categorised as a financial instrument $m |
|
|
Total $m |
| |||||||||||||||||||
Financial assets |
||||||||||||||||||||||||||||||||||||||||||||
Other financial assets |
1,3 b
|
124 |
68 |
– |
192 |
106 |
50 |
– |
156 |
|||||||||||||||||||||||||||||||||||
Cash and cash equivalents |
1 |
375 |
947 |
– |
1,322 |
360 |
616 |
– |
976 |
|||||||||||||||||||||||||||||||||||
Derivative financial instruments |
2 |
20 |
– |
– |
20 |
7 |
– |
– |
7 |
|||||||||||||||||||||||||||||||||||
Deferred compensation plan investments |
1 |
250 |
– |
– |
250 |
216 |
– |
– |
216 |
|||||||||||||||||||||||||||||||||||
Trade and other receivables |
– |
– |
651 |
102 |
753 |
– |
542 |
107 |
649 |
|||||||||||||||||||||||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments |
2 |
25 |
– |
– |
25 |
11 |
– |
– |
11 |
|||||||||||||||||||||||||||||||||||
Deferred compensation plan liabilities |
1 |
250 |
– |
– |
250 |
216 |
– |
– |
216 |
|||||||||||||||||||||||||||||||||||
Loans and other borrowings |
– |
– |
3,166 |
– |
3,166 |
– |
2,396 |
– |
2,396 |
|||||||||||||||||||||||||||||||||||
Trade and other payables |
3 |
69 |
670 |
47 |
786 |
83 |
658 |
37 |
778 |
|||||||||||||||||||||||||||||||||||
a |
With the exception of equity securities of $87m (2022: $88m) measured at fair value through other comprehensive income, all are measured at fair value through profit or loss. Of those, the financial assets related to the deferred compensation plan investments were designated as such upon initial recognition. |
b |
Of those measured at fair value, $14m (2022: $3m) are Level 1 and $110m (2022: $103m) are Level 3. |
Hierarchy of |
2023 |
2022 |
||||||||||||||||||||||||||
| fair value measurement |
Carrying value $m |
Fair value $m |
Carrying value $m |
Fair value $m |
||||||||||||||||||||||||
€ 500m 1.625% bonds 2024 |
1 |
555 |
545 |
534 |
511 |
|||||||||||||||||||||||
£300m 3.75% bonds 2025 |
1 |
387 |
373 |
365 |
344 |
|||||||||||||||||||||||
£350m 2.125% bonds 2026 |
1 |
449 |
416 |
423 |
367 |
|||||||||||||||||||||||
€ 500m 2.125% bonds 2027 |
1 |
559 |
535 |
539 |
492 |
|||||||||||||||||||||||
£400m 3.375% bonds 2028 |
1 |
509 |
476 |
480 |
417 |
|||||||||||||||||||||||
€ 600m 4.375% bonds 2029 |
1 |
663 |
689 |
– |
– |
|||||||||||||||||||||||
204 |
IHG |
|
Other financial assets $m |
Other payables $m |
Contingent purchase consideration $m |
||||||||||||||
At 1 January 2022 |
106 |
– |
(73 |
) |
||||||||||||
Valuation losses recognised in other comprehensive income |
(1 |
) |
– |
– |
||||||||||||
Unrealised changes in fair value a
|
– |
(18 |
) |
8 |
||||||||||||
Exchange adjustments |
(2 |
) |
– |
– |
||||||||||||
At 31 December 2022 |
103 |
(18 |
) |
(65 |
) |
|||||||||||
Valuation losses recognised in other comprehensive income |
(2 |
) |
– |
– |
||||||||||||
Additions |
8 |
– |
– |
|||||||||||||
Unrealised changes in fair value a
|
– |
18 |
(4 |
) |
||||||||||||
Exchange and other adjustments |
1 |
– |
– |
|||||||||||||
At 31 December 2023 |
110 |
– |
(69 |
) |
||||||||||||
a |
The change in the fair value of other payables was recognised within share of profits/(losses) from associates and joint ventures in the Group income statement and is presented as an exceptional item (see note 6). |
Notes to the Group Financial Statements |
IHG |
205 |
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||
Profit for the year |
750 |
376 |
265 |
|||||||||||||||||||||
Adjustments for: |
||||||||||||||||||||||||
Net financial expenses |
52 |
96 |
139 |
|||||||||||||||||||||
Fair value losses/(gains) on contingent purchase consideration |
4 |
(8 |
) |
(6 |
) |
|||||||||||||||||||
Income tax charge |
260 |
164 |
96 |
|||||||||||||||||||||
Operating profit adjustments: |
||||||||||||||||||||||||
Impairment (reversal)/loss on financial assets |
(1 |
) |
5 |
– |
||||||||||||||||||||
Other net impairment (reversals)/charges |
– |
(5 |
) |
4 |
||||||||||||||||||||
Other operating exceptional items |
(28 |
) |
100 |
25 |
||||||||||||||||||||
Depreciation and amortisation |
67 |
68 |
98 |
|||||||||||||||||||||
38 |
168 |
127 |
||||||||||||||||||||||
Contract assets deduction in revenue |
37 |
32 |
35 |
|||||||||||||||||||||
Share-based payments cost |
36 |
30 |
28 |
|||||||||||||||||||||
Share of (profits)/losses of associates and joint ventures (before exceptional items) |
(13 |
) |
(1 |
) |
8 |
|||||||||||||||||||
60 |
61 |
71 |
||||||||||||||||||||||
System Fund adjustments: |
||||||||||||||||||||||||
Depreciation and amortisation |
83 |
86 |
94 |
|||||||||||||||||||||
Impairment loss/(reversal) on financial assets |
– |
7 |
(6 |
) |
||||||||||||||||||||
Other impairment reversals |
– |
– |
(3 |
) |
||||||||||||||||||||
Share-based payments cost |
20 |
16 |
13 |
|||||||||||||||||||||
Share of losses of associates |
3 |
1 |
2 |
|||||||||||||||||||||
106 |
110 |
100 |
||||||||||||||||||||||
Working capital and other adjustments: |
||||||||||||||||||||||||
Increase in deferred revenue |
123 |
108 |
39 |
|||||||||||||||||||||
Decrease in inventories |
– |
– |
1 |
|||||||||||||||||||||
Increase in trade and other receivables |
(70 |
) |
(132 |
) |
(75 |
) |
||||||||||||||||||
Increase in trade and other payables |
31 |
121 |
153 |
|||||||||||||||||||||
Other adjustments |
(5 |
) |
4 |
(8 |
) |
|||||||||||||||||||
79 |
101 |
110 |
||||||||||||||||||||||
Cash flows relating to exceptional items |
(29 |
) |
(43 |
) |
(12 |
) |
||||||||||||||||||
Contract acquisition costs, net of repayments |
(101 |
) |
(64 |
) |
(42 |
) |
||||||||||||||||||
Total adjustments |
469 |
585 |
583 |
|||||||||||||||||||||
Cash flow from operations |
1,219 |
961 |
848 |
|||||||||||||||||||||
206 |
IHG |
Net defined benefit obligation |
||||||||||||||||||||||||
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||
At 1 January |
66 |
92 |
103 |
|||||||||||||||||||||
Recognised in profit or loss |
||||||||||||||||||||||||
Interest expense |
3 |
2 |
2 |
|||||||||||||||||||||
3 |
2 |
2 |
||||||||||||||||||||||
Recognised in other comprehensive income |
||||||||||||||||||||||||
Actuarial loss/(gain) arising from changes in: |
||||||||||||||||||||||||
Demographic assumptions |
(1 |
) |
(1 |
) |
(3 |
) |
||||||||||||||||||
Financial assumptions |
2 |
(22 |
) |
(3 |
) |
|||||||||||||||||||
Experience adjustments |
1 |
2 |
(1 |
) |
||||||||||||||||||||
Re-measurement loss/(gain) |
2 |
(21 |
) |
(7 |
) |
|||||||||||||||||||
Exchange adjustments |
– |
(2 |
) |
(1 |
) |
|||||||||||||||||||
2 |
(23 |
) |
(8 |
) |
||||||||||||||||||||
Other |
||||||||||||||||||||||||
Group contributions |
(5 |
) |
(5 |
) |
(5 |
) |
||||||||||||||||||
(5 |
) |
(5 |
) |
(5 |
) |
|||||||||||||||||||
At 31 December |
66 |
66 |
92 |
|||||||||||||||||||||
Comprising: |
||||||||||||||||||||||||
UK plan |
19 |
18 |
30 |
|||||||||||||||||||||
US plans |
34 |
35 |
45 |
|||||||||||||||||||||
US post-retirement plan |
13 |
13 |
17 |
|||||||||||||||||||||
66 |
66 |
92 |
||||||||||||||||||||||
Notes to the Group Financial Statements |
IHG |
207 |
2023 % |
2022 % |
2021 % |
||||||||||||||||||||||
UK plan only: |
||||||||||||||||||||||||
Pension increases |
3.1 |
3.2 |
3.4 |
|||||||||||||||||||||
Inflation rate |
3.1 |
3.2 |
3.4 |
|||||||||||||||||||||
Discount rate: |
||||||||||||||||||||||||
UK plan |
4.8 |
5.0 |
1.8 |
|||||||||||||||||||||
US plans |
4.7 |
4.9 |
2.4 |
|||||||||||||||||||||
US post-retirement plan |
4.7 |
4.9 |
2.4 |
|||||||||||||||||||||
US healthcare cost trend rate assumed for the next year: |
||||||||||||||||||||||||
Pre-65 (ultimate rate reached in 2034) |
7.8 |
6.9 |
6.2 |
|||||||||||||||||||||
Post-65 (ultimate rate reached in 2034) |
8.6 |
7.3 |
6.5 |
|||||||||||||||||||||
Ultimate rate that the cost rate trends to |
4.5 |
4.5 |
4.5 |
|||||||||||||||||||||
UK |
US |
|||||||||||||||||||||||||||||||||||||||||||||||||
2023 years |
2022 years |
2021 years |
2023 years |
2022 years |
2021 years |
|||||||||||||||||||||||||||||||||||||||||||||
Current pensioners at 65 a
|
– male |
23 |
24 |
24 |
22 |
22 |
22 |
|||||||||||||||||||||||||||||||||||||||||||
– female |
25 |
26 |
26 |
23 |
23 |
23 |
||||||||||||||||||||||||||||||||||||||||||||
Future pensioners at 65 b
|
– male |
23 |
25 |
25 |
23 |
23 |
23 |
|||||||||||||||||||||||||||||||||||||||||||
– female |
25 |
27 |
28 |
25 |
25 |
25 |
||||||||||||||||||||||||||||||||||||||||||||
a |
Relates to assumptions based on longevity following retirement at the end of the reporting period. |
b |
Relates to assumptions based on longevity relating to an employee retiring in 2043. |
2023 $m |
2022 $m |
|||||||||||||||||
Discount rate |
1% decrease |
6 |
7 |
|||||||||||||||
1% increase |
(6 |
) |
(5 |
) |
||||||||||||||
Inflation rate |
0.25% decrease |
(1 |
) |
(1 |
) |
|||||||||||||
0.25% increase |
1 |
1 |
||||||||||||||||
Mortality rate |
One-year increase |
3 |
3 |
|||||||||||||||
Healthcare costs trend rate |
1% decrease |
(1 |
) |
(1 |
) |
|||||||||||||
1% increase |
1 |
1 |
||||||||||||||||
|
2023 $m |
2022 $m |
|||||||||||||||
Within one year |
5 |
5 |
||||||||||||||
Between one and five years |
21 |
20 |
||||||||||||||
More than five years |
86 |
89 |
||||||||||||||
112 |
114 |
|||||||||||||||
208 |
IHG |
|
2023 years |
2022 years |
|||||||||||||||
UK plan |
13.0 |
14.0 |
||||||||||||||
US plans |
7.5 |
7.6 |
||||||||||||||
US post-retirement plan |
8.0 |
8.0 |
||||||||||||||
|
|
More detailed information on the performance measures for awards to Executive Directors is shown in the Directors’ Remuneration Report on pages 128 to 13 3 . |
Notes to the Group Financial Statements |
IHG |
209 |
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||
Equity-settled |
||||||||||||||||||||||||
Operating profit before System Fund, reimbursables and exceptional items |
31 |
28 |
26 |
|||||||||||||||||||||
System Fund |
20 |
16 |
13 |
|||||||||||||||||||||
51 |
44 |
39 |
||||||||||||||||||||||
Cash-settled |
||||||||||||||||||||||||
Operating profit before System Fund, reimbursables and exceptional items |
5 |
2 |
2 |
|||||||||||||||||||||
56 |
46 |
41 |
||||||||||||||||||||||
APP |
LTIP |
|||||||||||||||||||||||||||||||||||||||||||||||
Binomial valuation model |
Monte Carlo Simulation, Binomial and Finnerty valuation models |
|||||||||||||||||||||||||||||||||||||||||||||||
Option pricing models and assumptions |
2023 |
2022 |
2021 |
2023 |
2022 |
2021 |
||||||||||||||||||||||||||||||||||||||||||
Weighted average share price (pence) |
5,571.7 |
5,018.3 |
5,009.0 |
5,318.0 |
4,875.0 |
4,980.0 |
||||||||||||||||||||||||||||||||||||||||||
Expected dividend yield |
2.52% to 2.77% |
2.29% to 2.67% |
1.11% |
|||||||||||||||||||||||||||||||||||||||||||||
Risk-free interest rate |
3.85% |
1.29% |
0.09% |
|||||||||||||||||||||||||||||||||||||||||||||
Volatility a
|
29% to 30% |
35% to 45% |
43% |
|||||||||||||||||||||||||||||||||||||||||||||
Term (years) |
2.3 |
1.7 |
1.5 |
3.0 |
3.0 |
3.0 |
||||||||||||||||||||||||||||||||||||||||||
a |
The expected volatility was determined by calculating the historical volatility of the Company’s share price corresponding to the expected life of the share award. |
APP/DAP |
LTIP/DAP |
|||||||||||||||||||||||
Number of share awards (thousands) |
Performance-related
awards/LTI |
Restricted stock units |
||||||||||||||||||||||
Outstanding at 1 January 2021 |
413 |
814 |
1,421 |
|||||||||||||||||||||
Granted |
90 |
281 |
442 |
|||||||||||||||||||||
Vested |
(147 |
) |
(70 |
) |
(391 |
) |
||||||||||||||||||
Lapsed or cancelled |
(8 |
) |
(153 |
) |
(122 |
) |
||||||||||||||||||
Outstanding at 31 December 2021 |
348 |
872 |
1,350 |
|||||||||||||||||||||
Granted |
236 |
323 |
706 |
|||||||||||||||||||||
Vested |
(254 |
) |
(23 |
) |
(391 |
) |
||||||||||||||||||
Lapsed or cancelled |
(9 |
) |
(239 |
) |
(90 |
) |
||||||||||||||||||
Outstanding at 31 December 2022 |
321 |
933 |
1,575 |
|||||||||||||||||||||
Granted |
214 |
329 |
683 |
|||||||||||||||||||||
Vested |
(186 |
) |
(180 |
) |
(533 |
) |
||||||||||||||||||
Lapsed or cancelled |
(17 |
) |
(246 |
) |
(63 |
) |
||||||||||||||||||
Outstanding at 31 December 2023 |
332 |
836 |
1,662 |
|||||||||||||||||||||
Fair value of awards granted during the year (cents) |
||||||||||||||||||||||||
2023 |
6,926.4 |
3,169.7 |
6,351.0 |
|||||||||||||||||||||
2022 |
6,180.2 |
3,770.0 |
5,656.4 |
|||||||||||||||||||||
2021 |
6,888.5 |
4,676.3 |
6,559.7 |
|||||||||||||||||||||
Weighted average remaining contract life (years) |
||||||||||||||||||||||||
At 31 December 2023 |
1.5 |
1.3 |
1.3 |
|||||||||||||||||||||
At 31 December 2022 |
1.0 |
1.1 |
1.2 |
|||||||||||||||||||||
At 31 December 2021 |
0.5 |
1.2 |
1.2 |
|||||||||||||||||||||
210 |
IHG |
Allotted, called up and fully paid |
Number of shares millions |
Nominal value $m |
Share premium $m |
Equity share capital $m |
||||||||||||||||||||
At 1 January 2021 (ordinary shares of 20 340 /399 p each) |
187 |
53 |
103 |
156 |
||||||||||||||||||||
Exchange adjustments |
– |
– |
(2 |
) |
(2 |
) |
||||||||||||||||||
At 31 December 2021 (ordinary shares of 20 340 /399 p each) |
187 |
53 |
101 |
154 |
||||||||||||||||||||
Repurchased and cancelled under share repurchase programme |
(4 |
) |
(1 |
) |
– |
(1 |
) |
|||||||||||||||||
Exchange adjustments |
– |
(6 |
) |
(10 |
) |
(16 |
) |
|||||||||||||||||
At 31 December 2022 (ordinary shares of 20 340 /399 p each) |
183 |
46 |
91 |
137 |
||||||||||||||||||||
Repurchased and cancelled under share repurchase programme |
(11 |
) |
(3 |
) |
– |
(3 |
) |
|||||||||||||||||
Exchange adjustments |
– |
3 |
4 |
7 |
||||||||||||||||||||
At 31 December 2023 (ordinary shares of 20 340 /399 p each) |
172 |
46 |
95 |
141 |
||||||||||||||||||||
|
Number of shares millions |
Carrying value $m |
Market value $m |
||||||||||||||||||
31 December 2023 |
0.8 |
35.0 |
73.6 |
|||||||||||||||||
31 December 2022 |
1.1 |
37.0 |
62.8 |
|||||||||||||||||
31 December 2021 |
0.9 |
21.7 |
57.3 |
|||||||||||||||||
|
Number of shares millions |
Nominal value $m |
|||||||||||||||
At 1 January 2021 |
5.1 |
1.4 |
||||||||||||||
Transferred to employee share trusts |
(1.4 |
) |
(0.4 |
) |
||||||||||||
At 31 December 2021 |
3.7 |
1.0 |
||||||||||||||
Transferred to employee share trusts |
(0.7 |
) |
(0.2 |
) |
||||||||||||
Repurchased under share repurchase programme |
4.5 |
1.1 |
||||||||||||||
At 31 December 2022 |
7.5 |
1.9 |
||||||||||||||
Transferred to employee share trusts |
(0.5 |
) |
(0.1 |
) |
||||||||||||
Exchange adjustments |
– |
0.1 |
||||||||||||||
At 31 December 2023 |
7.0 |
1.9 |
||||||||||||||
Notes to the Group Financial Statements |
IHG |
211 |
|
Cash flow hedge reserve $m |
Cost of hedging reserve $m |
Total $m |
||||||||||||||
At 1 January 2021 |
(11 |
) |
(13 |
) |
(24 |
) |
||||||||||
Costs of hedging deferred and recognised in other comprehensive income |
– |
2 |
2 |
|||||||||||||
Change in fair value of currency swaps recognised in other comprehensive income |
(62 |
) |
– |
(62 |
) |
|||||||||||
Reclassified from other comprehensive income to profit or loss – included in financial expenses |
96 |
– |
96 |
|||||||||||||
Deferred tax |
(7 |
) |
– |
(7 |
) |
|||||||||||
At 31 December 2021 |
16 |
(11 |
) |
5 |
||||||||||||
Costs of hedging deferred and recognised in other comprehensive income |
– |
3 |
3 |
|||||||||||||
Change in fair value of currency swaps recognised in other comprehensive income |
33 |
– |
33 |
|||||||||||||
Reclassified from other comprehensive income to profit or loss – included in financial expenses |
(43 |
) |
– |
(43 |
) |
|||||||||||
Deferred tax |
2 |
– |
2 |
|||||||||||||
At 31 December 2022 |
8 |
(8 |
) |
– |
||||||||||||
Change in fair value of currency swaps recognised in other comprehensive income |
(30 |
) |
– |
(30 |
) |
|||||||||||
Reclassified from other comprehensive income to profit or loss – included in financial expenses |
28 |
– |
28 |
|||||||||||||
At 31 December 2023 |
6 |
(8 |
) |
(2 |
) |
|||||||||||
212 |
IHG |
Total compensation |
2023 $m |
2022 $m |
2021 $m |
|||||||||||||||
Short-term employment benefits |
18.6 |
18.7 |
19.3 |
|||||||||||||||
Contributions to defined contribution pension plans |
0.5 |
0.5 |
0.5 |
|||||||||||||||
Equity compensation benefits a
|
15.8 |
13.4 |
8.1 |
|||||||||||||||
34.9 |
32.6 |
27.9 |
||||||||||||||||
a |
As measured in accordance with IFRS 2 ‘Share-based Payment’. |
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||
Fee revenue |
11 |
9 |
3 |
|||||||||||||||
Amounts receivable |
19 |
10 |
11 |
|||||||||||||||
Amounts payable |
(10) |
– |
– |
|||||||||||||||
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||
System Fund revenues |
1,564 |
1,217 |
928 |
|||||||||||||||
Reimbursable revenues |
896 |
832 |
589 |
|||||||||||||||
System Fund and reimbursable revenues |
2,460 |
2,049 |
1,517 |
|||||||||||||||
System Fund expenses |
(1,545) |
(1,322) |
(939) |
|||||||||||||||
Reimbursable expenses |
(896) |
(832) |
(589) |
|||||||||||||||
System Fund and reimbursable expenses |
(2,441) |
(2,154) |
(1,528) |
|||||||||||||||
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||
Assessment fees and contributions received from hotels and other revenues |
1,185 |
989 |
727 |
|||||||||||||||
Loyalty programme revenues, net of the cost of point redemptions |
379 |
228 |
201 |
|||||||||||||||
|
2023 $m |
2022 $m |
2021 $m |
||||||||||||||||
Marketing |
498 |
408 |
147 |
|||||||||||||||
Staff costs |
399 |
341 |
304 |
|||||||||||||||
Depreciation and amortisation |
83 |
86 |
94 |
|||||||||||||||
Impairment loss/(reversal) on trade receivables (note 17) |
– |
7 |
(6) |
|||||||||||||||
Other net impairment reversals (note 14) |
– |
– |
(3) |
|||||||||||||||
Notes to the Group Financial Statements |
IHG |
213 |
214 |
IHG |
Key |
||
(a) |
Directly owned by InterContinental Hotels Group PLC |
|
(b) |
Ordinary shares and preference shares |
|
(c) |
and B s |
|
(d) |
12.5%/
|
|
(e) |
1 ⁄4 vote ordinary shares and ordinary shares |
|
(f) |
Ordinary shares, 5% cumulative preference shares and 7% cumulative preference shares |
|
(g) |
do not have share capital and are governed by an operating agreement |
|
(h) |
and due to rights contained in the partnership agreement |
|
(i) |
Accounted for as an other financial asset due to IHG being unable to exercise significant influence over the financial and operating policy decisions of the entity |
|
(j) |
Minority interest to one or more individual shareholders who are employed or were previously employed by the entity |
|
Notes to the Group Financial Statements |
I HG
|
215 |
(k) |
Three Ravinia Drive, Suite 100, Atlanta, GA 30346, USA |
(l) |
251 Little Falls Drive, Suite 400, Wilmington, New Castle County, DE19808, USA |
(m) |
Clarendon House, 2 Church Street, Hamilton HM11, Bermuda |
(n) |
1 Windsor Dials, Arthur Road, Windsor, Berkshire, SL4 1RS, UK |
(o) |
333 Bay Street, Suite 400, Toronto M5H 2R2, Ontario, Canada |
(p) |
Kingsfordweg 151, 1043 GR Amsterdam, The Netherlands |
(q) |
Room No. 23, Floor 16, Saigon Tower Building, 29 Le Duan Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam |
(r) |
The Corporation Trust Centre, 1209 Orange Street, Wilmington, DE 19801, USA |
(s) |
Atria One, 144 Morrison Street, Edinburgh, EH3 8EX, UK |
(t) |
Building 4, No 13 Xiao Gang Zhong Ma Road, Zhuhai District, Guangzhou, Guangdong, P.R. China |
(u) |
Level 6, Akaria Plaza, North Wing, Gate D, Olaya Street, PO Box 93228, Riyadh 1148, Saudi Arabia |
(v) |
Flemming House, Wickhams Cay, P.O. Box 662, Road Town, Tortola VG1110, British Virgin Islands |
(w) |
Premier Chambers, M. Lux Lodge, 1st Floor, Orchid Magu, Male, Republic of Maldives |
(x) |
31-33 rue Mogador, 75009 Paris, France |
(y) |
Bucharest, 2nd District, 2 Gara Herăstrău Street, 2nd floor, module 33, Romania |
(z) |
J E Irausquin Boulevard 93, 1Eagle/ Paardenbaai, Oranjestad West, Aruba |
(aa) |
Level 11, 20 Bond Street, Sydney NSW 2000, Australia |
(ab) |
Ontario # 1050, Col. Providencia, Guadalajara, Jalisco CP44630, Mexico |
(ac) |
5/F, Manulife Place, 348 Kwung Tong Road, Kowloon, Hong Kong |
(ad) |
Rond-Point Robert Schuman 11, 1040 Brussels, Belgium |
(ae) |
QBC 4 – Am Belvedere 4, 1100, Vienna, Austria |
(af) |
Avenida da Republica, no 52 – 9, 1069 – 211, Lisbon, Portugal |
(ag) |
Room 60, Section 11 Floor 3 Premises I, Building 1, House 125, Varshavskoye shosse Str, Vn.Ter.G. Municipal District Severnoye Chertanovo, Moscow City, 117587, Russia |
(ah) |
No. 84, Pan Haliain Street, Unit #1, Level 8, Uniteam Marine Office Building, Sanchuang Township, Yangon, Myanmar |
(ai) |
230 Victoria Street, #13-00 Bugis Junction Towers, 188024, Singapore |
(aj) |
57, 9th Floor, Park Ventures Ecoplex, Unit 902-904, Wireless Road, Limpini, Pathum Wan Bangkok 103330, Thailand |
(ak) |
Alameda Jau 536, Suite 3S-B, 01420-000 São Paulo, Brazil |
(al) |
Avenida Cordoba 1547, piso 8, oficina A, 1055 Buenos Aires, Argentina |
(am) |
The Phoenix Centre, George Street, Belleville St. Michael, Barbados |
(an) |
Level 10, 55 Shortland Street, Auckland Central, Auckland 1010, New Zealand |
(ao) |
1, Murtala Muhammed Drive, Ikoyi, Lagos, Nigeria |
(ap) |
Central Office Park Unit 4, 257 Jean Avenue, Centurion 0157, South Africa |
(aq) |
11th Floor, Building No. 10, Tower C, DLF Phase-II, DLF Cyber City, Gurgaon, Haryana-122002, India |
(ar) |
20th Floor, Toranomon Kotoshira Tower, 2-8, Toranomon 1-chom, Minato-ku, 105-0001, Tokyo, Japan |
(as) |
Venture Corporate Services (Mauritius) Ltd, Level 3, Tower 1, Nexteracom Towers, Cybercity, Ebene, Mauritius |
(at) |
1052 Budapest, Apáczai Csere Jánus u. 12 –14A, Hungary |
(au) |
Budapester Str. 2, 10787 Berlin, Germany |
(av) |
Grevgatan 13, 11453 Stockholm, Sweden |
(aw) |
Alameda Jau 536, Suite 3S-E, 01420-000 São Paulo, Brazil |
(ax) |
1980 Pérodeau Street, Vaudreuil-Dorion, J7V 8P7, Quebec, Canada |
(ay) |
168 Robinson Road, #16-01 SIF Building, 068899, Singapore |
(az) |
361 San Francisco Street Penthouse, San Juan, PR 00901, Puerto Rico |
(ba) |
Hotel Tamanaco Inter-Continental, Final Av. Ppal, Mercedes, Caracas, Venezuela |
(bb) |
22/F Citigroup Tower, No. 33 Huayanshiqiao Road, Lujiazui, Pudong New Area, 200120, Shanghai, P.R. China |
(bc) |
Alameda Jau 536, Suite 3S-C, 01420-000 São Paulo, Brazil |
(bd) |
Alameda Jau 536, Suite 3S-D, 01420-000 São Paulo, Brazil |
(be) |
Viale Monte Nero n.84, 20135 Milano, Italy |
(bf) |
Thurn-und-Taxis-Platz |
(bg) |
Juris Tax Services Ltd. Level 12, NeX Teracom Tower II, Ebene, Mauritius |
(bh) |
Menara Imperium 22nd Floor, Suite D, JI. HR. Rasuna Said Kav.1, Guntur Sub-district, Setiabudi District, South Jakarta 12980, Indonesia |
(bi) |
Primmer Piper Eggleston & Cramer PC, 30 Main St., Suite 500, P.O. Box 1489, Burlington, VT 05402-1489, USA |
(bj) |
Calle 49, Sur 45 A 300, Oficina 1102, 055422 Envigado, Antioquia, Colombia |
(bk) |
21 Engineer Lane, Gibraltar, GX11 1AA, Gibraltar |
(bl) |
Suite 2500, 1000 de La Gauchetiere St. West, Montreal C H3B OA2, Canada |
(bm) |
Room 311, Building 1, No. 6 East Wen Hua Yuan Road, Beijing Economy and Technology Development Zone, Beijing, P.R. China |
(bn) |
Room N306, 3rd Floor, Building 6, Binhai Financial Street, No. 52 West Xincheng Road, Tianjin Economy and Technology Development Zone, Tianjin, P.R. China |
(bo) |
Cesta v Mestni log 1, 1000 Ljubljana, Slovenia |
(bp) |
37A Professor Fridtjof Nansen Street, 5th Floor, District Sredets, Sofia, 1142, Bulgaria |
(bq) |
C/o Holiday Inn & Suites, Cnr Waigani Drive & Wards Road, Port Moresby, National Capital District, Papua New Guinea |
(br) |
Suite 2201, Festival Tower, Dubai Festival City, Al Rebbat St., P.O. Box 58191, Dubai, United Arab Emirates |
(bs) |
Madinah Road, Jeddah, P.O Box 9456, Post Code 21413, Jeddah, Saudi Arabia |
(bt) |
Maples Corporate Services Ltd. – PO Box 309, Ugland House, Grand Cayman – KY-1104, Cayman Islands |
(bu) |
971, 973 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330, Thailand |
(bv) |
Room R316, 3rd Floor, Building 6, Binhai Financial Street, No. 52 West Xincheng Road, Tianjin Economy and Technology Development Zone, Tianjin, P.R. China |
(bw) |
14th Floor, South China Building, 1-3 Wyndham Street, Hong Kong, SAR |
(bx) |
Maslak Mah. Eski Büyükdere Cad. Orjin Maslak İŞ, Merkezi Sitesi No: 27 IC KapiI No: 4 Sariyer/Istanbul, Turkey |
(by) |
Paseo de Recoletos 37 – 41, 28004 Madrid, Spain |
(bz) |
B-11515 Bhikaj Cama Place, New Delhi, South Delhi, 110066 India |
(ca) |
Carr Hospitality, LLC, 1455 Pennsylvania Avenue, NW, Suite 200, Washington, DC 20004, USA |
(cb) |
84 Albert Street, Belize City, Belize, C.A. |
(cc) |
Krunska 73, 3rd floor, office no.3, Vračar, 11000 Belgrade, Serbia |
(cd) |
Moreno 809 2 Piso, C1091AAQ Buenos Aires, Argentina |
(ce) |
Bulevar Svetog Petra Cetinjskog 149 – 81000 Podgorica, Montenegro |
(cf) |
Bernard Monteagudo 201, 15076, Lima, Peru |
(cg) |
Avenida Ejercito Nacional Mexicano No. 769, Torre B Piso 8, Granada, Miguel Hidalgo, Ciudad de Mexico, CP 11520, Mexico |
(ch) |
Ground Floor, Al Kamel Law Building, Plot 52-b, Banks Area, Six of October City, Egypt |
(ci) |
Shop No. L3-6, Amity Building, No. 125 High Level Road, Maharagama, Colombo, Sri Lanka |
(cj) |
1st Floor, No. 68, Zhupan Road, Zhuqiao Town, Pudong New Area, Shanghai, P.R. China |
(ck) |
95 Blvd. Berthier, 75017 Paris, France |
(cl) |
PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands |
(cm) |
23/6 D, Anhaght Str., Yerevan, 0069, Armenia |
(cn) |
Generation Park Z – ul. Towarowa 28, 00-839 Warsaw, Poland |
(co) |
Suite 1, Ground Floor, The Financial Services Centre, Bishops Court Hill, St. Michael, BB14004, Barbados |
(cp) |
Brumby Centre, Lot 42, Jalan Muhibbah, 87000 Labuan F.T., Malaysia |
(cq) |
Charlottenstrasse 49, 10117 Berlin, Germany |
(cr) |
Blvd, Morazan, Centro Comercial El Dorado, 6th Floor, Tegucigalpa, Honduras |
(cs) |
ATS Services Limited, Capital Center, 9th Floor, 2-4 Arch, Makarios III Ave., 1065 Nicosia, Cyprus |
(ct) |
1 More London Place, London, SE1 2AF, UK |
216 |
IHG |
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| IHG | Annual Report and Form 20-F 2023 | 217 |
[THIS PAGE INTENTIONALLY LEFT BLANK]
| 218 | IHG | Annual Report and Form 20-F 2023 |
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| IHG | Annual Report and Form 20-F 2023 | 219 |
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| 220 | IHG | Annual Report and Form 20-F 2023 |
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| IHG | Annual Report and Form 20-F 2023 | 221 |
[THIS PAGE INTENTIONALLY LEFT BLANK]
| 222 | IHG | Annual Report and Form 20-F 2023 |
[THIS PAGE INTENTIONALLY LEFT BLANK]
| IHG | Annual Report and Form 20-F 2023 | 223 |
[THIS PAGE INTENTIONALLY LEFT BLANK]
| 224 | IHG | Annual Report and Form 20-F 2023 |
| 226 | Other financial information | |||
| 235 | Directors’ Report | |||
| 242 | Group information | |||
| 255 | Shareholder information | |||
| 262 | Exhibits | |||
| 263 | Forward-looking statements | |||
| 264 | Form 20-F cross-reference guide | |||
| 267 | Glossary | |||
| 269 | Useful information |
Additional Information
Other financial information
Use of Non-GAAP measures
In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures.
|
|
Further explanation in relation to these measures and their definitions can be found on pages 84 to 88. |
Revenue and operating profit Non-GAAP reconciliations
Highlights for the year ended 31 December 2023
Reportable segments
| Revenue | Operating profit | |||||||||||||||||||||||||||||||||||||||||||||
| 2023 $m |
2022 (re- presented)a |
Change $m |
Change % |
2023 $m |
2022 (re- presented)a |
Change $m |
Change % |
|||||||||||||||||||||||||||||||||||||||
| Per Group income statement | 4,624 | 3,892 | 732 | 18.8 | 1,066 | 628 | 438 | 69.7 | ||||||||||||||||||||||||||||||||||||||
| System Fund and reimbursables | (2,460 | ) | (2,049 | ) | (411 | ) | 20.1 | (19 | ) | 105 | (124 | ) | NMb | |||||||||||||||||||||||||||||||||
| Operating exceptional items | – | – | – | – | (28 | ) | 95 | (123 | ) | NMb | ||||||||||||||||||||||||||||||||||||
| Reportable segments | 2,164 | 1,843 | 321 | 17.4 | 1,019 | 828 | 191 | 23.1 | ||||||||||||||||||||||||||||||||||||||
| Reportable segments analysed as: |
||||||||||||||||||||||||||||||||||||||||||||||
| Fee business | 1,672 | 1,434 | 238 | 16.6 | 992 | 805 | 187 | 23.2 | ||||||||||||||||||||||||||||||||||||||
| Owned, leased and managed lease | 471 | 394 | 77 | 19.5 | 29 | 19 | 10 | 52.6 | ||||||||||||||||||||||||||||||||||||||
| Insurance activities | 21 | 15 | 6 | 40.0 | (2 | ) | 4 | (6 | ) | NMb | ||||||||||||||||||||||||||||||||||||
| 2,164 | 1,843 | 321 | 17.4 | 1,019 | 828 | 191 | 23.1 | |||||||||||||||||||||||||||||||||||||||
| a | Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’ and to combine System Fund and reimbursables (see ‘New accounting standards and other presentational changes’ in the Group Financial Statements). |
| b | Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period. |
Underlying revenue and underlying operating profit
| Revenue | Operating profit | |||||||||||||||||||||||||||||||||||||||||||||
| 2023 $m |
2022 $m |
Change $m |
Change % |
2023 $m |
2022 $m |
Change $m |
Change % |
|||||||||||||||||||||||||||||||||||||||
| Reportable segments (see above) | 2,164 | 1,843 | 321 | 17.4 | 1,019 | 828 | 191 | 23.1 | ||||||||||||||||||||||||||||||||||||||
| Significant liquidated damagesb | – | (7 | ) | 7 | NM | a | – | (7 | ) | 7 | NMa | |||||||||||||||||||||||||||||||||||
| Owned and leased asset disposalsc | – | (19 | ) | 19 | NM | a | – | (2 | ) | 2 | NMa | |||||||||||||||||||||||||||||||||||
| Currency impact | – | – | – | – | – | (1 | ) | 1 | NMa | |||||||||||||||||||||||||||||||||||||
| Underlying revenue and underlying operating profit | 2,164 | 1,817 | 347 | 19.1 | 1,019 | 818 | 201 | 24.6 | ||||||||||||||||||||||||||||||||||||||
| a | Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period. |
| b | $7m recognised in 2022 reflects the significant liquidated damages related to one hotel in EMEAA. |
| c | The results of three UK Portfolio hotels and one InterContinental Hotel have been removed in 2022 (being the year of disposal) to determine underlying growth. |
Underlying fee revenue and underlying fee operating profit
| Revenue | Operating profit | |||||||||||||||||||||||||||||||||||||||||||||
| 2023 $m |
2022 (re- presented)a |
Change $m |
Change % |
2023 $m |
2022 (re- presented)a |
Change $m |
Change % |
|||||||||||||||||||||||||||||||||||||||
| Reportable segments fee business (see above) | 1,672 | 1,434 | 238 | 16.6 | 992 | 805 | 187 | 23.2 | ||||||||||||||||||||||||||||||||||||||
| Significant liquidated damagesb | – | (7 | ) | 7 | NM | c | – | (7 | ) | 7 | NMc | |||||||||||||||||||||||||||||||||||
| Currency impact | – | (4 | ) | 4 | NM | c | – | (2 | ) | 2 | NMc | |||||||||||||||||||||||||||||||||||
| Underlying fee revenue and underlying fee operating profit | 1,672 | 1,423 | 249 | 17.5 | 992 | 796 | 196 | 24.6 | ||||||||||||||||||||||||||||||||||||||
| a | Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’ and to combine System Fund and cost reimbursements (see ‘New accounting standards and other presentational changes’ in the Group Financial Statements). |
| b | $7m recognised in 2022 reflects the significant liquidated damages related to one hotel in EMEAA. |
| c | Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period. |
| 226 | IHG | Annual Report and Form 20-F 2023 |
Revenue and operating profit Non-GAAP reconciliations continued
Americas
| Revenue | Operating profitb | |||||||||||||||||||||||||||||||||||||||||||||||
| 2023 $m |
2022 $m |
Change $m |
Change % |
2023 $m |
2022 $m |
Change $m |
Change % |
|||||||||||||||||||||||||||||||||||||||||
| Per Group financial statements, note 2 | 1,105 | 1,005 | 100 | 10.0 | 815 | 761 | 54 | 7.1 | ||||||||||||||||||||||||||||||||||||||||
| Reportable segments analysed asa: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Fee business | 957 | 879 | 78 | 8.9 | 787 | 741 | 46 | 6.2 | ||||||||||||||||||||||||||||||||||||||||
| Owned, leased and managed lease | 148 | 126 | 22 | 17.5 | 28 | 20 | 8 | 40.0 | ||||||||||||||||||||||||||||||||||||||||
| 1,105 | 1,005 | 100 | 10.0 | 815 | 761 | 54 | 7.1 | |||||||||||||||||||||||||||||||||||||||||
| Reportable segments (see above) | 1,105 | 1,005 | 100 | 10.0 | 815 | 761 | 54 | 7.1 | ||||||||||||||||||||||||||||||||||||||||
| Currency impact | – | 2 | (2 | ) | NM | c | – | – | – | – | ||||||||||||||||||||||||||||||||||||||
| Underlying revenue and underlying operating profit | 1,105 | 1,007 | 98 | 9.7 | 815 | 761 | 54 | 7.1 | ||||||||||||||||||||||||||||||||||||||||
| a | Revenues as included in the Group Financial Statements, note 3. |
| b | Before exceptional items. |
| c | Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period. |
EMEAA
| Revenue | Operating profitb | |||||||||||||||||||||||||||||||||||||||||||||||
| 2023 $m |
2022 $m |
Change $m |
Change % |
2023 $m |
2022 $m |
Change $m |
Change % |
|||||||||||||||||||||||||||||||||||||||||
| Per Group financial statements, note 2 | 677 | 552 | 125 | 22.6 | 215 | 152 | 63 | 41.4 | ||||||||||||||||||||||||||||||||||||||||
| Reportable segments analysed asª: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Fee business | 354 | 284 | 70 | 24.6 | 214 | 153 | 61 | 39.9 | ||||||||||||||||||||||||||||||||||||||||
| Owned, leased and managed lease | 323 | 268 | 55 | 20.5 | 1 | (1 | ) | 2 | NM | e | ||||||||||||||||||||||||||||||||||||||
| 677 | 552 | 125 | 22.6 | 215 | 152 | 63 | 41.4 | |||||||||||||||||||||||||||||||||||||||||
| Reportable segments (see above) | 677 | 552 | 125 | 22.6 | 215 | 152 | 63 | 41.4 | ||||||||||||||||||||||||||||||||||||||||
| Significant liquidated damagesc | – | (7 | ) | 7 | NM | e | – | (7 | ) | 7 | NM | e | ||||||||||||||||||||||||||||||||||||
| Owned asset disposalsd | – | (19 | ) | 19 | NM | e | – | (2 | ) | 2 | NM | e | ||||||||||||||||||||||||||||||||||||
| Currency impact | – | 3 | (3 | ) | NM | e | – | 1 | (1 | ) | NM | e | ||||||||||||||||||||||||||||||||||||
| Underlying revenue and underlying operating profit | 677 | 529 | 148 | 28.0 | 215 | 144 | 71 | 49.3 | ||||||||||||||||||||||||||||||||||||||||
| a | Revenues as included in the Group Financial Statements, note 3. |
| b | Before exceptional items. |
| c | $7m recognised in 2022 reflects the significant liquidated damages related to one hotel in EMEAA. |
| d | The results of three UK Portfolio hotels and one InterContinental Hotel have been removed in 2022 (being the year of disposal) to determine underlying growth. |
| e | Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period. |
| Other financial information | IHG | Annual Report and Form 20-F 2023 | 227 |
Additional Information
Other financial information continued
Revenue and operating profit Non-GAAP reconciliations continued
Greater China
| Revenue | Operating profitc | |||||||||||||||||||||||||||||||||||||||||||||||
| 2023 $m | 2022 $m | Change $m |
Change % |
2023 $m |
2022 $m | Change $m |
Change % |
|||||||||||||||||||||||||||||||||||||||||
| Per Group financial statements, note 2 | 161 | 87 | 74 | 85.1 | 96 | 23 | 73 | 317.4 | ||||||||||||||||||||||||||||||||||||||||
| Reportable segments analysed asª: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Fee business | 161 | 87 | 74 | 85.1 | 96 | 23 | 73 | 317.4 | ||||||||||||||||||||||||||||||||||||||||
| Reportable segments (see above) | 161 | 87 | 74 | 85.1 | 96 | 23 | 73 | 317.4 | ||||||||||||||||||||||||||||||||||||||||
| Currency impact | – | (5 | ) | 5 | NM | b | – | (1 | ) | 1 | NM | b | ||||||||||||||||||||||||||||||||||||
| Underlying revenue and underlying operating profit | 161 | 82 | 79 | 96.3 | 96 | 22 | 74 | 336.4 | ||||||||||||||||||||||||||||||||||||||||
| a | Revenues as included in the Group Financial Statements, note 3. |
| b | Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period. |
| c | Before exceptional items. |
Highlights for the year ended 31 December 2022
Reportable segments
| Revenue | Operating profit | |||||||||||||||||||||||||||||||||||||||||||||||
| 2022 (re- presented)a |
2021 (re- presented)a |
Change $m |
Change % |
2022 (re- presented)a |
2021 (re- presented)a |
Change $m |
Change % |
|||||||||||||||||||||||||||||||||||||||||
| Per Group income statement | 3,892 | 2,907 | 985 | 33.9 | 628 | 494 | 134 | 27.1 | ||||||||||||||||||||||||||||||||||||||||
| System Fund and reimbursables | (2,049 | ) | (1,517 | ) | (532 | ) | 35.1 | 105 | 11 | 94 | 854.5 | |||||||||||||||||||||||||||||||||||||
| Operating exceptional items | – | – | – | – | 95 | 29 | 66 | 227.6 | ||||||||||||||||||||||||||||||||||||||||
| Reportable segments | 1,843 | 1,390 | 453 | 32.6 | 828 | 534 | 294 | 55.1 | ||||||||||||||||||||||||||||||||||||||||
| Reportable segments analysed as: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Fee business | 1,434 | 1,144 | 290 | 25.3 | 805 | 569 | 236 | 41.5 | ||||||||||||||||||||||||||||||||||||||||
| Owned, leased and managed lease | 394 | 237 | 157 | 66.2 | 19 | (36 | ) | 55 | NM | b | ||||||||||||||||||||||||||||||||||||||
| Insurance activities | 15 | 9 | 6 | 66.7 | 4 | 1 | 3 | NM | b | |||||||||||||||||||||||||||||||||||||||
| 1,843 | 1,390 | 453 | 32.6 | 828 | 534 | 294 | 55.1 | |||||||||||||||||||||||||||||||||||||||||
| a | Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’ and to combine System Fund and cost reimbursements (see ‘New accounting standards and other presentational changes’ in the Group Financial Statements). |
| b | Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period. |
Underlying fee revenue
| Revenue | ||||||||||||||||||||||||
| 2022 (re- presented)a |
2021 (re- presented)a |
Change $m |
Change % |
|||||||||||||||||||||
| Reportable segments fee business (see above) | 1,434 | 1,144 | 290 | 25.3 | ||||||||||||||||||||
| Significant liquidated damages | (7 | ) | (6 | ) | (1 | ) | 16.7 | |||||||||||||||||
| Currency impact | – | (22 | ) | 22 | – | |||||||||||||||||||
| Underlying fee revenue | 1,427 | 1,116 | 311 | 27.9 | ||||||||||||||||||||
| a | Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’. |
| 228 | IHG | Annual Report and Form 20-F 2023 |
Fee margin reconciliation
| 2023 $m | 2022 (re- presented)b |
2021 (re- presented)b |
||||||||||||||
| Revenue | ||||||||||||||||
| Reportable segments analysed as fee business (page 226) | 1,672 | 1,434 | 1,144 | |||||||||||||
| Significant liquidated damages | – | (7 | ) | (6) | ||||||||||||
| 1,672 | 1,427 | 1,138 | ||||||||||||||
| Operating profitc | ||||||||||||||||
| Reportable segments analysed as fee business (page 226) | 992 | 805 | 569 | |||||||||||||
| Significant liquidated damages | – | (7 | ) | (6) | ||||||||||||
| 992 | 798 | 563 | ||||||||||||||
| Fee margina | 59.3% | 55.9% | 49.5% | |||||||||||||
| a | Reported as a KPI on page 62. |
| b | Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’. |
| c | Before exceptional items. |
Fee margin is broken down by region as follows:
| Year ended 31 December 2023 | Americas | EMEAA | Greater China |
Central | Total | |||||||||||||||||||||||||
| Revenue $m | ||||||||||||||||||||||||||||||
| Reportable segments analysed as fee business (pages 226 to 228) | 957 | 354 | 161 | 200 | 1,672 | |||||||||||||||||||||||||
| 957 | 354 | 161 | 200 | 1,672 | ||||||||||||||||||||||||||
| Operating profitb | ||||||||||||||||||||||||||||||
| Reportable segments analysed as fee business (pages 226 to 228) | 787 | 214 | 96 | (105) | 992 | |||||||||||||||||||||||||
| 787 | 214 | 96 | (105) | 992 | ||||||||||||||||||||||||||
| Fee margin | 82.2% | 60.5% | 59.6% | (52.5)% | 59.3% | |||||||||||||||||||||||||
| Year ended 31 December 2022 (Re-presented)a | Americas | EMEAA | Greater China |
Central | Total | |||||||||||||||||||||||||
| Revenue $m | ||||||||||||||||||||||||||||||
| Reportable segments analysed as fee business (see above) | 879 | 284 | 87 | 184 | 1,434 | |||||||||||||||||||||||||
| Significant liquidated damages | – | (7 | ) | – | – | (7 | ) | |||||||||||||||||||||||
| 879 | 277 | 87 | 184 | 1,427 | ||||||||||||||||||||||||||
| Operating profitb | ||||||||||||||||||||||||||||||
| Reportable segments analysed as fee business (see above) | 741 | 153 | 23 | (112) | 805 | |||||||||||||||||||||||||
| Significant liquidated damages | – | (7 | ) | – | – | (7 | ) | |||||||||||||||||||||||
| 741 | 146 | 23 | (112) | 798 | ||||||||||||||||||||||||||
| Fee margin | 84.3% | 52.7% | 26.4% | (60.9)% | 55.9% | |||||||||||||||||||||||||
| Year ended 31 December 2021 (Re-presented)a | Americas | EMEAA | Greater China |
Central | Total | |||||||||||||||||||||||||
| Reportable segments analysed as fee business (see above) | 691 | 149 | 116 | 188 | 1,144 | |||||||||||||||||||||||||
| Significant liquidated damages | – | – | (6 | ) | – | (6 | ) | |||||||||||||||||||||||
| 691 | 149 | 110 | 188 | 1,138 | ||||||||||||||||||||||||||
| Operating profitb | ||||||||||||||||||||||||||||||
| Reportable segments analysed as fee business (see above) | 568 | 32 | 58 | (89) | 569 | |||||||||||||||||||||||||
| Significant liquidated damages | – | – | (6 | ) | – | (6 | ) | |||||||||||||||||||||||
| 568 | 32 | 52 | (89) | 563 | ||||||||||||||||||||||||||
| Fee margin | 82.2% | 21.5% | 47.3% | (47.3)% | 49.5% | |||||||||||||||||||||||||
| a | Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’. |
| b | Before exceptional items. |
| Other financial information | IHG | Annual Report and Form 20-F 2023 | 229 |
Additional Information
Other financial information continued
Net capital expenditure reconciliation
| 12 months ended 31 December |
||||||||||||||||
| $m | 2023 $m |
2022 $m |
||||||||||||||
| Net cash from investing activities | (137 | ) | (78 | ) | ||||||||||||
| Adjusted for: | ||||||||||||||||
| Contract acquisition costs, net of repayments |
(101 | ) | (64 | ) | ||||||||||||
| System Fund depreciation and amortisationa |
81 | 83 | ||||||||||||||
| Net capital expenditure | (157 | ) | (59 | ) | ||||||||||||
| Analysed as: | ||||||||||||||||
| Capital expenditure: maintenance (including contract acquisition costs, net of repayments, of $101m (2022: $64m)) |
(139 | ) | (108 | ) | ||||||||||||
| Capital expenditure: recyclable investments |
(53 | ) | 1 | |||||||||||||
| Capital expenditure: System Fund capital investments |
35 | 48 | ||||||||||||||
| Net capital expenditure | (157 | ) | (59 | ) | ||||||||||||
| a | Excludes depreciation on right-of-use assets. |
Gross capital expenditure reconciliation
| 12 months ended 31 December |
||||||||||||||||
| $m | 2023 $m |
2022 $m |
||||||||||||||
| Net capital expenditure | (157 | ) | (59 | ) | ||||||||||||
| Add back: | ||||||||||||||||
| Disposal receipts |
(8 | ) | (16 | ) | ||||||||||||
| Repayments of contract acquisition costs |
(7 | ) | (3 | ) | ||||||||||||
| System Fund depreciation and amortisationa |
(81 | ) | (83 | ) | ||||||||||||
| Gross capital expenditure | (253 | ) | (161 | ) | ||||||||||||
| Analysed as: | ||||||||||||||||
| Capital expenditure: maintenance (including contract acquisition costs of $108m (2022: $67m)) |
(146 | ) | (111 | ) | ||||||||||||
| Capital expenditure: recyclable investments |
(61 | ) | (15 | ) | ||||||||||||
| Capital expenditure: System Fund capital investments |
(46 | ) | (35 | ) | ||||||||||||
| Gross capital expenditure | (253 | ) | (161 | ) | ||||||||||||
| a | Excludes depreciation on right-of-use assets. |
Adjusted free cash flow reconciliation
| 12 months ended 31 December | ||||||||||||||||||||||||||||||||||||||||
| 2023 $m |
2022 $m |
2021 $m |
2020 $m |
2019 $m |
||||||||||||||||||||||||||||||||||||
| Net cash from operating activities | 893 | 646 | 636 | 137 | 653 | |||||||||||||||||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||
| Payment of contingent purchase consideration |
– | – | – | – | 6 | |||||||||||||||||||||||||||||||||||
| Principal element of lease payments |
(28 | ) | (36 | ) | (32 | ) | (65 | ) | (59 | ) | ||||||||||||||||||||||||||||||
| Purchase of shares by employee share trusts |
(8 | ) | (1 | ) | – | – | (5 | ) | ||||||||||||||||||||||||||||||||
| Capital expenditure: maintenance (excluding contract acquisition costs) |
(38 | ) | (44 | ) | (33 | ) | (43 | ) | (86 | ) | ||||||||||||||||||||||||||||||
| Adjusted free cash flowa | 819 | 565 | 571 | 29 | 509 | |||||||||||||||||||||||||||||||||||
| a | Reported as a KPI on page 62. |
| 230 | IHG | Annual Report and Form 20-F 2023 |
Adjusted interest reconciliation
| 12 months ended 31 December |
||||||||||||||||||||||||
| 2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||
| Net financial expenses | ||||||||||||||||||||||||
| Financial income | 39 | 22 | 8 | |||||||||||||||||||||
| Financial expenses | (91 | ) | (118 | ) | (147 | ) | ||||||||||||||||||
| (52 | ) | (96 | ) | (139 | ) | |||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||
| Interest attributable to the System Fund |
(44 | ) | (16 | ) | (3 | ) | ||||||||||||||||||
| Foreign exchange gains |
(35 | ) | (10 | ) | – | |||||||||||||||||||
| (79 | ) | (26 | ) | (3 | ) | |||||||||||||||||||
| Adjusted interest | (131 | ) | (122 | ) | (142 | ) | ||||||||||||||||||
Adjusted tax and tax rate reconciliations
| 2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| |
Profit before tax $m |
|
|
Tax $m |
|
|
Rate % |
|
|
|
|
|
Profit before tax Re-presented $m |
a
|
|
Tax Re-presented $m |
a
|
|
Rate Re-presented % |
a
|
|
Profit before tax Re-presented $m |
a
|
|
Tax Re-presented $m |
a
|
|
Rate Re-presented % |
a
|
|||||||||||||||||||
| Group income statement | 1,010 | (260 | ) | 25.7 | 540 | (164 | ) | 30.4 | 361 | (96 | ) | 26.6 | ||||||||||||||||||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Exceptional items |
(28 | ) | 7 | 95 | (26 | ) | 29 | (29 | ) | |||||||||||||||||||||||||||||||||||||||
| Foreign exchange gains |
(35 | ) | (3 | ) | (10 | ) | (4 | ) | – | – | ||||||||||||||||||||||||||||||||||||||
| System Fund |
(19 | ) | 3 | 105 | – | 11 | – | |||||||||||||||||||||||||||||||||||||||||
| System Fund interest |
(44 | ) | – | (16 | ) | – | (3 | ) | – | |||||||||||||||||||||||||||||||||||||||
| Fair value (losses)/gains on contingent purchase consideration |
4 | – | (8 | ) | – | (6 | ) | 1 | ||||||||||||||||||||||||||||||||||||||||
| 888 | (253 | ) | 28.5 | 706 | (194 | ) | 27.5 | 392 | (124 | ) | 31.6 | |||||||||||||||||||||||||||||||||||||
| a | The definition of adjusted tax measures has been amended in 2023, see page 86. Prior year measures have been re-presented accordingly. |
Adjusted earnings per ordinary share reconciliation
| 12 months ended 31 December |
||||||||||||||||||||||||
| 2023 $m |
2022 $m |
2021 $m |
||||||||||||||||||||||
| Profit/(loss) available for equity holders | 750 | 375 | 266 | |||||||||||||||||||||
| Adjusting items: | ||||||||||||||||||||||||
| System Fund and reimbursable result |
(19 | ) | 105 | 11 | ||||||||||||||||||||
| Interest attributable to the System Fund |
(44 | ) | (16 | ) | (3 | ) | ||||||||||||||||||
| Operating exceptional items |
(28 | ) | 95 | 29 | ||||||||||||||||||||
| Fair value losses/(gains) on contingent purchase consideration |
4 | (8 | ) | (6 | ) | |||||||||||||||||||
| Tax on fair value gains on contingent purchase consideration |
– | – | 1 | |||||||||||||||||||||
| Foreign exchange gains |
(35 | ) | (10 | ) | – | |||||||||||||||||||
| Tax attributable to the System Fund |
3 | – | – | |||||||||||||||||||||
| Tax on foreign exchange gains |
(3 | ) | (4 | ) | – | |||||||||||||||||||
| Tax on exceptional items |
7 | (26 | ) | (3 | ) | |||||||||||||||||||
| Exceptional tax |
– | – | (26 | ) | ||||||||||||||||||||
| Adjusted earnings | 635 | 511 | 269 | |||||||||||||||||||||
| Basic weighted average number of ordinary shares (millions) | 169 | 181 | 183 | |||||||||||||||||||||
| Adjusted earnings per ordinary share (cents) | 375.7 | 282.3 | 147.0 | |||||||||||||||||||||
| Other financial information | IHG | Annual Report and Form 20-F 2023 | 231 |
Additional Information
Other financial information continued
Revenue per available room (RevPAR), average daily rate and occupancy
RevPAR is the primary metric used by management to track hotel performance across regions and brands. RevPAR is also a commonly used performance measure in the hotel industry. RevPAR comprises IHG system rooms revenue divided by the number of room nights available and can be mathematically derived from occupancy rate multiplied by average daily rate (ADR). Occupancy rate is rooms occupied by hotel guests expressed as a percentage of rooms that are available. ADR is rooms revenue divided by the number of room nights sold.
References to RevPAR, occupancy and ADR are presented on a comparable basis comprising groupings of hotels that have traded in both the current and prior year. The principal exclusions in deriving this measure are new hotels, hotels closed for major refurbishment and hotels sold in either of the two years. RevPAR and ADR are quoted at a constant US$ conversion rate, in order to allow a better understanding of the comparable year-on-year trading performance excluding distortions created by fluctuations in exchange rates.
The following tables present RevPAR statistics for the year ended 31 December 2023 and a comparison to 2022. Fee business and owned, leased and managed lease statistics are for comparable hotels and include only those hotels in the Group’s System at 31 December 2023 and franchised, managed, owned, leased or operated under a managed lease by the Group since 1 January 2022. The comparison with 2022 is at constant US$ exchange rates.
| Fee business |
Owned, leased and managed lease |
|||||||||||||||||||||||||||||||
| 2023 | Change vs 2022 |
2023 | Change vs 2022 |
|||||||||||||||||||||||||||||
| Americas | ||||||||||||||||||||||||||||||||
| InterContinental | ||||||||||||||||||||||||||||||||
| Occupancy | 65.6% | 3.6%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $231.96 | 5.8% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $152.16 | 12.0% | – | – | ||||||||||||||||||||||||||||
| Kimpton | ||||||||||||||||||||||||||||||||
| Occupancy | 70.1% | 4.7%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $280.42 | 1.6% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $196.47 | 8.9% | – | – | ||||||||||||||||||||||||||||
| Hotel Indigo | ||||||||||||||||||||||||||||||||
| Occupancy | 67.2% | 2.5%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $182.36 | 0.9% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $122.54 | 4.9% | – | – | ||||||||||||||||||||||||||||
| Crowne Plaza | ||||||||||||||||||||||||||||||||
| Occupancy | 60.3% | 3.4%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $135.82 | 4.9% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $81.87 | 11.2% | – | – | ||||||||||||||||||||||||||||
| EVEN Hotels | ||||||||||||||||||||||||||||||||
| Occupancy | 67.0% | 0.5%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $162.03 | 7.7% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $108.60 | 8.5% | – | – | ||||||||||||||||||||||||||||
| Holiday Inn Express | ||||||||||||||||||||||||||||||||
| Occupancy | 69.8% | 1.6%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $130.29 | 4.0% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $90.90 | 6.4% | – | – | ||||||||||||||||||||||||||||
| Holiday Inn | ||||||||||||||||||||||||||||||||
| Occupancy | 63.0% | 1.7%pts | 67.2% | 4.3%pts | ||||||||||||||||||||||||||||
| Average daily rate | $126.49 | 4.4% | $236.85 | 12.8% | ||||||||||||||||||||||||||||
| RevPAR | $79.72 | 7.2% | $159.15 | 20.5% | ||||||||||||||||||||||||||||
| avid hotels | ||||||||||||||||||||||||||||||||
| Occupancy | 63.4% | 3.4%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $104.36 | 2.7% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $66.12 | 8.6% | – | – | ||||||||||||||||||||||||||||
| Staybridge Suites | ||||||||||||||||||||||||||||||||
| Occupancy | 76.1% | 0.0%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $131.73 | 6.1% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $100.28 | 6.1% | – | – | ||||||||||||||||||||||||||||
| Candlewood Suites | ||||||||||||||||||||||||||||||||
| Occupancy | 74.2% | (1.6)%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $100.70 | 4.7% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $74.76 | 2.4% | – | – | ||||||||||||||||||||||||||||
| 232 | IHG | Annual Report and Form 20-F 2023 |
RevPAR, average daily rate and occupancy continued
| Fee business |
Owned, leased and managed lease |
|||||||||||||||||||||||||||||||
| 2023 | Change vs 2022 |
2023 | Change vs 2022 |
|||||||||||||||||||||||||||||
| EMEAA | ||||||||||||||||||||||||||||||||
| Six Senses | ||||||||||||||||||||||||||||||||
| Occupancy | 42.7% | 0.4%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $1,094.25 | 16.7% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $466.91 | 17.7% | – | – | ||||||||||||||||||||||||||||
| InterContinental | ||||||||||||||||||||||||||||||||
| Occupancy | 66.8% | 8.7%pts | 59.5% | 18.4%pts | ||||||||||||||||||||||||||||
| Average daily rate | $244.74 | 9.6% | $279.81 | 10.3% | ||||||||||||||||||||||||||||
| RevPAR | $163.37 | 26.0% | $166.44 | 59.6% | ||||||||||||||||||||||||||||
| Kimpton | ||||||||||||||||||||||||||||||||
| Occupancy | 69.1% | 11.2%pts | 74.5% | 8.2%pts | ||||||||||||||||||||||||||||
| Average daily rate | $316.75 | 23.2% | $291.63 | 8.2% | ||||||||||||||||||||||||||||
| RevPAR | $218.75 | 47.1% | $217.38 | 21.5% | ||||||||||||||||||||||||||||
| Hotel Indigo | ||||||||||||||||||||||||||||||||
| Occupancy | 75.0% | 7.1%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $167.47 | 12.6% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $125.57 | 24.5% | – | – | ||||||||||||||||||||||||||||
| voco | ||||||||||||||||||||||||||||||||
| Occupancy | 74.0% | 7.8%pts | 78.9% | 6.7%pts | ||||||||||||||||||||||||||||
| Average daily rate | $148.57 | (1.2)% | $163.52 | 2.6% | ||||||||||||||||||||||||||||
| RevPAR | $109.94 | 10.5% | $129.07 | 12.0% | ||||||||||||||||||||||||||||
| Crowne Plaza | ||||||||||||||||||||||||||||||||
| Occupancy | 67.4% | 7.1%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $131.95 | 10.6% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $88.91 | 23.7% | – | – | ||||||||||||||||||||||||||||
| Holiday Inn Express | ||||||||||||||||||||||||||||||||
| Occupancy | 76.2% | 9.3%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $96.95 | 7.0% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $73.85 | 21.9% | – | – | ||||||||||||||||||||||||||||
| Holiday Inn | ||||||||||||||||||||||||||||||||
| Occupancy | 69.5% | 7.3%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $106.51 | 10.3% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $73.99 | 23.4% | – | – | ||||||||||||||||||||||||||||
| Staybridge Suites | ||||||||||||||||||||||||||||||||
| Occupancy | 80.3% | 3.0%pt | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $124.38 | 8.2% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $99.90 | 12.5% | – | – | ||||||||||||||||||||||||||||
| Greater China | ||||||||||||||||||||||||||||||||
| Regent | ||||||||||||||||||||||||||||||||
| Occupancy | 75.3% | 29.3%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $171.35 | 28.6% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $128.97 | 110.8% | – | – | ||||||||||||||||||||||||||||
| InterContinental | ||||||||||||||||||||||||||||||||
| Occupancy | 66.0% | 24.8%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $127.44 | 14.0% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $84.13 | 82.4% | – | – | ||||||||||||||||||||||||||||
| Hotel Indigo | ||||||||||||||||||||||||||||||||
| Occupancy | 58.3% | 20.6%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $137.55 | 10.1% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $80.15 | 70.3% | – | – | ||||||||||||||||||||||||||||
| HUALUXE | ||||||||||||||||||||||||||||||||
| Occupancy | 57.9% | 17.3%pts | – | – | ||||||||||||||||||||||||||||
| Other financial information | IHG | Annual Report and Form 20-F 2023 | 233 |
Additional Information
Other financial information continued
RevPAR, average daily rate and occupancy continued
| Fee business | Owned, leased and managed lease |
|||||||||||||||||||||||||||||||
| 2023 | Change vs 2022 |
2023 | Change vs 2022 |
|||||||||||||||||||||||||||||
| Average daily rate | $80.26 | 23.1% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $46.50 | 75.6% | – | – | ||||||||||||||||||||||||||||
| Crowne Plaza | ||||||||||||||||||||||||||||||||
| Occupancy | 61.0% | 19.9%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $82.81 | 14.3% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $50.49 | 69.7% | – | – | ||||||||||||||||||||||||||||
| Holiday Inn Express | ||||||||||||||||||||||||||||||||
| Occupancy | 60.5% | 17.6%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $45.05 | 13.5% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $27.26 | 60.3% | – | – | ||||||||||||||||||||||||||||
| Holiday Inn | ||||||||||||||||||||||||||||||||
| Occupancy | 58.4% | 15.6%pts | – | – | ||||||||||||||||||||||||||||
| Average daily rate | $61.83 | 20.1% | – | – | ||||||||||||||||||||||||||||
| RevPAR | $36.13 | 63.8% | – | – | ||||||||||||||||||||||||||||
| 234 | IHG | Annual Report and Form 20-F 2023 |
Directors’ Report
This Directors’ Report includes the information required to be given in line with the Companies Act or, where provided elsewhere, an appropriate cross reference is given. The Governance Report approved by the Board is provided on pages 89 to 142 and incorporated by reference herein.
Subsidiaries, joint ventures and associated undertakings
The Group has around 370 subsidiaries, joint ventures, associates and related undertakings (including branches outside of the United Kingdom). A list of subsidiaries and associated undertakings disclosed in accordance with the Companies Act is provided at note 33 of the Group Financial Statements on pages 214 to 216.
Directors
The Directors may exercise all the powers of the Company, subject to the Articles of Association, legislation and regulation. This includes the ability to exercise the authority to allot or purchase the Company’s shares pursuant to authorities granted by shareholders at the Company’s AGM every year. Further details of the powers of the Company’s Directors can be found on page 251.
For biographies of the current Directors see pages 92 to 95.
Directors’ and Officers’ (D&O) liability insurance and existence of qualifying indemnity provisions
The Company maintains the Group’s D&O liability insurance policy, which covers Directors and Officers of the Company defending civil proceedings brought against them in their capacity as Directors or Officers of the Company (including those who served as Directors or Officers during the year). There were no indemnity provisions relating to the UK pension plan for the benefit of the Directors during 2023.
Articles of Association
|
|
A summary is provided on pages 251 and 252. |
|
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The Company’s Articles of Association may only be amended by special resolution and are available on the Company’s website at ihgplc.com/investors under Corporate governance. |
Shares
Share capital
The Company’s issued share capital at 31 December 2023 consisted of 172,256,766 ordinary shares of 20 340/399 pence each, including 7,006,782 shares held in treasury, which constituted 4.07% of the total issued share capital (including treasury shares).
There are no special control rights or restrictions on share transfers or limitations on the holding of any class of shares.
During 2023, 500,000 shares were transferred from treasury to the employee share ownership trust.
As far as is known to management, IHG is not directly or indirectly owned or controlled by another company or by any government. The Board focuses on shareholder value creation. When it decides to return capital to shareholders, it considers all of its options, including share buybacks and special dividends.
Share issues and buybacks
In December 2023, we completed our $750m share buyback programme which was announced, and commenced, on 21 February 2023. As part of the buyback, 10,643,334 shares were bought back and cancelled.
Further information on the transactions that took place this year can be found on page 260.
Dividends
| Dividends | Ordinary shares |
ADRs | ||||||||||
| Interim dividend | ||||||||||||
| An interim dividend was paid on 5 October 2023 to shareholders on the register at the close of business on 1 September 2023. |
38.7p | 48.3¢ | ||||||||||
| Final dividend | ||||||||||||
| Subject to approval at the 2024 AGM, a final dividend of 104¢ in respect of 2023 will be payable on 14 May 2024 to shareholders on the register at the close of business on 5 April 2024. | 104¢a | 104¢ | ||||||||||
| a | The sterling amount of the final dividend will be announced on 25 April 2024 using the average of the daily exchange rates for the three working days commencing 22 April 2024. |
Major institutional shareholders
As at 16 February 2024, being the last practicable date, the Company had been notified of the following significant holdings in its ordinary shares under section 5 of the UK Disclosure Guidance and Transparency Rules (DTRs).
| As at 16 February 2024 | As at 17 February 2023 | As at 21 February 2022 | ||||||||||||||||||||||||||||||||||
| Shareholder | |
Ordinary shares/ADSs |
a |
% | a | |
Ordinary shares/ADSs |
a |
% | a | |
Ordinary shares/ADSs |
a |
% | a | |||||||||||||||||||||
| BlackRock, Inc. | 10,190,311 | b | 6.14 | 11,247,319 | c | 6.12 | 11,247,319 | c | 6.12 | |||||||||||||||||||||||||||
| Boron Investments B.V. | 8,280,000 | 5.01 | 6,890,000 | 3.77 | 6,890,000 | 3.77 | ||||||||||||||||||||||||||||||
| Royal Bank of Canada | 9,658,543 | 5.84 | 9,189,549 | 5.02 | 9,189,549 | 5.02 | ||||||||||||||||||||||||||||||
| The Capital Group Companies, Inc. | 8,980,505 | 5.12 | 8,980,505 | 5.12 | 9,071,574 | 4.98 | ||||||||||||||||||||||||||||||
| PineStone Asset Management Inc. | 12,950,002 | 7.08 | – | – | – | – | ||||||||||||||||||||||||||||||
| a | The numbers of shares and percentages of voting rights are as set out in the relevant disclosures made in accordance with Rule 5 of the DTRs and do not necessarily reflect the impact of any share buyback programmes or any changes in shareholdings subsequent to the date of notification that are not notified to the Company under the DTRs. |
| b | Total shown includes 1,913,249 qualifying financial instruments to which voting rights are attached. |
| c | Total shown includes 2,080,427 qualifying financial instruments to which voting rights are attached. |
The Company’s major shareholders have the same voting rights as other shareholders. The Company does not know of any arrangements, the operation of which may result in a change in its control.
|
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For further details on shareholder profiles see page 261. |
The Companies (Miscellaneous Reporting) Regulations 2018
Set out below is our employee engagement statement and on page 237, our statement summarising how the Directors have had regard to the need to foster the Company’s business relationships with suppliers, customers and others.
|
|
Details of how the Directors have had regard to the matters set forth in Section 172(1)(a) to (f) of the Companies Act are provided on pages 102 and 103. |
| Directors’ Report | IHG | Annual Report and Form 20-F 2023 | 235 |
Additional Information
Directors’ Report continued
Employee engagement statement
Our statement relates to IHG’s directly employed individuals and should be read in conjunction with our people section, Section 172 statement, Voice of the Employee and wider workforce remuneration and employee engagement disclosures on pages 29 to 31, 102 and 103, 113, 117 and 118 and 123 and 124.
During 2023, the main communication channels to provide information of concern to employees included weekly newsletters, virtual town halls, CEO and regional leadership calls, podcasts, blogs, email broadcasts, videos and business function team meetings.
Employees have been consulted and given opportunities to express their views and concerns through participation in the employee engagement survey, Voice of the Employee feedback sessions, ERGs, Next events (interactive sessions relating to IHG’s strategy and behaviours), quarterly performance, development and wellbeing meetings, team meetings and the Q&A session as part of the CEO quarterly business update call.
Each December, employees are invited to join the employee share plan. The plan is available to around 98% of our corporate employees below the senior/mid-management level (who received LTIP and restricted stock units awards). Further details are on page 123.
Employees have been made aware of the financial and economic factors affecting the performance of the Company through quarterly business update calls with the CEO, as well as business function team meetings and other regional leadership calls.
The Chair and other Directors have engaged with employees through a number of means, including direct interactions, Voice of the Employee feedback sessions, Next events and a series of opportunities held during the year to meet Executive Directors via video meetings or in person.
Details of how Directors have had regard to employee interests, and the effect of that regard, including principal decisions taken by IHG during the year can be found on pages 38 to 40 and 101 to 103.
Employee numbers
Having a predominantly franchised and managed business model means that many of those people who work at hotels operated under our brands are not our employees.
The average number of IHG employees, including part-time employees, during 2023 were as follows:
| • | 7,292 people worldwide (including those in our corporate offices, central reservations offices and owned, leased and managed leased hotels (excluding those in a category below)), whose costs were borne by the Group; and |
| • | 20,306 people who either worked directly on behalf of the System Fund and whose costs were borne by the System Fund, or as General Managers and (in the US predominantly) other hotel workers, who work in managed hotels, who have contracts or are directly employed by IHG and whose costs are borne by those hotel owners. |
See note 4 of the Group Financial Statements on page 178.
Employment of disabled persons
IHG continues to focus on providing an inclusive environment, in which employees are valued for who they are and what they bring to the Group, and in which talented individuals are retained through all levels of the organisation.
We look to appoint the most appropriate person for the job and are committed to providing equality of opportunity to all employees without discrimination. Every effort is made to ensure that applications for employment from disabled employees are fully and fairly considered and that disabled employees have equal opportunities to training, career development and promotion.
See our people disclosures on pages 29 to 31.
Visit ihgplc.com/responsible-business for more information.
2023 share awards and grants to employees
Our current policy is to settle the majority of awards or grants under the Company’s share plans with shares purchased in the market or from shares held in treasury; however, the Company continues to review this policy. The Company’s share plans incorporate the current Investment Association’s guidelines on dilution which provide that commitments to issue new shares or re-issue treasury shares under executive plans should not exceed 5%, and under all plans should not exceed 10%, of the issued ordinary share capital of the Company (adjusted for share issuance and cancellation) in any 10-year period. During the financial year ended 31 December 2023, the Company transferred 500,000 treasury shares (0.29% of the total issued share capital) to satisfy obligations under its share plans.
The estimated maximum dilution from awards made under the Company’s share plans over the last 10 years is 4.49%.
As at 31 December 2023, there were no options outstanding. The Company has not utilised the authority given by shareholders at any of its AGMs to allot shares for cash without first offering such shares to existing shareholders.
Employee share ownership trust (ESOT)
IHG operates an ESOT for the benefit of employees and former employees. The ESOT receives treasury shares from the Company and purchases ordinary shares in the market and releases them to current and former employees in satisfaction of share awards. During 2023, the ESOT released 899,845 shares and at 31 December 2023, it held 589,077 ordinary shares in the Company. The ESOT adopts a prudent approach to purchasing shares, using funds provided by the Group, based on expectations of future requirements.
Certain shares that have been allocated to share plan participants under the Annual Performance Plan (APP) are held in a nominee account on behalf of those participants by Computershare Investors Plc (Nominee). As at 31 December 2023, the Nominee held 225,688 forfeitable shares as part of the APP. The shares held by the Nominee have been allocated to share plan participants on terms that entitle those participants to request or require the Nominee to exercise the voting rights relating to those shares. The Nominee exercises those votes in accordance with the directions of the participants. Shares that have not been allocated to share plan participants under such terms are held by the ESOT and although the trustee has the right to vote or abstain from exercising their voting rights in relation to those shares, it has a policy of not voting, which is in line with guidelines. The trustee also has the right to accept or reject any offer relating to the shares in any way it sees fit.
| 236 | IHG | Annual Report and Form 20-F 2023 |
Unless otherwise requested by the Company, the trustee of the ESOT waives all ordinary dividends on the shares held in the ESOT, other than shares which have been allocated to participants on terms which entitle them to the benefit of dividends, except for such amount per share as shall, when multiplied by the number of shares held by it on the relevant date, equal one pence or less.
In 2023, the new Deferred Award Plan (‘DAP’) rules were approved by shareholders at the May AGM. For more information, please see the Remuneration Report on page 127.
Colleague Share Plan
The Company’s employee share plan, known as the Colleague Share Plan, was first introduced in 2019 following approval by shareholders at the Company’s 2019 AGM.
In accordance with the Colleague Share Plan Rules, participants’ contributions are used to purchase shares on a monthly basis on behalf of the individuals (Purchased Shares) and held within the Nominee. At the end of the Plan Year, the participants receive a conditional right to receive one share (Matching Share) for every one Purchased Share that they have purchased. Provided the participants hold the Purchased Shares in the Nominee until the second anniversary of the end of the Plan Year, the conditional right to Matching Shares will vest.
In 2023, 45 shares vested outside of the usual timetable due to deaths or good leavers, and in January 2024, 30,922 shares vested as part of the third Plan Year. As at 16 February 2024, the Nominee held 30,084 Purchased Shares in relation to the fourth Plan Year.
Code of Conduct
The Code of Conduct (Code) applies to all Directors, officers and employees and complies with the NYSE rules as set out in Section 406 of the US Sarbanes-Oxley Act 2002. Further details on our Code, including the Board’s oversight of the Code, are set out in the Strategic Report on pages 39 and 40.
Business relationships with suppliers, customers and others
Our business relationships with our guests, hotel owners and suppliers are fundamental to our commercial success. During the year, the Board considered matters related to them and had regard to the impact of decisions on them as detailed in the key matters discussed by the Board on pages 101 to 103. These included strategic and operational matters relating to our brand portfolio, global sales strategy and operating regions.
The Board monitors relationships through a mixture of presentations, reports and direct engagement. The Responsible Business Committee specifically reviews responsible procurement processes, targets and the Supplier Code of Conduct.
Details of how relationships have been maintained during the year are set out in the key stakeholder engagement tables on pages 36 and 37.
The Group is party to a technology agreement with Amadeus Hospitality Americas, Inc. (Amadeus), for the next generation central reservation system used by the Group. The initial term of 10 years will expire in 2028, and the Group has the right to extend this agreement for two additional periods of up to 10 years each on the same terms, conditions and pricing. The financial and performance obligations in this agreement are guaranteed by Amadeus IT Group S.A., the parent company of Amadeus.
Otherwise, there are no specific individual contracts or arrangements considered to be essential to the business of the Group as a whole.
Future business developments of the Group
Details on these are set out in the Strategic Report on pages 21 to 27.
Finance
Political donations
The Group made no political donations under the Companies Act during the year and proposes to maintain this policy in respect of such donations. Notwithstanding this policy, in accordance with US law, one of IHG’s US subsidiaries provides administrative support to an employee-operated Political Action Committee in the US (US PAC), which is funded by voluntary political donations from eligible employees. The US PAC is not controlled by IHG. All decisions regarding the amounts and recipients of contributions are directed by the Board of Directors of the US PAC, in accordance with its Charter and By-laws. In 2023, a total of US $12,600 was expended on political contributions by the US PAC.
Financial risk management
|
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The Group’s financial risk management objectives and policies, including its use of financial instruments, are set out in note 24 to the Group Financial Statements on pages 199 to 203. |
Significant agreements and change of control provisions
The Group is a party to the following arrangements which could be terminated upon a change of control of the Company and which are considered significant in terms of their potential impact on the business of the Group as a whole:
| • | The $1.35 billion syndicated loan facility agreement dated 28 April 2022 and (unless extended) maturing in April 2028, under which a change of control of the Company would entitle each lender to cancel its commitment and declare all amounts due to it payable. |
| • | The 10-year £300 million bond issued by the Company on 14 August 2015, under which, if the bond’s credit rating was downgraded in connection with a change of control, the bond holders would have the option to require the Company to redeem or, at the Company’s option, repurchase the outstanding notes together with interest accrued. |
| • | The 10-year £350 million bond issued by the Company on 24 August 2016, under which, if the bond’s credit rating was downgraded in connection with a change of control, the bond holders would have the option to require the Company to redeem or, at the Company’s option, repurchase the outstanding notes together with interest accrued. |
| • | The 8.5-year €500 million bond issued by the Company on 15 November 2018, under which, if the bond’s credit rating was downgraded in connection with a change of control, the bond holders would have the option to require the Company to redeem or, at the Company’s option, repurchase the outstanding notes together with interest accrued. |
| • | The four-year €500 million bond issued by the Company on 8 October 2020, under which, if the bond’s credit rating was downgraded in connection with a change of control, the bond holders would have the option to require the Company to redeem or, at the Company’s option, repurchase the outstanding notes together with interest accrued. |
| • | The eight-year £400 million bond issued by the Company on 8 October 2020, under which, if the bond’s credit rating was downgraded in connection with a change of control, the bond holders would have the option to require the Company to redeem or, at the Company’s option, repurchase the outstanding notes together with interest accrued. |
| • | The six-year €600 million bond issued by IHG Finance LLC on 28 November 2023, under which, if the bond’s credit rating was downgraded in connection with a change of control, the bond holders would have the option to require the Company to redeem or, at the Company’s option, repurchase the outstanding notes together with interest accrued. |
|
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Further details on material contracts are set out on page 253. |
Disclosure of information to Auditor
|
|
For details, see page 144. |
| Directors’ Report | IHG | Annual Report and Form 20-F 2023 | 237 |
Additional Information
Directors’ Report continued
Greenhouse gas (GHG) emissions
By delivering more environmentally sustainable hotels, we create value for IHG, our hotel owners and all our stakeholders. We recognise the risks from climate change and the importance of reducing our carbon footprint and our 2030 Science Based Target (SBT) reflects this. Our SBT is approved by the SBTi and aligns with the most ambitious goals of the Paris Agreement to keep global warming within 1.5°C by targeting a reduction in market-based greenhouse gas (GHG) emissions of 46% across our Scope 1 and 2 GHG emissions, as well as our Scope 3 GHG emissions covering both our Fuel and
Streamlined Energy and Carbon Reporting (SECR)
Energy Related Activities (FERA) and franchised hotels energy. Our Exclusive Partners hotels (i.e. Iberostar Beachfront Resorts) are not included within the scope of our ESG reporting and are therefore not included in our Streamlined Energy and Carbon Reporting (SECR) table at present.
|
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Refer to page 63 for more information on our SBT and Carbon KPI and pages 52 to 59 for more information on how we identify and manage climate-related risks and the steps we are taking to mitigate these, including our transition plan. |
| 2023 | 2022 | 2019 Baseline Year | ||||||||||||||||||||||||||||
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Global | UK and UK offshore only |
Global | UK and UK offshore only |
Global | UK and UK offshore only |
||||||||||||||||||||||||
| Energy (MWh) |
Managed, owned, | Electricity, heat, steam and cooling | 4,275,818 | 23,249 | 3,621,830 | 22,885 | 3,759,820 | 26,221 | ||||||||||||||||||||||
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| leased and managed lease hotels | Fuel consumption for boilers, furnaces, generators | 2,058,347 | 31,553 | 1,806,925 | 24,789 | 2,032,555 | 32,894 | |||||||||||||||||||||||
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| Franchised | Electricity, heat, steam and cooling | 4,726,162 | 243,093 | 4,600,437 | 237,626 | 4,669,277 | 277,892 | |||||||||||||||||||||||
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| hotels energy | Fuel consumption for boilers, furnaces, generators | 3,206,875 | 271,871 | 3,007,008 | 241,749 | 3,339,195 | 311,019 | |||||||||||||||||||||||
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| Corporate | Electricity, heat, steam and cooling | 14,773 | 3,458 | 17,606 | 4,971 | 26,995 | 6,694 | |||||||||||||||||||||||
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| office energy | Fuel consumption for boilers, furnaces, generators | 2,894 | 1,109 | 8,995 | 3,459 | 9,312 | 2,981 | |||||||||||||||||||||||
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| Company-owned vehicle fuel | 221 | 221 | 214 | 214 | 557 | 557 | ||||||||||||||||||||||||
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| Private vehicle mileage fuela | 196 | 196 | – | – | – | – | ||||||||||||||||||||||||
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| Total global energy (MWh) |
Franchised, managed, owned, leased and managed lease hotels and corporate offices |
Electricity, heat, steam and cooling and fuel consumption from boilers, furnaces, generators and company-owned vehicle fuel (excluding fuel from private vehicle mileage)a | 14,285,090 | 574,554 | 13,063,015 | 535,693 | 13,837,711 | 658,258 | ||||||||||||||||||||||
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| GHG emissions (tonnes of CO2e (tCO2e)) |
Scope 1 + 2 | Scope 1 (fuel consumption for boilers, furnaces, generators and company-owned vehicle fuel) | 486,094 | 6,336 | 418,902 | 5,479 | 473,803 | 7,042 | ||||||||||||||||||||||
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| Scope 2 location-based (electricity, heat, steam and cooling) | 2,149,107 | 5,532 | 1,805,995 | 5,387 | 2,012,896 | 8,413 | ||||||||||||||||||||||||
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| Scope 2 market-based (electricity, heat, steam and cooling) | 2,176,340 | 5,795 | 1,825,769 | 4,671 | 2,051,839 | 12,539 | ||||||||||||||||||||||||
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| Total Scope 1 + 2 location-based | 2,635,201 | 11,868 | 2,224,897 | 10,866 | 2,486,699 | 15,455 | ||||||||||||||||||||||||
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| Total Scope 1 + 2 market-based | 2,662,434 | 12,131 | 2,244,671 | 10,150 | 2,525,642 | 19,581 | ||||||||||||||||||||||||
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| Scope 3 | Scope 3 FERA | 556,434 | 2,538 | 635,106 | 2,451 | 526,603 | 3,836 | |||||||||||||||||||||||
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| Scope 3 Franchises (including franchises FERA) | 3,150,412 | 174,880 | 3,057,648 | 167,945 | 3,442,793 | 200,496 | ||||||||||||||||||||||||
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| Scope 3 Business Travel (private vehicle mileage fuel)a | 56 | 56 | ||||||||||||||||||||||||||||
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| Total Scope 3 (excluding private vehicle mileage)a | 3,706,846 | 177,418 | 3,692,754 | 170,396 | 3,969,396 | 204,332 | ||||||||||||||||||||||||
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| Total GHG emissions (tCO2e) | Total Scope 1 + 2 + 3 | Scope 1 + 2 +3 market-based (excluding private vehicle mileage fuel)b | 6,369,280 | 189,549 | 5,937,425 | 180,546 | 6,495,038 | 223,913 | ||||||||||||||||||||||
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| Total Gross Revenue (TGR) | TGR ($m) for managed, owned, leased and managed lease hotelsc | 11,593 | 258 | 9,056 | 247 | 11,952 | 310 | |||||||||||||||||||||||
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| GHG Intensity metrics |
GHG intensity metrics location-based | Scope 1 + 2 tCO2e per occupied room nightd | 0.0456 | 0.0196 | 0.0475 | 0.0162 | 0.0397 | 0.0163 | ||||||||||||||||||||||
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| Scope 1 + 2 + 3 tCO2e per occupied room nightd | 0.0298 | 0.0104 | 0.0317 | 0.0105 | 0.0305 | 0.0121 | ||||||||||||||||||||||||
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| Scope 1 + 2 tCO2e per $m revenuec | 0.2273 | 0.0460 | 0.2457 | 0.0440 | 0.2081 | 0.0499 | ||||||||||||||||||||||||
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| GHG intensity metrics | Scope 1 + 2 tCO2e per occupied room nightd | 0.0461 | 0.0201 | 0.0479 | 0.0151 | 0.0403 | 0.0206 | |||||||||||||||||||||||
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| market-based | Scope 1 + 2 + 3 tCO2e per occupied room nightd | 0.0304 | 0.0139 | 0.0317 | 0.0142 | 0.0316 | 0.0153 | |||||||||||||||||||||||
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| Scope 1 + 2 tCO2e per $m revenuec | 0.2297 | 0.0470 | 0.2479 | 0.0411 | 0.2113 | 0.0632 | ||||||||||||||||||||||||
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| a | Fuel use from UK private vehicle mileage is not included in the scope of IHG’s SBT and therefore not included in the GHG and energy use totals within this table, however it is included in the total figures within our third-party verification statement found a ihgplc.com/responsiblebusiness/reporting. |
| b | Based on franchised, managed, owned, leased and manage lease hotels and corporate offices and calculated using a market-based methodology to align with IHG’s SBT. |
| c | GHG intensity per $m revenue uses TGR from managed, owned, leased and managed lease hotels as reported in the table above and on page 70 of Group Performance. |
| d | GHG intensity per occupied room night excludes UK private mileage and uses actual occupied room nights from hotels that fall within the scope of the metric and our SBT, which excludes our Exclusive Partners hotels (i.e. Iberostar Beachfront Resorts). |
| 238 | IHG | Annual Report and Form 20-F 2023 |
Our Performance
Our absolute Scope 1, 2 and Scope 3 market-based GHG emissions have decreased by 1.9% compared to our 2019 baseline level despite our system size growing from over 5,900 open hotels in 2019 to over 6,300 in 2023 across 100 countries. In addition, we have seen a reduction of 3.8% in our GHG emissions intensity per occupied room night on the same basis.
Even as our actions become more widely embedded across our estate, the rate at which we can decarbonise will be impacted by several factors, including rates of grid decarbonisation and government’s climate change policies. We recognise that our role in collaborating with governments, peers and trade bodies will be crucial to supporting owners and the industry in decarbonising successfully. Some of the key external dependencies we have identified are outlined in our TCFD disclosure on page 58 and have been factored into our decarbonisation plan.
To support our progress towards our decarbonisation target while continuing to grow our business, we are taking action across three main areas: decarbonising our existing hotels; sourcing renewable energy; and developing new-build hotels that operate at very low/ zero carbon.
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See pages 56 and 57 for more information on our decarbonisation strategy and our transition plan. |
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See pages 47 to 49 of our 2023 Responsible Business Report for a full breakdown of our GHG emissions and energy data including renewable energy. |
GHG Scope boundaries
We report Scope 1, Scope 2 and Scope 3 GHG emissions in tonnes (tCO2e) as defined by the GHG Protocol Corporate Accounting and Reporting Standard methodology, under the operational control approach:
| • | Scope 1 emissions are direct GHG emissions from the combustion of fuels on-site, in company-owned vehicles and from refrigerant losses from our managed, owned, leased and managed lease hotels and corporate offices. |
| • | Scope 2 emissions are indirect GHG emissions generated by the energy purchased or acquired from our managed, owned, leased and managed lease hotels and corporate offices. A market-based method has been used to calculate total GHG emissions as this aligns with our SBT, however we have also reported Scope 2 location-based emissions for reference in the table above. |
| • | Scope 3 emissions are indirect GHG emissions that occur in IHG’s value chain. The Scope 3 emissions included within our SBT are material to IHG in accordance with the SBTi criteria. This includes Category 3 (FERA) from IHG’s managed, owned, leased and managed lease hotels and corporate offices, as well as Category 14 (Franchises), which includes the Scope 1 and 2 market-based emissions of our franchised hotels energy consumption and their Scope 3 FERA. For the purposes of SECR, IHG also report Scope 3 emissions from UK business travel in rental or employee-owned vehicles where IHG is responsible for purchasing the fuel, in the table above. However, these emissions are not in the scope of our SBT and, therefore, not included in the total figures above, reported in our Carbon KPI or our 2023 Responsible Business Report. |
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See page 47 of our 2023 Responsible Business Report for more information on our SBT and GHG emissions scopes and materiality. |
Methodology
We work with data specialists to give us an up-to-date picture of IHG’s carbon footprint and assess our performance over time. To calculate our global energy consumption for the reporting period 1 January to 30 September 2023, we used energy consumption data reported by hotels through IHG’s Green Engage system. Energy consumption for the final three months of 2023 has been estimated using an average consumption from the previous 12 months, applied to a projected number of occupied room nights to ensure that all hotels have a consumption figure corresponding to their likely occupancy. This approach was not used for fuel where it was not possible to determine whether data was missed or fuel was not used, or only purchased intermittently/ seasonally. Estimating Q4 enables us to gain assurance over the data we report for the calendar year and aligns with our financial reporting period to enable analysis of both financial and non-financial indicators for the same period. Outlier checks were completed, and a gap-filling, and extrapolation methodology was applied where necessary. Any missing data points for energy consumption were filled using average consumption per room night from the nearest 12-month period. The IHG system size and number of occupied room nights used to estimate missing energy data is based on nine months of actual data and three months of data from 2022. Our estimation methodology is conservative to reduce the risk of under reporting. For 2023, the energy sample included 86% of hotels reporting energy consumption globally. As IHG’s system size is constantly changing and as new data becomes available, each year we restate the previous year’s figures (2019, 2020, 2021 and 2022).
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For more information on our restatement method and historical GHG emissions and utility data, see pages 46 to 51 of our 2023 Responsible Business Report. |
To calculate our emissions, we use the GHG Protocol Corporate Accounting and Reporting Standard methodology. Energy (MWh) and fuel (Litres) use was converted to GHG emissions using the published conversion factors from sources including IEA, USEPA, AIB and BEIS, and reported to the nearest tonne in tCO2e across Scope 1, 2 and 3 emissions. The most recently published emissions factors were used for all regions and applied to each energy data point to give associated GHG emissions. Intensities were calculated from the data in the sample group and divided by the total occupied room nights in the sample group.
To ensure that our market-based emissions reporting is robust, IHG only reports on renewable electricity where we have received corresponding Renewable Energy Certificates (RECs) or energy contracts that state that the electricity being purchased is 100% renewable. This evidence is validated by our internal teams and third-party verification provider. We are working to improve this reporting and validation process to account for more of the renewable energy that is being procured by our hotels going forward.
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The full details of our methodology statements for GHG emissions and all utilities are detailed on pages 46 to 51 of our 2023 Responsible Business Report, where we report our carbon, energy (including renewables), water and waste data since 2019, as part of a performance tracking towards our Journey to Tomorrow commitments. |
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Our carbon, energy and water data has been verified by a third-party, the assurance statements can be found at ihgplc.com/ responsiblebusiness/reporting |
| Directors’ Report | IHG | Annual Report and Form 20-F 2023 | 239 |
Additional Information
Directors’ Report continued
Energy reduction initiatives
We have devised a strategy to drive forward our carbon reduction commitments while expanding our estate. To make progress against our decarbonisation target while continuing to grow our business, we are taking action across three main areas: decarbonising our existing hotels; sourcing renewable energy; and developing new-build hotels that operate at very low/zero carbon. Due to the different challenges and opportunities across our three regions, we have developed regional plans to take into consideration the significant geographical and operational variances. These regional plans are overseen by a new regional governance structure that incorporates oversight of resource and capital planning requirements. These regional plans have helped us to accelerate action in 2023 and further support hotels where we can.
In 2022, we updated our brand standards to integrate ECMs; these include high-efficiency, low-flow aerated shower heads and taps and LED lighting. In 2023, we integrated further ECMs into our existing estate across the Essentials & Suites (E&S) brands in the Americas. These measures included guest room occupancy sensing thermostats to ensure that heating/ cooling isn’t being used unnecessarily in unoccupied rooms, public area and back-of-house programmable thermostats (upon renovation) to ensure heating and cooling operation is efficient, and switching traditional electric resistance packaged terminal air-conditioners with more efficient packaged terminal heat pumps upon replacement. All ECMs integrated into hotel brand standards are carefully considered in consultation with the Hotel Owners Association and supported by our LTIP ESG metrics. We are now working on implementing additional brand standards tailored to each region and segment.
Every hotel is given access to the IHG Green Engage system, our comprehensive online environmental management platform, which helps hotel teams to measure, track and report their utility consumption and carbon footprint, as well as providing over 200 ‘Green Solutions’ with detailed guidance to support hotels in reducing their energy, water and waste impacts. To comply with the IHG Green Engage standard, hotels are required to report their monthly energy consumption and complete key energy-saving actions. Collaborating with our hotels, we actively promote energy efficiency throughout our estate, assigning customised annual and 2025 energy reduction targets to each hotel. To motivate hotels to reduce their energy consumption, these targets are integrated into hotel-level metrics and key performance indicators, aligning with the Executive Committee’s broader metrics, including Guest Satisfaction and Guest Love. We track their performance through the verifiable data required to enter into our IHG Green Engage system.
IHG continues to invest in utility data acquisition to improve data quality and assurance to enhance our reporting. This includes our collaboration with an energy specialist to offer all our hotels a centralised data feed solution to collect utility information, which is then sent directly into the Green Engage system. The collected data enables improved analytics for hotels to drive efficiencies in utility management and strengthen hotel RFP responses to corporate clients globally.
Being part of IHG means hotel owners receive a range of support to empower them with the knowledge and resources they need to progress against their energy reduction targets. In 2022, we launched the IHG HERO tool, which guides hotels on the most effective energy conservation measures for their specific building. The tool provides indicative capital costs, energy reductions and payback periods for a range of energy conservation measures based on the hotel’s facilities, climate and energy consumption. Since we launched the tool in 2022, over 560 hotels have used it to guide their capital spending. The tool is available across our EMEAA and Americas regions and is expected to launch in Greater China in 2024, following a successful pilot programme in 2023.
Our Energy & Carbon Reduction Training’ e-learning modules advise hotel colleagues on how to reduce costs, drive revenue and increase the asset value of their property by providing effective strategies to reduce their hotel’s energy consumption and carbon footprint. These modules also cover the global context, the commercial and competitive advantages of sustainability efforts, and what hotels need to do to meet their energy reduction targets. We also have a decarbonisation module for our corporate colleagues. In 2023, we led multiple training workshops for key business functions to engage them on how their role can support us to deliver our decarbonisation commitments.
We are supporting hotels to identify tax and other financial incentives available to them to help fund energy efficiency investments. Owners in our Americas region have access, free of charge, to reports on tax incentives and utility rebates available to their hotels. We have also partnered with an ‘energy efficiency as a service’ supplier that provides financing, installation, and maintenance of energy conservation measures and then shares the energy cost savings with the hotel.
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See pages 28 to 32 of our 2023 Responsible Business Report for further information on our work across carbon and energy. |
Listing Rules – compliance with LR 9.8.4C
The below table sets out only those sections of LR 9.8.4C which are relevant. The remaining sections of LR 9.8.4 are not applicable.
| Section | Applicable sub-paragraph within LR 9.8.4C | Location | ||||||
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| 1 | Interest capitalised | Group Financial Statements, note 7, page 181 | ||||||
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| 4 | Details of long-term incentive schemes | Directors’ Remuneration Report, pages 116 to 140 | ||||||
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| 240 | IHG | Annual Report and Form 20-F 2023 |
Going concern
An overview of the business activities of IHG, including a review of the key business risks that the Group faces, is given in the Strategic Report on pages 2 to 88 and in the Group information on pages 242 to 254.
As at 31 December 2023, the Group had total liquidity of $2,572m, comprising $1,350m of undrawn bank facilities and $1,222m of cash and cash equivalents (net of overdrafts and restricted cash).
There remains a wide range of possible planning scenarios over the going concern period. The scenarios considered and assessment made by the Directors in adopting the going concern basis for preparing these financial statements are included on page 161.
Based on the assessment completed, the Directors have a reasonable expectation that the Group has sufficient resources to continue operating until at least 30 June 2025, and there are no material uncertainties that may cast doubt on the Group’s going concern status. Accordingly, they continue to adopt the going concern basis in preparing the Financial Statements.
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Please see the viability statement on pages 50 and 51. |
By order of the Board,
Nicolette Henfrey
Company Secretary
InterContinental Hotels Group PLC
Registered in England and Wales, Company number 5134420
19 February 2024
| Directors’ Report | IHG | Annual Report and Form 20-F 2023 | 241 |
Additional Information
Group information
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 the holding company of the Group.
The Group, formerly known as Bass, and then 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 1988 Bass acquired Holiday Inn International and the remainder of the Holiday Inn brand in 1990. The InterContinental brand was acquired by Bass in 1998 and the Candlewood Suites brand was acquired by Six Continents in 2003.
On 15 April 2003, following shareholder and regulatory approval, Six Continents PLC separated into two new listed groups, InterContinental Hotels Group PLC, comprising the hotels and soft drinks businesses, and Mitchells & Butler plc, comprising the 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. The Group now continues as a stand-alone hotels business.
Recent acquisitions and divestitures
The Group made no acquisitions or disposals in 2023 or 2022. In 2021, the Group disposed of a portfolio of three EVEN Hotels in the Americas region resulting in a net cash inflow of $44m.
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Further information is included in note 11 to the Group Financial Statements on page 186. |
Capital expenditure
| • | Gross capital expenditurea in 2023 totalled $253 million compared with $161 million in 2022 and $100 million in 2021, see page 230. |
| • | At 31 December 2023, capital committed (being contracts placed for expenditure on property, plant and equipment and intangible assets not provided for in the Group Financial Statements) totalled $10 million, see page 212. |
| a | Definitions for Non-GAAP revenue and operating profit measures can be found on pages 84 to 88. Reconciliations of these measures to the most directly comparable line items within the Group Financial Statements can be found on pages 226 to 231. |
Risk factors
The Group is subject to a variety of inherent risks that may have an adverse impact on its business operations, financial condition, turnover, profits, brands and reputation. This 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 Group and some risks that the Group does not currently believe to be material could later turn out to be material.
During 2023, the Group continued to face risks relating to macro external factors, including the impact of continuing inflationary pressures and challenges to labour availability in key markets, ongoing conflict in Ukraine and, towards the end of the year, in the Middle East. These factors contributed to additional political, economic and financial market developments and uncertainties, including global supply chain disruptions, continuing cybersecurity threat levels, and increases to the cost of borrowing due to rising interest rates.
Following the outbreak of the war in Ukraine, the Group ceased all operations in Russia due to the ongoing and increasing challenges of operating there and consistent with evolving UK, US and EU sanction regimes. The Group continues to monitor the impact of the war in relation to our two hotels in Ukraine, both of which are open to the public.
The Group’s refreshed strategy will require balancing of short-term execution and long-term goals, along with resilience in an environment of uncertainties relating to, for example, its ability to deliver innovation at scale and speed; how it uses, stores, secures and transfers data; owner preferences for and ability to invest in its brands; global and local supply chain efficiency and resiliency; and legal and regulatory complexity and litigation trends.
Several other factors will continue to remain important to the Group’s outlook, including those relating to operational resilience, such as the safety and security of hotel operations; guest preferences for branded hotel experiences and loyalty in a competitive industry where expectations continue to evolve; and its ability to attract and retain talent and capability where key aspects of the Group’s growth ambitions and operations are dependent on access to experience and knowledge.
The Group also faces emerging risks where the impact and likelihood are not yet fully understood or factors that may become significant in the medium- to long-term. This includes uncertainty linked to the rapidly evolving wider macroeconomic and geopolitical factors, including government policy and how this might impact travel patterns and business relationships, central bank policy and how this might impact development and financing costs of owners, rapid development of generative artificial intelligence technology, and the physical risks of climate change on the Group’s activities.
To enable focus on the material risk factors facing the Group, the detail below has been organised under headings corresponding to the ordering of the principal risks outlined earlier in this document.
|
|
The principal risks are on pages 45 to 49, the cautionary statements regarding forward-looking statements are on page 263 and financial and forward-looking information in note 8 on pages 181 to 185, and note 24 on pages 199 to 203. |
| 242 | IHG | Annual Report and Form 20-F 2023 |
1. Guest preferences for branded hotel experiences and loyalty
The Group is subject to a competitive and changing industry
The Group competes against other global hotel chains, local hotel companies and independent hotels to win the loyalty of guests, employees and owners. The competitive landscape also includes other types of businesses, both global and specific to certain markets, such as web-based booking channels (which include online travel agents and intermediaries), and alternative sources of accommodation, such as short-term lets of private property. Failure to compete effectively in traditional and emerging areas of the business could impact the Group’s market share, system size, profitability and relationships with owners and guests. The hospitality industry has previously experienced consolidation, and further such activity may result in such competitors having access to increased resources, capabilities or capacity and provide advantages from scale of revenues, marketing funds and/or cost structures.
The Group is reliant on the reputation of its existing brands and is exposed to inherent reputation risks
Any event that materially damages the reputation of one or more of the Group’s brands and/or fails to sustain the appeal of the Group’s brands to its customers and owners may have an adverse impact on the value of that brand and subsequent revenues from that brand or business. In particular, if the Group is unable to create consistent, valued and quality products and guest experiences across the franchised, managed, owned, leased and managed lease hotels or if the Group, its franchisees or business partners fail to act responsibly, this could result in an adverse impact on its brand reputation. In addition, the value of the Group’s brands could be influenced by a number of external factors outside the Group’s control, such as, but not limited to, changes in sentiments against global brands, changes in applicable regulations related to the hotel industry or to franchising, successful commoditisation of hotel brands by online travel agents and intermediaries, or changes in owners’ perceptions of the value of the Group.
The Group is exposed to inherent uncertainties associated with brand development and expansion
The Group has launched eight brands in six years and also maintains co-branded credit card relationships to support the IHG Rewards programme. Since the rollout, integration and growth of these brands (including associated loyalty programmes) is dependent on market conditions, guest preference and owner investment, as well as continued cooperation with third parties, there are inherent risks that we will be unable to recover costs incurred in developing or acquiring the brands or any new programmes or products, or those brands, programmes, or products will not succeed as we intend. The Group’s ongoing agenda to deliver industry-leading net rooms growth creates risks relating to the transition of systems, new or changed operating models, services and processes, and may result in failures to improve commercial performance, leading to financial loss and undermining stakeholder confidence.
2. Owner preferences for or ability to invest in our brands
The Group is exposed to a variety of risks related to identifying, securing and retaining franchise and management agreements
The Group’s growth strategy depends on its success in identifying, securing and retaining franchise and management agreements. This is an inherent risk for the hotel industry and the franchising business and management model. Competition with other hotel companies may generally reduce the number of suitable franchise, management and investment opportunities offered to the Group and increase the bargaining position of property owners seeking to become a franchisee or engage a manager. The terms of new franchise or management agreements may not be as favourable as current arrangements; the Group may not be able to renew existing arrangements on similarly favourable terms, or at all.
There can be no assurance that the Group will be able to identify, retain or add franchisees to the IHG System, to secure management contracts or open hotels in our development pipeline. For example, the availability of suitable sites, market saturation, planning and other local regulations or the availability and affordability of finance, which has remained a challenge in 2023, may restrict the supply of suitable hotel development opportunities under franchise or management agreements and mean that not every hotel in our development pipeline may develop into a new hotel that enters our system. In connection with entering into franchise or management agreements, the Group may be required to make investments in, or guarantee the obligations of, third parties or guarantee minimum income to third parties. There are also risks that significant franchisees or groups of franchisees may have interests that conflict, or are not aligned, with those of the Group, including, for example, the unwillingness of franchisees to support individual or masterbrand or system improvement initiatives. This could result in franchisees prematurely terminating contracts, which could lead to disputes, litigation, damages and other expenses and would adversely impact the overall IHG System size and the Group’s financial performance.
The Group is exposed to the risks of hotel industry overcapacity
The future operating results of the Group could be adversely affected by industry overcapacity (by number of rooms) and weak demand due, for example, to customer confidence in business and leisure travel, whether related to pandemics, war, or otherwise, the cyclical nature of the hotel industry, other differences between planning assumptions and actual operating conditions, cost-of-living pressures and changes in stakeholder expectations around environmental factors. These conditions could result in reductions in room rates and occupancy levels, which would adversely impact the financial performance of the Group.
3. Our ability to attract and retain talent and capability
The Group requires the right people, skills and capability to manage growth and change
In order to remain competitive, the Group relies upon hiring and retaining highly skilled employees with particular expertise or leadership capability. The Group’s strategic business plans could be undermined by a failure to build and sustain a resilient corporate culture, failure to recruit or retain key personnel, unexpected loss of key senior employees, inadequate succession planning and incentive plans, or failure to invest in the development of key skills.
The Group must compete against other companies inside and outside the hospitality industry for suitably qualified or experienced employees, up to and including Executive Directors. Some of the markets in which the Group operates may experience economic growth and/or low levels of unemployment, pay compression, and there may be attractive roles and competitive rewards available elsewhere which limit the ability to attract and retain talent.
Labour shortages could restrict our ability and the ability of franchisees to operate hotel properties or grow our business or could result in increased costs that could adversely affect results of operations. The Covid-19 pandemic negatively affected the labour market for employers. Staffing shortages in various parts of the world could hinder our ability to grow and expand our business. Some emerging markets may not have the required local expertise to operate a hotel, particularly for luxury and lifestyle brands, and may not be able to attract the right talent.
If we or our franchisees are unable to attract, retain, train, manage and engage skilled individuals, the ability to staff and operate the hotels that we manage, own or franchise could be diminished. This could reduce customer satisfaction and adversely affect the reputation of our brands. Labour costs may also increase, threatening the ability to operate hotels and our corporate support functions, achieve business growth targets or impact the profitability of our operations. Additionally, unless the Group maintains a sufficient infrastructure to enable knowledge and skills to be passed on, the Group risks losing accumulated knowledge if key employees leave.
| Group information | IHG | Annual Report and Form 20-F 2023 | 243 |
Additional Information
Group information continued
Risk factors continued
Collective bargaining activity could disrupt operations, increase our labour costs or interfere with the ability of our management to focus on executing our business strategies.
A significant number of the Group’s colleagues at its managed, owned, leased and managed lease hotels in the US, Canada, Mexico, Grand Cayman and Netherlands Antilles are covered by collective bargaining agreements and similar agreements. If relationships with those colleagues or the unions that represent them deteriorate, the properties we own, lease or manage could experience labour disruptions such as strikes, lockouts, boycotts and public demonstrations. In 2024, bargaining agreements in major cities will be expiring within several months of each other. There will be labour activity in many of our major markets, including Washington DC, San Diego, Boston and San Francisco. Hotel sector union member participation continues to increase in key markets within the Americas region, which may require IHG to enter into new labour agreements as more employees become unionised in the future. Labour disputes, which are generally more likely when collective bargaining agreements are being renegotiated, could harm our relationship with our colleagues, result in increased regulatory inquiries and enforcement by governmental authorities and deter guests. Further, adverse publicity related to a labour dispute could harm our reputation and reduce customer demand for our services.
Labour regulation and the negotiation of new or existing collective bargaining agreements could lead to higher wage and benefit costs, changes in work rules that raise operating expenses, legal costs and limitations on our ability or the ability of our third-party property owners to take cost-saving measures during economic downturns. We do not have the ability to control the negotiations of collective bargaining agreements covering unionised labour employed by our third-party property owners and franchisees. Increased unionisation of our workforce, new labour legislation or changes in regulations could disrupt our operations, reduce our profitability or interfere with the ability of our management to focus on executing our business strategies.
4. Data and information usage, storage, security and transfer
The Group is exposed to cybersecurity and data privacy risks
The Group is increasingly dependent upon the collection, usage, retention, availability, integrity and confidentiality of information, including, but not limited to: guest, employee and owner credit card, financial and personal data, business performance, financial reporting and commercial development. The information is sometimes held in different formats, such as digital, paper, voice recordings and video, and could be stored in many places, including cloud-based storage and facilities managed by third-party service providers, in our managed hotels, and by our independently owned and operated hotels, that are all subject to the same or similar risks.
Cyber breaches are increasingly becoming an unfortunate reality for most companies and risks relating to cybersecurity appear to be heightened in light of geopolitical conflicts. The threats towards the hospitality industry and the Group’s information are dynamic, and include cyber-attacks, fraudulent use, loss or misuse by employees and breaches of our vendors’ security arrangements, among others.
For example, in 2022, parts of the Group’s technology systems were subject to unauthorised activity, causing disruption to the Group’s booking channels and other applications. A putative class action suit has been filed by a small group of hotel owners related to the incident. This cybersecurity breach follows additional previous cybersecurity incidents of a different nature in 2016.
The legal and regulatory environment around data privacy and requirements set out by the payment card industry surrounding information security across the many jurisdictions in which the Group operates are constantly evolving (such as the EU GDPR, China cybersecurity law, and US State privacy laws). If the Group fails to protect information and ensure relevant controls are in place to enable the acceptable use and release of information through the
appropriate channels in a timely and accurate manner, IHG System performance, guest experience and the reputation of the Group may be adversely affected. This could lead to revenue losses, fines, penalties, litigation and other additional costs.
We are required to comply with marketing and advertising laws relating to our direct marketing practices, including email marketing, online advertising, including in our use of generative artificial intelligence, and postal mailings. Further restrictions to the content or interpretations of these laws could adversely impact our current and planned activities and the effectiveness or viability of our marketing strategies to maintain, extend and acquire relationships with customers, and impact the amount and timing of our sales of certain products.
|
|
For information of incidents and ongoing legal proceedings relating to cybersecurity, data privacy and trade practices, see pages 212 and 254. |
The Group is exposed to intellectual property risks
Given the importance of brand recognition to the Group’s business, the protection of its intellectual property poses a risk due to the variability and changes in controls, laws and effectiveness of enforcement globally, particularly in jurisdictions that may not have developed levels of protection for corporate assets, such as intellectual property, trade secret, know-how and customer information and records. Any widespread infringement, misappropriation or weakening of the control environment could materially harm the value of the Group’s brands and its ability to develop the business and compete currently or in the future. Third-party claims that we infringe their intellectual property could lead to disputes, litigation, damages and other expenses.
5. Ethical and social expectations
The Group’s reputation and the value of its brands are influenced by the perception of various stakeholders of the Group
The reputation of the Group and the value of its brands are influenced by a wide variety of factors, including the perception of stakeholder groups, such as guests, owners, suppliers and communities in which the Group operates. The social and environmental impacts of its business are under increasing scrutiny, and the Group is exposed to the risk of damage to its reputation if it fails to (or fails to influence its business partners to) undertake responsible practices and engage in ethical behaviour, or fails to comply with relevant regulatory requirements.
6. Legal and regulatory complexity or litigation trends
The Group is required to comply with existing and changing regulations and act in accordance with societal expectations across numerous countries, territories and jurisdictions
Government regulations affect countless aspects of the Group’s business, including corporate governance, health and safety, the environment, social responsibility, bribery and corruption, employment law and diversity, franchise laws and regulation, disability access, data privacy and information protection, financial, accounting and tax. Regulatory changes may require significant changes in the way the business operates and may inhibit the Group’s strategy, including the markets the Group operates in, brand protection, and use or transmittal of personal data and use of artificial intelligence. If the Group fails to comply with existing or changing regulations, the Group may be subject to fines, prosecution, loss of licence to operate or reputational damage.
Companies that operate franchise systems may be subject to liabilities and claims relating to the franchisor/franchisee relationship, such as for allegedly being a ‘joint employer’ with a franchisee. Changes in laws or regulations relating to this relationship could result in a determination that we are a joint employer with our franchisees or that our franchisees are part of one unified system subject to joint and several liability. Such a determination could subject us to liability for employment-related and other liabilities of our franchisees and could cause us to incur other costs that have a material adverse effect on our results of operations and profit.
| 244 | IHG | Annual Report and Form 20-F 2023 |
The Group is exposed to the risk of litigation
Certain companies in the Group are the subject of various claims and proceedings. The ultimate outcome of these matters is subject to many uncertainties, including future events and uncertainties inherent in litigation. In addition, the Group could be at risk of litigation claims made by many parties, including but not limited to: guests, customers, joint venture partners, suppliers, employees, regulatory authorities, franchisees and/or the owners of the hotels it manages. Claims filed may include requests for punitive damages as well as compensatory damages. Unfavourable outcomes of claims or proceedings could have a material adverse impact on the Group’s results of operations, cash flow and/or financial position. Exposure to significant litigation or fines may also affect the reputation of the Group and its brands. (See also legal proceedings on page 254.)
Domestic and international environmental laws and regulations may cause us to incur substantial costs or subject us to potential liabilities
The Group is exposed to certain compliance costs and potential liabilities under various foreign and US federal, state and local environmental, health and safety laws and regulations. These laws and regulations govern actions and reporting requirements relating to matters including air emissions, the use, storage and disposal of hazardous and toxic substances, and wastewater disposal. The Group’s failure to comply with such laws, including any required permits or licences, could result in substantial fines or possible revocation of our authority to conduct some of our operations. We could also be liable under such laws for the costs of investigation, removal or remediation of hazardous or toxic substances at our currently or formerly franchised, managed, owned, leased or managed lease hotels or at third-party locations in connection with our waste disposal operations, regardless of whether or not we knew of, or caused, the presence or release of such substances. The Group may also be required to remediate such substances or remove, abate or manage asbestos, mould, radon gas, lead or other hazardous conditions at our properties. The presence or release of such toxic or hazardous substances could result in third-party claims for personal injury, property or natural resource damages, business interruption or other losses. Such claims and the need to investigate, remediate or otherwise address hazardous, toxic or unsafe conditions could adversely affect the Group’s operations, the value of any affected property, or our ability to sell, lease or assign our rights in any such property, or could otherwise harm our business or reputation. Environmental, health and safety requirements are increasingly stringent, and our costs may increase as a result.
The Group’s financial performance may be affected by changes in tax laws
Many factors will affect the Group’s future tax rate, the key ones being legislative developments, future profitability of underlying subsidiaries and tax uncertainties. Tax liabilities or refunds may also differ from those anticipated, in particular as a result of changes in tax law, changes in the interpretation of tax law, or clarification of uncertainties in the application of tax law. The Group continues to monitor significant tax reform proposals, most notably the development of the OECD’s ‘Pillar Two’ minimum tax regime; further information is included in note 8 to the Group Financial Statements on page 181.
7. Global and local supply chain efficiency and resilience
The Group is dependent upon a wide range of external stakeholders and business partners
The Group relies on the performance, behaviours and reputation of a wide range of business partners and external stakeholders, including, but not limited to, owners, contractors, lenders, suppliers, outsourced providers, vendors, joint-venture partners, online travel agents, third-party intermediaries and other business partners which may have different ethical values, interests and priorities. Further, the number and complexity of interdependencies with
stakeholders is evolving. Breakdowns in relationships, contractual disputes, deterioration of the financial health of our partners, poor vendor performance, sub-standard control procedures, business continuity arrangements, insolvency, stakeholder behaviours or adverse reputations, which may be outside of the Group’s control, could adversely impact on the Group’s performance and competitiveness, delivery of projects, guest experiences or the reputation of the Group or its brands.
8. Operational resilience to incidents or disruption or control breakdown (including geopolitical, safety and security, cybersecurity, fraud and health-related)
The Group is exposed to a variety of risks associated with safety, security and crisis management
There is a constant need to protect the safety and security of our guests, employees and assets against natural and man-made threats. These include, but are not limited to, exceptional events, such as extreme weather, civil or political unrest, violence and terrorism, serious and organised crime, fraud, employee dishonesty, cyber crime, pandemics or contagious diseases, fire and day-to-day accidents, incidents and petty crime, which impact the guest or employee experience, could cause loss of life, sickness or injury and result in compensation claims, fines from regulatory bodies, litigation and impact reputation. Serious incidents or a combination of events could escalate into a crisis that, if managed poorly, could further expose the Group and its brands to significant reputational damage.
The Group is reliant upon the resilience of its reservation system and other key technology platforms and is exposed to risks that could disrupt their operation and/or integrity
The value of the Group is partly derived from the ability to drive reservations through its reservation system and technology platforms which are highly integrated with other processes and systems and linked to multiple sales channels, including the Group’s own websites, in-house and third-party managed call centres, hotels, third-party intermediaries and travel agents.
The scope and complexity of our technology infrastructure, including increasing reliance on third-party suppliers to support and protect our systems and information, as well as the rapidly evolving cyber threats, means that we are inherently vulnerable to physical damage, failures, disruptions, denial of service, phishing or other malware attacks, ransomware, cyber terrorism and fraud, as well as human error, negligence and wilful misuse. These risks may be heightened when these capabilities are provided offshore or in cloud-based environments. Our franchisees and suppliers are also inherently vulnerable to the same risks.
Lack of resilience and operational availability of these systems provided by the Group or third-party technology providers and inability or difficulty in updating existing or implementing new functionality could lead to prolonged service disruption. This might result in significant business interruption, impact the guest booking experience, lead to loss of or theft of data, and subsequently adversely impact Group revenues, incur financial costs to remediate or investigate, lead to regulatory and/or contractual enforcement actions or lawsuits, or damage the Group’s reputation and relationships with hotel owners.
The Group is exposed to political and economic developments
The Group is exposed to political, economic and financial market developments, such as recession, inflation and availability and/or cost of credit (due to rising interest rates) and currency fluctuations that could lower revenues and reduce income. The outlook for 2024 may worsen due to continued unrest and conflict in Ukraine, the Middle East, parts of Africa and Asia and other geopolitical tensions; potential disruptions in the US economy; uncertain central bank policies; the impact of fluctuating commodity prices (including oil) on economies dependent on such exports; and barriers to global trade, including unforeseeable changes in regulations, imposition of tariffs or embargoes and other trade restrictions or controls.
| Group information | IHG | Annual Report and Form 20-F 2023 | 245 |
Additional Information
Group information continued
Risk factors continued
The interconnected nature of economies suggests any of these events, or other events, could trigger a recession that reduces leisure and business travel as demand for our services is closely associated with the performance of the general economy and is sensitive to business and personal discretionary spending levels. Decreased global or regional demand for hospitality products and services can be especially pronounced during economic downturns or low levels of economic growth, and the hospitality industry may fail to keep pace with overall economic improvement. Such declines in demand for our products and services could adversely affect room rates and/ or occupancy levels and other income-generating activities.
Specifically, the Group is most exposed to the impact of political and economic risk factors in relation to the US market, including elections in 2024, and to Greater China. The owners or potential owners of hotels franchised or managed by the Group face similar risks that could adversely impact their solvency and the Group’s ability to secure and retain franchise or management agreements. Accordingly, the Group is particularly susceptible to adverse changes in these economies, as well as changes in their currencies. In addition to trading conditions, the economic outlook also affects the financial health of current and potential owners and their ability to access capital, which could impact existing operations, timely payment of IHG fees and the health of the pipeline.
The Group is exposed to continued disruption and consequences from the war in Ukraine
The Group continues to monitor the impact of the war in relation to our two hotels in Ukraine, both of which are open to the public. The Group has ceased all operations in Russia. Although these operations were not material to consolidated financial results, the Group continues to face uncertainty relating to the broader consequences of this conflict on global macroeconomic conditions. These uncertainties include the potential for governments to impose additional sanctions or other economic or military measures. Further expansion or escalation of military confrontations or related geopolitical tensions, including increased restrictions on global trade, could also result in, among other things, depressed or restricted travel demand, declines in consumer confidence and economic growth, an increased likelihood of cyber attacks or information technology disruption, supply chain disruptions, increases in inflation rates, changes to foreign currency exchange rates, constraints, volatility or disruption in financial markets, the decreased availability of raw materials, supplies, freight and labour, and uncertainty about economic and global stability.
The Group is also exposed to disruption and consequences from the conflict in the Middle East
The Group continues to face some disruption relating to the broader consequences of the Middle East conflict on neighbouring countries and on wider global macroeconomic uncertainty, including supply chain disruption through the region. Further expansion or escalation of military confrontations or related geopolitical tensions could also result in similar factors to those listed above relating to the war in Ukraine.
The Group may face difficulties insuring its business
Historically, the Group has maintained insurance at levels determined to be appropriate in light of the cost of cover and the risk profile of the business. However, the Group’s claims experience and wider external market forces may limit the scope of coverage the Group can obtain and the Group’s ability to obtain coverage at reasonable rates. Other forces beyond the Group’s control, such as terrorist attacks or natural disasters, may be uninsurable or simply too expensive to insure. Inadequate or insufficient insurance carried by the Group, our owners or other partners for damage, other potential losses or liabilities to third parties involving properties that we own, manage or franchise could expose the Group to large claims or could result in the loss of capital invested in properties.
The Group is exposed to risks related to executing and realising benefits from strategic transactions, including acquisitions and restructuring
The Group may seek to make strategic transactions, including acquisitions, divestments or investments in the future. The Group may not be able to identify opportunities or complete transactions on commercially reasonable terms, or at all, and may not realise the anticipated benefits from such transactions. Strategic transactions come with inherent valuation, financial and commercial risks, and regulatory and insider information risks during the execution of the transactions. The Group may also continue to make organisational adjustments to support delivery of our growth ambitions, including the integration of acquisitions into the Group’s operating processes and systems. This creates inherent risks of complexity and that any changes made could be unsustainable or that we are unable to achieve the return envisaged through reinvestment. In addition, the Group may face unforeseen costs and liabilities, diversion of management attention, as well as longer-term integration and operational risks, which could result in a failure to realise benefits, financial losses, lower employee morale and loss of talent.
The Group is exposed to a variety of risks associated with its financial stability and ability to borrow and satisfy debt covenants
While the strategy of the Group is to grow through activities that do not involve significant amounts of its own capital, the Group does require capital to fund some development opportunities, technological innovations and strategic acquisitions; and to maintain and improve owned, leased and managed lease hotels. The Group is reliant upon having financial strength and access to capital markets and other borrowing facilities to meet these expected capital requirements. The Group’s $1,350m revolving credit facility (RCF) is only available if the financial covenants in the facility are complied with. Non-compliance with covenants could result in the Group’s lenders demanding repayment of the funds advanced and any undrawn facilities could be unavailable. In addition, if the RCF was drawn and repayment was demanded, it would trigger a repayment of the bond debt. If the Group’s financial performance does not meet market expectations, it may not be able to refinance existing bond and bank facilities on terms considered favourable.
The Group currently has a senior unsecured long-term credit rating of BBB from S&P and, since 2023, a Baa2 rating from Moody’s. In the event of either rating being downgraded below BBB- and Baa3 respectively (a downgrade of two levels) there would be an additional step-up coupon of 1.25% payable on the public bonds which are subject to those ratings.
The Group’s operations are dependent on maintaining sufficient liquidity to meet all foreseeable medium-term requirements and provide headroom against unforeseen obligations
Cash and cash equivalents are held in short-term deposits, money market funds and repurchase agreements with short maturities. Most of the Group’s funds are held in the UK or US, although $30 million (2022: $24 million) is held in countries where repatriation is restricted as a result of foreign exchange regulations. Medium and long-term borrowing requirements are met through the bonds and RCF. Short-term borrowing requirements may be met from drawings under uncommitted overdrafts and RCF.
The Group is exposed to an impairment of the carrying value of our brands, goodwill or other tangible and intangible assets negatively affecting our consolidated operating results
Significant amounts of goodwill, intangible assets, right-of-use assets, property, plant and equipment, investments and contract assets are recognised on the Group balance sheet. We review the value of our goodwill and indefinite-lived intangible assets for impairment annually (or whenever events or circumstances indicate impairment may have occurred). Changes to estimated values can result from political, economic and financial market developments or other shifts in the business climate, the competitive environment, the perceived reputation of our brands (by guests or owners),
| 246 | IHG | Annual Report and Form 20-F 2023 |
or changes in interest rates, operating cash flows, market capitalisation, or developments in the legal or regulatory environment. Because of the significance of our goodwill and other non-current assets, we have incurred and may incur future impairment charges on these assets which could have a material adverse effect on our financial results. Due to significant challenges and uncertainty in the data associated with both risks and opportunities, the Group is not yet able to fully quantify the potential financial impacts of climate change. The Group continues to refine its workplan to enable quantification in the future and is focused on ensuring the identified risks and opportunities are integrated into our business strategy.
The Group is exposed to fluctuations in exchange rates, currency devaluations or restructurings and to interest rate risk in relation to its borrowings
The US dollar is the predominant currency of the Group’s revenue and cash flows. Movements in foreign exchange rates can affect the Group’s reported profit, net liabilities and interest cover. The most significant exposures of the Group are in currencies that are freely convertible. The Group’s reported debt has an exposure to borrowings held in pounds sterling (including €1,000 million euro bonds which have been swapped into sterling using currency swaps). Conducting business in currencies other than US dollars exposes us to fluctuations in exchange rates, currency devaluations, or restructurings. This could potentially lower our reported revenues, increase our costs, reduce our profits or disrupt our operations. Exposure to these factors is linked to the pace of our growth in territories outside the US and, if the proportion of our revenues grows, this may increase the potential sensitivity to currency movements having an adverse impact on our results. The Group is also exposed to interest rate risk in relation to its fixed and floating rate borrowings and interest rates may be higher on new or replacement borrowings compared to existing interest rates. All of the current bond debt ($3,122m) is at fixed rates. The Group may use interest rate swaps to manage the interest rate exposure.
The Group could be affected by credit risk on treasury transactions
The Group uses long-term credit ratings from S&P, Moody’s and Fitch Ratings as a basis for setting its counterparty limits. In order to manage the Group’s credit risk exposure, the treasury function sets counterparty exposure limits using metrics including credit ratings, the relative placing of credit default swap pricings, tier 1 capital and share price volatility of the relevant counterparty. The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In respect of credit risk arising from financial assets, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.
9. Our ability to deliver technological or digital performance or innovation (at scale, speed, etc.)
The Group is exposed to inherent risks in relation to changing technology and systems
As the use of the internet, artificial intelligence, mobile and data technology grows, and new and disruptive technology solutions are developed, customer needs and expectations evolve at pace. The Group may find that its evolving technology capability is not sufficient and may have to make substantial additional investments in new technologies or systems to remain competitive. Failure to keep pace with developments in technologies or systems, and also with regulatory, risk and ethical considerations of how these developments are used, for example in relation to cross-border transfers of data, may put the Group at a competitive disadvantage. Generative artificial intelligence is an emerging technology that the Group expects will create uncertainty for the travel and hospitality sector and society in general. The primary impacts are considered to be in relation to how guests will find and interact with hotels, how colleagues will work and talent and capability attraction or retention (among others).
In addition, the technologies or systems that the Group chooses to . deploy may not be commercially successful or the technology or system strategy may not be sufficiently aligned with the needs of the business. Any such failure could adversely affect guest experiences, and the Group may lose customers, fail to attract new customers, impact our appeal to owners, incur substantial costs or face other losses. This could further impact the Group’s reputation in regards to innovation.
(See also ‘4. Data and information usage, storage, security and transfer’.)
The Group is exposed to competition from online travel agents and intermediaries
A proportion of the Group’s bookings originate from large multinational, regional and local online travel agents and intermediaries with which the Group has contractual arrangements and to which it pays commissions. These platforms offer a wide range of products, often across multiple brands, have growing booking and review capabilities, and may create the perception that they offer the lowest prices. Some of these online travel agents and intermediaries have strong marketing budgets and aim to create brand awareness and brand loyalty among consumers, which may impact the Group’s profitability, undermine the Group’s own booking channels and value to its hotel owners.
10. The impact of climate change on hospitality
(physical and transition risks for IHG)
The Group is exposed to the risk of events or stakeholder expectations that adversely impact domestic or international travel, including climate change
The room rates and occupancy levels of the Group could be adversely impacted by events that reduce domestic or international travel, such as actual or threatened acts of terrorism or war, political or civil unrest, epidemics and pandemics or threats thereof, travel-related accidents or industrial action, natural or man-made disasters, or other local factors impacting specific countries, cities or individual hotels, as well as increased transportation and fuel costs. Additionally, the Group may be impacted by increasing stakeholder and societal expectations and attitudes in relation to factors contributing to climate change including overtravel and overtourism, and those linked directly to hotels including waste, water, energy, or impact on local communities. A decrease in the demand for business and/or leisure hotel rooms as a result of such events or attitudinal and demand shifts may have an adverse impact on the Group’s operations or growth prospects and financial results. In addition, inadequate planning, preparation, response or recovery in relation to a major incident or crisis may cause loss of life, prevent operational continuity, or result in financial loss, and consequently impact the value of our brands and/or the reputation of the Group.
The Group is exposed to risks relating to our commitments in relation to Climate Change
In line with our commitment to reduce our energy use and carbon emissions in line with climate science, the Group has implemented a 2030 science-based target to reduce absolute scope 1, 2, and scope 3 greenhouse gas emissions from fuel and energy-related activities and franchises by 46.2% by 2030 from a 2019 base year. This ambition is challenging to implement and will require significant transformation across IHG, hotel owners and supply chain partners, including investment in physical assets and operational procedures. It is also dependent on government financial incentives, the decarbonisation of electricity grids and hotel owners having access to scalable, cost-effective renewable energy, as well as new operational behaviours and mindset shifts, including from guests, to adapt to low-energy products and services. If these changes, many of which are outside of IHG’s control, do not occur, the Group may have difficulty achieving its public commitments, which may impact the reputation of the Group.
| Group information | IHG | Annual Report and Form 20-F 2023 | 247 |
Additional Information
Group information continued
Cybersecurity
Cybersecurity governance
IHG’s board of directors is ultimately accountable for establishing a framework of prudent and effective controls, which enable risk to be assessed and managed. Management, including the Chief Information Security Officer (CISO) and our cybersecurity team, regularly update the Board on the company’s cybersecurity programmes, material risks and mitigation strategies and provide status and risk reports at least annually. The audit committee reviews the appropriateness of IHG’s risk management system to address risks and has allocated particular attention to cybersecurity and governance in the context of previous criminal, unauthorised access to the Group’s technology systems.
Management is responsible for identifying, considering and assessing material cybersecurity risks on an ongoing basis, establishing processes to ensure that such potential exposures are monitored, putting in place appropriate mitigation measures and maintaining cybersecurity programmes. This is guided by periodic external third-party assessment of IHG’s cyber risks and the maturity of the cybersecurity programme. The cyber incident response framework uses defined playbooks, coordinating with external incident response groups and aligning with wider IHG crisis management and escalation protocols, including triggers for reporting to senior management, board of directors and external parties where required.
IHG’s CISO has overall responsibility for the Information Security strategy and the development and management of the associated programme. The CISO was hired by IHG in 2018 from Invesco, a global investment management company, where he built and ran the cybersecurity programme as CISO for more than 10 years. The CISO is supported by a dedicated, certified and experienced in-house team, complemented by outsourced groups for performing either highly repetitive or operational tasks or for very specialised skillsets such as penetration testing or cyber forensics. The CISO receives reports from the team to enable the monitoring of the prevention, detection, mitigation, and remediation of cybersecurity incidents.
IHG employs several independent or third-party mechanisms to provide a level of assurance that the different information security capabilities are operating effectively and assessment of risk is also informed by observations arising from a variety of independent auditing either from IHG’s Internal Audit function or as part of regulatory compliance work performed including Sarbanes-Oxley, HIPAA, SWIFT, SOC-1 and MLPS (China). As noted above, periodic external assessments are also conducted of the maturity of the cybersecurity programme, which are also reported to the board of directors.
Cybersecurity risk management
Cybersecurity is an integral part of IHG’s overall risk management and internal control system. Our information security risk management programme follows the National Institute of Standards and Technology Cyber Security Framework and supports the identification of the systems, data, and other information assets that are considered most sensitive from a confidentiality perspective, or most critical from an availability perspective. These include guest data, credit card data, pre-public financial information, and revenue generating applications.
Standards, policies and procedures are in place to manage how personal data can be used and protected across IHG, including a requirement for participation by all employees in annual e-learning training on handling information responsibly.
The Information Security programme incorporates:
| • | Engagement with leaders from other IHG business functions, including to identify and assess cybersecurity threats, and to act as point of contact for escalation of issues and incidents. |
| • | User awareness and colleague engagement, including communications to corporate and hotel teams on changing threats and phishing simulation exercises to raise risk awareness. |
| • | Maintenance of information risk management processes including a risk register and standard contract language. |
| • | Risk assessment of third parties based on access to IHG systems, data, and operational reliance using a combination of manual procedures, for example, completion of security questionnaires, and independent cyber risk scoring. Critical rated third parties are reviewed annually. |
| • | Security compliance to coordinate required tracking of compliance for applicable regulations and standards, including remediation of any regulatory and audit findings. |
| • | Security engineering and architecture to define, implement and maintain standards for the secure use of core technology platforms and solutions, including new technology solutions and potential business partners and acquisitions. |
| • | Assessment of the security of individual business applications and platforms, including good security hygiene within coding. |
| • | Vulnerability management for all technical components of infrastructure and core application platforms. |
| • | Identity and access management for global platforms and solutions, including privileged access management, and loyalty account members. |
| • | Cyber threat intelligence relationships with worldwide law enforcement and intelligence sharing organisations, profiling likely threat actors and methods, and providing insight on threat levels. |
| • | Security operations monitoring, triaging alerts to facilitate response and action within agreed service level agreements. |
| • | Cyber incident response using agreed and practised playbooks for security events, coordinating with external incident response groups and wider IHG crisis protocols, and deploying tabletop exercises to simulate scenarios and identify potential gaps in response. |
| • | Center of Excellence project management, continuous process improvement, tracking of key performance metrics, change management, and communications to internal, executive and external stakeholder groups. |
In 2023 we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident. As we explained in our 6 and 29 September 2022 Stock Exchange Announcements, parts of our technology systems were subject to unauthorised activity, causing disruption to our booking channels and other applications. In line with our crisis management framework, teams across IHG came together to evaluate and address the incident, supported by external specialists. No evidence of unauthorised access to systems storing guest data was identified. The Board was engaged throughout the incident response.
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For more information about our risks, please refer to pages 42 to 49 and pages 242 to 247. |
| 248 | IHG | Annual Report and Form 20-F 2023 |
Directors’ and Executive Committee
members’ shareholdings
As at 16 February 2024: (i) Executive Directors had a number of beneficial interests in shares (including Directors’ share awards under IHG’s share plans) set out in the table below; (ii) Non-Executive Directors had the number of beneficial interests in shares set out in the table on page 136; and (iii) Executive Committee members had the number of beneficial interests in shares (including members’ share awards under IHG’s share plans) set out in the table below. These shareholdings indicate all Directors’ or Executive Committee members’ beneficial interests and those held by their spouses and other connected persons. As at 16 February 2024, no Director or Executive Committee member held more than 1.0% of the total issued share capital. None of the Directors have a beneficial interest in the shares of any subsidiary.
| Executive Committee |
Number of shares held outright | APP deferred share awards | LTIP/DAP share awards (unvested) | Total number of shares held | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 16 Feb 2024 |
31 Dec 2023 |
31 Dec 2022 |
16 Feb 2024 |
31 Dec 2023 |
31 Dec 2022 |
16 Feb 2024 |
31 Dec 2023 |
31 Dec 2022 |
16 Feb 2024 |
31 Dec 2023 |
31 Dec 2022 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Elie Maalouf | 99,265 | 99,265 | 83,340 | 24,833 | 24,833 | 21,308 | 157,908 | 157,908 | 111,089 | 282,006 | 282,006 | 215,737 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Michael Glover | 13,307 | 13,307 | – | 3,247 | 3,247 | – | 47,152 | 47,152 | – | 63,706 | 63,706 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Heather Balsley | – | – | – | 3,174 | 3,174 | – | 34,544 | 34,544 | – | 37,718 | 37,718 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jolyon Bulley | 52,164 | 52,164 | 52,164 | 17,034 | 17,034 | 14,228 | 62,472 | 62,472 | 57,380 | 131,670 | 131,670 | 123,772 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Yasmin Diamond | 5,043 | 5,043 | 2,902 | 11,151 | 11,151 | 9,877 | 36,929 | 36,929 | 39,070 | 53,123 | 53,123 | 51,849 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nicolette Henfrey | 11,351 | 11,351 | 4,815 | 12,545 | 12,545 | 8,981 | 42,232 | 42,232 | 43,417 | 66,128 | 66,128 | 57,213 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wayne Hoare | 12,172 | 12,172 | 5,700 | 16,207 | 16,207 | 9,408 | 53,487 | 53,487 | 48,516 | 81,866 | 81,866 | 63,624 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kenneth Macpherson | 24,060 | 24,060 | 24,060 | 15,808 | 15,808 | 14,088 | 52,167 | 52,167 | 55,719 | 92,035 | 92,035 | 93,867 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| George Turner | 20,928 | 20,928 | 37,059 | 16,376 | 16,376 | 14,052 | 53,555 | 53,555 | 57,616 | 90,859 | 90,859 | 108,727 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Directors’ benefits upon termination of office
All current Executive Directors have a rolling service contract with a notice period from the Group of 12 months. As an alternative, the Group may, at its discretion, pay in lieu of that notice. Neither notice nor a payment in lieu of notice will be given in the event of gross misconduct.
Payment in lieu of notice could potentially include up to 12 months’ salary and the cash equivalent of 12 months’ pension contributions and other contractual benefits. Where possible, the Group will seek to ensure that, where a leaver mitigates their losses by, for example, finding new employment, there will be a corresponding reduction in compensation payable for loss of office.
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Visit ihgplc.com/investors under Corporate governance in the Directors’ Remuneration Policy section for further details about the determination of termination payments in the Directors’ Remuneration Policy. |
| Group information | IHG | Annual Report and Form 20-F 2023 | 249 |
Additional Information
Group information continued
Description of securities other than equity securities
Fees and charges payable to a depositary
| Category (as defined by SEC) |
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Depositary actions | Associated fee | |||||
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| Depositing or substituting the underlying shares | Each person to whom ADRs are issued against deposits of shares, including deposits and issuances in respect of:
• Share distributions, stock splits, rights, mergers
• Exchange of securities or any other transactions or event or other distribution affecting the ADSs or the deposited securities |
$5 for each 100 ADSs (or portion thereof) | ||||||
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| Receiving or distributing dividends |
Distribution of stock dividends | $5 for each 100 ADSs (or portion thereof) | ||||||
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| Distribution of cash | $0.05 or less per ADS (or portion thereof) | |||||||
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| Selling or exercising rights | Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs, which would have been charged as a result of the deposit of such securities | $5 for each 100 ADSs (or portion thereof) | ||||||
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| Withdrawing an underlying security | Acceptance of ADRs surrendered for withdrawal of deposited securities | $5 for each 100 ADSs (or portion thereof) | ||||||
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| Transferring, splitting or grouping receipts | Transfers, combining or grouping of depositary receipts | $1.50 per ADS | ||||||
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| General depositary services, particularly those charged on an annual basis | Other services performed by the depositary in administering the ADRs | $0.05 per ADS (or portion thereof) not more than once each calendar year and payable at the sole discretion of the ADR Depositary by billing ADR holders or by deducting such charge from one or more cash dividends or other cash distributions | ||||||
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| Expenses of the depositary | Expenses incurred on behalf of ADR holders in connection with:
• Compliance with foreign exchange control regulations or any law or regulation relating to foreign investment
• The ADR Depositary’s or its custodian’s compliance with applicable laws, rules or regulations
• Stock transfer or other taxes and other governmental charges
• Cable, telex, facsimile transmission or delivery
• Transfer or registration fees in connection with the deposit and withdrawal of deposited securities
• Expenses of the ADR Depositary in connection with the conversion of foreign currency into US dollars (which are paid out of such foreign currency)
• Any other charge payable by the ADR Depositary or its agents |
Expenses payable at the sole discretion of the ADR Depositary by billing ADR holders or by deducting charges from one or more cash dividends or other cash distributions are $20 per transaction | ||||||
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Fees and charges payable by a depositary
J.P. Morgan Chase Bank N.A. (the ADR Depositary) is the depositary for IHG’s ADR programme. The ADR Depositary’s principal executive office is at: J.P. Morgan Depositary Receipts, 390 Madison Avenue, New York, NY 10017. The ADR Depositary has agreed to reimburse certain reasonable Company expenses related to the Company’s ADR programme and incurred by the Company in connection with the ADR programme. The Company did not receive any payments from the ADR Depositary during the year ended 31 December 2023 in respect of legal, accounting and other fees incurred in connection with the preparation of the Annual Report and Form 20-F, ongoing SEC compliance and listing requirements, investor relations programmes, and advertising and public relations expenditure.
| 250 | IHG | Annual Report and Form 20-F 2023 |
Articles of Association
The Company’s Articles of Association (the Articles) were first adopted with effect from 27 June 2005, were most recently amended at the AGM held on 7 May 2020 and are available on the Company’s website at ihgplc.com/investors under Corporate governance. The following summarises material rights of holders of the Company’s ordinary shares under the material provisions of the Articles and English law. This summary is qualified in its entirety by reference to the Companies Act and the Articles.
The Company’s shares may be held in certificated or uncertificated form. No holder of the Company’s shares will be required to make additional contributions of capital in respect of the Company’s shares in the future.
In the following description, a ‘shareholder’ is the person registered in the Company’s register of members as the holder of the relevant share.
Principal objects
The Company is incorporated under the name InterContinental Hotels Group PLC and is registered in England and Wales with registered number 5134420. The Articles do not restrict its objects or purposes.
Directors
Under the Articles, a Director may have an interest in certain matters (‘Permitted Interest’) without the prior approval of the Board, provided they have declared the nature and extent of such Permitted Interest at a meeting of the Directors or in the manner set out in Section 184 or Section 185 of the Companies Act.
Any matter in which a Director has a material interest, and which does not comprise a Permitted Interest, must be authorised by the Board in accordance with the procedure and requirements contained in the Articles. In particular, this includes the requirement that a Director may not vote on a resolution to authorise a matter in which they are interested, nor may they count in the quorum of the meeting at which such business is transacted.
Further, a Director may not vote in respect of any proposal in which they, or any person connected with them, has any material interest other than by virtue of their interests in securities of, or otherwise in or through, the Company, nor may they count in the quorum of the meeting at which such business is transacted. This is subject to certain exceptions, including in relation to proposals: (a) indemnifying them in respect of obligations incurred on behalf of the Company; (b) indemnifying a third party in respect of obligations of the Company for which the Director has assumed responsibility under an indemnity or guarantee; (c) relating to an offer of securities in which they will be interested as an underwriter; (d) concerning another body corporate in which the Director is beneficially interested in less than one per cent of the issued shares of any class of shares of such a body corporate; (e) relating to an employee benefit in which the Director will share equally with other employees; and (f) relating to liability insurance that the Company is empowered to purchase for the benefit of Directors of the Company in respect of actions undertaken as Directors (or officers) of the Company.
The Directors have authority under the Articles to set their own remuneration (provided certain criteria are met). While an agreement to award remuneration to a Director is an arrangement with the Company that comprises a Permitted Interest (and therefore does not require authorisation by the Board in that respect), it is nevertheless a matter that would be expected to give rise to a conflict of interest between the Director concerned and the Company, and such conflict must be authorised by a resolution of the Board. The Director that is interested in such a matter may neither vote on the resolution to authorise such conflict, nor count in the quorum of the meeting at which it was passed. Furthermore, as noted above, the interested Director is not permitted to vote in respect of any proposal in which they have any material interest (except in respect of the limited exceptions outlined above) nor may they count in the quorum of the meeting at which such business is transacted.
As such, a Director has no power, in the absence of an independent quorum, to vote on compensation to themselves, but may vote on a resolution (and may count in the quorum of the meeting at which it was passed) to award compensation to Directors provided those arrangements do not confer a benefit solely on them.
The Directors are empowered to exercise all the powers of the Company to borrow money, subject to any limitation in the Articles (currently $5 billion), unless sanctioned by an ordinary resolution of the Company.
Under the Articles, there are no age limit requirements relating to a person’s qualification to hold office as a Director of the Company.
Directors are not required to hold any shares of the Company by way of qualification.
The Articles require annual retirement and re-election of all Directors at the AGM.
Rights attaching to shares
Dividend rights and rights to share in the Company’s profits
Under English law, dividends are payable on the Company’s ordinary shares only out of profits available for distribution, as determined in accordance with accounting principles generally accepted in the UK and by the Companies Act. No dividend will bear interest as against the Company.
Holders of the Company’s ordinary shares are entitled to receive such dividends as may be declared by the shareholders in general meeting, rateably according to the amounts paid up on such shares, provided that the dividend cannot exceed the amount recommended by the Directors.
The Company’s Board of Directors may declare and pay to shareholders such interim dividends as appear to them to be justified by the Company’s financial position. If authorised by an ordinary resolution of the shareholders, the Board of Directors may also direct payment of a dividend in whole or in part by the distribution of specific assets (and in particular of paid-up shares or debentures of any other company).
Any dividend unclaimed by a member (or by a person entitled by virtue of transmission on death or bankruptcy or otherwise by operation of law) after six years from the date the dividend was declared, or became due for payment, will be forfeited and will revert to the Company.
Voting rights
The holders of ordinary shares are entitled, in respect of their holdings of such shares, to receive notice of general meetings and to attend, speak and vote at such meetings in accordance with the Articles.
Voting at any general meeting of shareholders is by a show of hands unless a poll, which is a written vote, is duly demanded. On a show of hands, every shareholder who is present in person or by proxy at a general meeting has one vote regardless of the number of shares held. Resolutions put to the members at electronic general meetings shall be voted on by a poll, which poll votes may be cast by such electronic means as the Board in its sole discretion deems appropriate for the purposes of the meeting.
| Group information | IHG | Annual Report and Form 20-F 2023 | 251 |
Additional Information
Group information continued
Articles of Association continued
On a poll, every shareholder who is present in person or by proxy has one vote for every share held by that shareholder. A poll may be demanded by any of the following:
• the Chair of the meeting;
| • | at least five shareholders present in person or by proxy and entitled to vote at the meeting; |
| • | any shareholder or shareholders present in person or by proxy representing in the aggregate not less than one-tenth of the total voting rights of all shareholders entitled to vote at the meeting; or |
| • | any shareholder or shareholders present in person or by proxy holding shares conferring a right to vote at the meeting and on which there have been paid up sums in the aggregate at least equal to one-tenth of the total sum paid up on all the shares conferring that right. |
A proxy form will be treated as giving the proxy the authority to demand a poll, or to join others in demanding one.
The necessary quorum for a general meeting is two persons carrying a right to vote upon the business to be transacted, whether present in person or by proxy.
Matters are transacted at general meetings of the Company by the proposing and passing of resolutions, of which there are two kinds:
| • | an ordinary resolution, which includes resolutions for the election of Directors, the approval of financial statements, the cumulative annual payment of dividends, the appointment of the Auditor, the increase of share capital or the grant of authority to allot shares; and |
| • | a special resolution, which includes resolutions amending the Articles, disapplying statutory pre-emption rights, modifying the rights of any class of the Company’s shares at a meeting of the holders of such class or relating to certain matters concerning the Company’s winding up or changing the Company’s name. |
An ordinary resolution requires the affirmative vote of a majority of the votes of those persons present and entitled to vote at a meeting at which there is a quorum.
Special resolutions require the affirmative vote of not less than three-quarters of the persons present and entitled to vote at a meeting at which there is a quorum.
AGMs must be convened upon advance written notice of 21 days. Other meetings must be convened upon advance written notice of 14 days. The days of delivery or receipt of the notice are not included. The notice must specify the nature of the business to be transacted. The Board of Directors may, if they choose, make arrangements for shareholders, who are unable to attend the place of the meeting, to participate at other places or to allow for shareholders to attend and participate in shareholder meetings by electronic means.
Variation of rights
If, at any time, the Company’s share capital is divided into different classes of shares, the rights attached to any class may be varied, subject to the provisions of the Companies Act, with the consent in writing of holders of three-quarters in nominal value of the issued shares of that class or upon the adoption of a special resolution passed at a separate meeting of the holders of the shares of that class. At every such separate meeting, all of the provisions of the Articles relating to proceedings at a general meeting apply, except that the quorum is to be the number of persons (which must be two or more) who hold or represent by proxy not less than one-third in nominal value of the issued shares of that class.
Rights in a winding-up
Except as the Company’s shareholders have agreed or may otherwise agree, upon the Company’s winding up, the balance of assets available for distribution is to be distributed among the holders of ordinary shares according to the amounts paid up on the shares held by them:
| • | after the payment of all creditors including certain preferential creditors, whether statutorily preferred creditors or normal creditors; and |
| • | subject to any special rights attaching to any class of shares. |
This distribution is generally to be made in cash. A liquidator may, however, upon the adoption of a special resolution of the shareholders, divide among the shareholders the whole or any part of the Company’s assets in kind.
Limitations on voting and shareholding
There are no limitations imposed by English law or the Articles on the right of non-residents or foreign persons to hold or vote the Company’s ordinary shares or ADSs, other than the limitations that would generally apply to all of the Company’s shareholders.
Working Time Regulations 1998
In the UK, many employees of Group companies are covered by the Working Time Regulations, which came into force on 1 October 1998. These regulations implemented the EU Working Time Directive and parts of the Young Workers Directive, and lay down rights and protections for employees in areas such as maximum working hours, minimum rest time, minimum days off and paid leave. The Working Time Regulations continue to apply in the UK following the UK’s exit from the EU as retained EU law under the European Union (Withdrawal) Act 2018, as amended.
In the UK, there is in place a national minimum wage under the National Minimum Wage Act 1998, as amended. At 31 December 2023, the minimum wage for individuals aged 18 to 20 was £7.49 per hour, aged 21 to 22 was £10.18 per hour and for those aged 23 or over was £10.42 per hour in each case, excluding apprentices aged under 19 years or, otherwise, in the first year of their apprenticeships.
This particularly impacts businesses in the hospitality and retailing sectors. Compliance with the National Minimum Wage Act is being monitored by the Low Pay Commission, an independent statutory body established by the UK Government.
None of the Group’s UK employees are covered by collective bargaining agreements with trade unions.
Continual attention is paid to the external market in order to ensure that terms of employment are appropriate. The Group believes the Group companies will be able to conduct their relationships with trade unions and employees in a satisfactory manner.
| 252 | IHG | Annual Report and Form 20-F 2023 |
Material contracts
The following contracts have been entered into otherwise than in the course of ordinary business by members of the Group: (i) in the two years immediately preceding the date of this document in the case of contracts which are or may be material; or (ii) that contain provisions under which any Group member has any obligation or entitlement that is material to the Group as at the date of this document. To the extent that these agreements include representations, warranties and indemnities, such provisions are considered standard in an agreement of that nature, save to the extent identified below.
Syndicated Facility
In April 2022, the Company, together with Six Continents Limited and InterContinental Hotels Limited (as borrowers and guarantors), signed a five-year $1.35 billion bank facility agreement (Syndicated Facility) with Bank of America Europe Designated Activity Company, Bank of China Limited, London Branch, Barclays Bank PLC, BNP Paribas, London Branch, Commerzbank Aktiengesellschaft, London Branch, DBS Bank Ltd, London Branch, Mizuho Bank, Ltd., MUFG Bank, Ltd., Standard Chartered Bank, Truist Securities, Inc., Unicredit Bank AG, U.S. Bank National Association and Wells Fargo Bank, N.A., London Branch all acting as lenders, mandated lead arrangers and joint bookrunners, and MUFG Bank, Ltd. as facility agent.
During 2023, IHG Finance LLC, a Group company, acceded to the Syndicated Facility agreement as an additional guarantor and the Syndicated Facility agreement was amended to ensure that the implementation of IFRS 16 ‘Leases’ was accurately reflected in the agreement’s terms. The Company also exercised its ability to extend the term of the Syndicated Facility by an additional period of 12 months, taking its term to April 2028.
The interest margin payable on borrowings under the Syndicated Facility is linked to the long-term credit rating assigned to the senior unsecured and unsubordinated debt of the Company. The margin can vary between the applicable reference rate + 0.50% and the applicable reference rate + 1.00% depending on the credit rating. The Syndicated Facility was undrawn as at 31 December 2023.
£4 billion Euro Medium Term Note programme
In 2023, the Group updated its Euro Medium Term Note programme (EMTN Programme) and issued a tranche of €600 million 4.375% notes due 28 November 2029 (2023 Issuance).
On 21 September 2023, an amended and restated trust deed (Trust Deed) was executed by the Company and IHG Finance LLC (IHGFL) as issuers (Issuers); the Company, IHGFL, Six Continents Limited and InterContinental Hotels Limited as guarantors (Guarantors) and U.S. Bank Trustees Limited as trustee (Trustee), pursuant to which the trust deed dated 27 November 2009, as supplemented by five supplemental trust deeds dated 7 July 2011, 9 November 2012, 16 June 2015, 11 August 2016 and 14 September 2020 between the Company as issuer, Six Continents Limited and InterContinental
Hotels Limited as guarantors and HSBC Corporate Trustee Company (UK) Limited as trustee relating to the Programme, was amended and restated. Under the Trust Deed, the Issuers may issue notes (Notes) unconditionally and irrevocably guaranteed by the Guarantors, up to a maximum nominal amount from time to time outstanding of £4 billion (or its equivalent in other currencies). Notes are to be issued in series (each a Series) in bearer or registered form. Each Series may comprise one or more tranches (each a Tranche) issued on different issue dates. A Tranche of Notes may be issued on the terms and conditions set out in a base prospectus as amended and/or supplemented by a document setting out the final terms (Final Terms) of such Tranche or in a separate prospectus specific to such Tranche.
Under the Trust Deed, each of the Issuers and the Guarantors has given certain customary covenants in favour of the Trustee.
The Final Terms issued under the 2023 Issuance provide that the holders of the Notes have the right to repayment if the Notes (a) become non-investment grade within the period commencing on the date of announcement of a change of control and ending 90 days after the change of control (Change of Control Period) and are not subsequently, within the Change of Control Period, reinstated to investment grade; (b) are downgraded from a non-investment grade and are not reinstated to its earlier credit rating or better within the Change of Control Period; or (c) are not credit rated and do not become investment grade credit rated by the end of the Change of Control Period.
On 21 September 2023, the Issuers and the Guarantors entered into an amended and restated agency agreement (Agency Agreement) with Elavon Financial Services DAC, UK Branch as principal paying agent, Elavon Financial Services DAC as transfer agent and registrar and the Trustee, pursuant to which the Issuers and the Guarantors appointed paying agents and calculation agents in connection with the EMTN Programme and the Notes.
Under the Agency Agreement, each of the Issuers and the Guarantors has given a customary indemnity in favour of the paying agents and the calculation agents.
On 21 September 2023, the Issuers and the Guarantors entered into an amended and restated dealer agreement (Dealer Agreement) with Barclays Bank PLC as arranger and Bank of China Limited, London Branch, Barclays Bank PLC, Commerzbank Aktiengesellschaft, Merrill Lynch International, MUFG Securities EMEA plc, Truist Securities, Inc. and Wells Fargo Securities International Limited as dealers (Dealers), pursuant to which the Dealers were appointed in connection with the EMTN Programme and the Notes.
Under the Dealer Agreement, each of the Issuer and the Guarantors has given customary warranties and indemnities in favour of the Dealers.
Exchange controls and restrictions on payment of dividends
There are no restrictions on dividend payments to US citizens.
Although there are currently no UK foreign exchange control restrictions on the export or import of capital or the payment of dividends on the ordinary shares or the ADSs, economic sanctions which may be in force in the UK from time to time impose restrictions on the payment of dividends to persons resident (or treated as so resident) in or governments of (or persons exercising public functions in) certain countries.
Other than economic sanctions which may be in force in the UK from time to time, there are no restrictions under the Articles of Association or under English law that limit the right of non-resident or foreign owners to hold or vote the ordinary shares or the ADSs. In addition, the Articles contain certain limitations on the voting and other rights of any holder of ordinary shares whose holding may, in the opinion of the Directors, result in the loss or failure to secure the reinstatement of any licence or franchise from any US governmental agency held by Six Continents Hotels, Inc. or any subsidiary thereof.
| Group information | IHG | Annual Report and Form 20-F 2023 | 253 |
Additional Information
Group information continued
Legal proceedings
Group companies have extensive operations in the UK, as well as internationally, and are involved in a number of legal claims and proceedings incidental to those operations. These legal claims and proceedings are in various stages and include disputes related to specific hotels where the potential materiality is not yet known. It is the Company’s view that such proceedings, either individually or in the aggregate, have not in the recent past and are not likely to have a significant effect on the Group’s financial position or profitability.
Notwithstanding the above, the Company notes the matters set out below, which are ongoing. Litigation is inherently unpredictable and, as of 16 February 2024, unless stated otherwise, the outcome of these matters cannot be reasonably determined.
A claim was filed on 5 July 2016 by CPTS Hotel Lessee, LLC (CPTS) against Holiday Hospitality Franchising, LLC (HHF). The claimant alleged breach of the licence agreement and sought a declaratory judgement from the court that it had the right to terminate its licence with HHF. In June 2023, this case was dismissed.
A claim was filed on 26 June 2017 against InterContinental Hotels Corporation, InterContinental Hotels Group Resources, Inc., and InterContinental Hotels Group (Canada), Inc. seeking class action status and alleging breach of fiduciary duty, negligence, breach of confidence, intrusion upon seclusion, breach of contract, breach of privacy legislation, and unjust enrichment regarding an alleged data breach. The claim was amended in March 2018 to name Six Continents Hotels, Inc. as the sole defendant. The claimant alleges that security failures allowed customers’ financial information to be compromised. As of 16 February 2024, the likelihood of a favourable or unfavourable result cannot be reasonably determined, and it is not possible to determine whether any loss is likely or to estimate the amount of any loss.
Seven claims were filed in March 2022 against Holiday Hospitality Franchising LLC, Six Continents Hotels, Inc., and the IHG Owner’s Association, seeking class action status on behalf of IHG franchisees. Following dismissal of two claims and consolidation of the remaining, an amended claim was filed against Holiday Hospitality Franchising LLC and Six Continents Hotels, Inc., alleging claims for breach of contract, breach of implied covenant of good faith and fair dealing, breach of fiduciary duty, declaratory judgement, violation of the Sherman Act and demand for accounting. The claims allege that IHG, as franchisor, is engaged in unlawful business practices relating to numerous programmes, products and requirements which are purportedly part of IHG’s franchise system. The Court dismissed the majority of the claims, and the remaining claims allege breach of contract and deceptive trade practices. As of 16 February 2024, the likelihood of a favourable or unfavourable result cannot be reasonably determined and it is not possible to determine whether any loss is likely or to estimate the amount of any loss.
A claim was filed on 15 September 2022 against Holiday Hospitality Franchising LLC, Six Continents Hotels, Inc., and IHG Technology Solutions, Inc. seeking class action status and damages for alleged claims for breach of contract, deceptive trade practices under state law, negligence and unjust enrichment. The allegations relate to the criminal, unauthorised access into IHG’s systems. As of 16 February 2024, the likelihood of a favourable or unfavourable result cannot be reasonably determined, and it is not possible to determine whether any loss is likely or to estimate the amount of any loss.
An arbitration was filed on December 11, 2022, alleging that Holiday Inns Middle East Limited breached its contractual obligations by causing delay in relation to the opening of a hotel. The claim seeks monetary damages for various alleged losses. As of 16 February 2024, the likelihood of a favourable or unfavourable result cannot be reasonably determined, and it is not possible to determine whether any loss is likely or to estimate the amount of any loss.
| 254 | IHG | Annual Report and Form 20-F 2023 |
Shareholder information
Taxation
This section provides a summary of material US federal income tax and UK tax consequences to the US holders, described below, of owning and disposing of ordinary shares or ADSs of the Company. This section addresses only the tax position of a US holder who holds ordinary shares or ADSs as capital assets. This section does not, however, discuss all of the tax considerations that may be relevant to any particular US holder, such as the provisions of the Internal Revenue Code of 1986, as amended (IR Code) known as the Medicare Contribution tax or tax consequences to US holders subject to special rules, such as:
| • | certain financial institutions; |
| • | insurance companies; |
| • | dealers and traders in securities who use a mark-to-market method of tax accounting; |
| • | persons holding ordinary shares or ADSs as part of a straddle, conversion transaction, integrated transaction or wash sale, or persons entering into a constructive sale with respect to the ordinary shares or ADSs; |
| • | persons whose functional currency for US federal income tax purposes is not the US dollar; |
| • | partnerships or other entities classified as partnerships for US federal income tax purposes; |
| • | persons liable for the alternative minimum tax; |
| • | tax-exempt organisations; |
| • | persons who acquired the Company’s ADSs or ordinary shares pursuant to the exercise of any employee stock option or otherwise in connection with employment; and |
| • | persons who, directly or indirectly, own ordinary shares or ADSs representing 10% or more of the Company’s voting power or value. |
This section does not generally deal with the position of a US holder who is resident in the UK for UK tax purposes or who is subject to UK taxation on capital gains or income by virtue of carrying on a trade, profession or vocation in the UK through a branch, agency or permanent establishment to which such ADSs or ordinary shares are attributable (‘trading in the UK’).
As used herein, a ‘US holder’ is a person who, for US federal income tax purposes, is a beneficial owner of ordinary shares or ADSs and is: (i) a citizen or individual resident of the US; (ii) a corporation, or other entity taxable as a corporation, created or organised in or under the laws of the US, any state therein or the District of Columbia; (iii) an estate whose income is subject to US federal income tax regardless of its source; or (iv) a trust, if a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorised to control all substantial decisions of the trust.
This section is based on the IR Code, its legislative history, existing and proposed regulations, published rulings and court decisions, and on UK tax laws and the published practice of HM Revenue and Customs (HMRC), all as of the date hereof. These laws, and that practice, are subject to change, possibly on a retroactive basis.
This section is further based in part upon the representations of the ADR Depositary and assumes that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms. For US federal income tax purposes, an owner of ADRs evidencing ADSs will generally be treated as the owner of the underlying shares represented by those ADSs. For UK tax purposes, in practice, HMRC will also regard holders of ADSs as the beneficial owners of the ordinary shares represented by those ADSs (although case law has cast some doubt on this). The discussion below assumes that HMRC’s position is followed.
Generally, exchanges of ordinary shares for ADSs, and ADSs for ordinary shares, will not be subject to US federal income tax or UK taxation on capital gains, although UK stamp duty or stamp duty reserve tax (SDRT) may arise as described below.
Investors should consult their own tax advisers regarding the US federal, state and local, the UK and other tax consequences of owning and disposing of ordinary shares or ADSs in their particular circumstances.
The following disclosures assume that the Company is not, and will not become, a passive foreign investment company (PFIC), except as described below.
Taxation of dividends
UK taxation
Under current UK tax law, the Company will not be required to withhold tax at source from dividend payments it makes.
A US holder who is not resident for UK tax purposes in the UK and who is not trading in the UK will generally not be liable for UK taxation on dividends received in respect of the ADSs or ordinary shares.
US federal income taxation
A US holder is generally subject to US federal income taxation on the gross amount of any dividend paid by the Company out of its current or accumulated earnings and profits (as determined for US federal income tax purposes). Distributions in excess of the Company’s current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a return of capital to the extent of the US holder’s basis in the ordinary shares or ADSs and thereafter as capital gain. Because the Company has not historically maintained, and does not currently maintain, books in accordance with US tax principles, the Company does not expect to be in a position to determine whether any distribution will be in excess of the Company’s current and accumulated earnings and profits as computed for US federal income tax purposes. As a result, it is expected that amounts distributed will be reported to the Internal Revenue Service (IRS) as dividends.
Subject to applicable limitations, dividends paid to certain non-corporate US holders will be taxable at the preferential rates applicable to long-term capital gain if the dividends constitute ‘qualified dividend income’. The Company expects that dividends paid by the Company with respect to the ordinary shares or ADSs will constitute qualified dividend income. Non-corporate US holders should consult their own tax advisers to determine whether they are subject to any special rules that limit their ability to be taxed at these preferential rates.
Dividends must be included in income when the US holder, in the case of shares, or the ADR Depositary, in the case of ADSs, actually or constructively receives the dividend, and will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. For foreign tax credit limitation purposes, dividends will generally be income from sources outside the US.
The amount of any dividend paid in pounds sterling will be the US dollar value of the sterling payments made, determined at the spot sterling/US dollar rate on the date the dividend distribution is includible in income, regardless of whether the payment is in fact converted into US dollars. If the dividend is converted into US dollars on that date, a US holder should not be required to recognise foreign currency gain or loss in respect of the dividend income. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includible in income to the date the payment is converted into US dollars will be treated as ordinary income or loss from sources within the US.
| Shareholder information | IHG | Annual Report and Form 20-F 2023 | 255 |
Additional Information
Shareholder information continued
Taxation continued
Taxation of capital gains
UK taxation
A US holder who is not resident for UK tax purposes in the UK and who is not trading in the UK will not generally be liable for UK taxation on capital gains, or eligible for relief for allowable losses, realised or accrued on the sale or other disposal of ADSs or ordinary shares. A US holder of ADSs or ordinary shares who is an individual and who, broadly, has temporarily ceased to be resident in the UK or has become temporarily treated as non-resident for UK tax purposes for a period of not more than five years and who disposes of ordinary shares or ADSs during that period may, for the year of assessment when that individual becomes resident again in the UK, be liable to UK tax on capital gains (subject to any available exemption or relief), notwithstanding the fact that such US holder was not treated as resident in the UK at the time of the sale or other disposal.
US federal income taxation
A US holder who sells or otherwise disposes of ordinary shares or ADSs will recognise a capital gain or loss for US federal income tax purposes equal to the difference between the amount realised and its tax basis in the ordinary shares or ADSs, each determined in US dollars. Such capital gain or loss will be a long-term capital gain or loss where the US holder has a holding period greater than one year. Losses may also be treated as long-term capital losses to the extent of certain ‘extraordinary dividends’ that qualified for the preferential tax rates on qualified dividend income described above. The capital gain or loss will generally be income or loss from sources within the US for foreign tax credit limitation purposes. The deductibility of capital losses is subject to limitations.
PFIC rules
Based on the manner in which the Group operates its business and estimates of the value of its assets (which estimates are based, in part, on the market value of the Company’s ADSs) the Company believes that it was not a PFIC for US federal income tax purposes for its 2023 taxable year. However, the Company’s PFIC status is an annual factual determination and thus may be subject to change. If the Company were a PFIC for any taxable year during which a US holder owned ordinary shares or ADSs, gain realised on the sale or other disposition of ordinary shares or ADSs would, in general, not be treated as capital gain. Instead, gain would be treated as if the US holder had realised such gain rateably over the holding period for the ordinary shares or ADSs and, to the extent allocated to the taxable year of the sale or other disposition and to any year before the Company became a PFIC, would be taxed as ordinary income. The amount allocated to each other taxable year would be taxed at the highest tax rate in effect (for individuals or corporations, as applicable) for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. In addition, similar rules would apply to any ‘excess distribution’ received on the ordinary shares or ADSs (generally, the excess of distributions received on the ordinary shares or ADSs during the taxable year over 125% of the average amount of distributions received during a specified prior period). The preferential rates for qualified dividend income described above would not apply if the Company were a PFIC for the taxable year of the distribution or the preceding taxable year.
Certain elections may be available (including a market-to-market election) to US holders that would result in alternative treatments of the ordinary shares or ADSs. If the Company were a PFIC for any taxable year in which a US holder held ordinary shares or ADSs, a US holder would generally be required to file IRS Form 8621 with their annual US federal income tax returns, subject to certain exceptions.
Additional tax considerations
UK inheritance tax
An individual who is neither domiciled nor deemed domiciled in the UK is only chargeable to UK inheritance tax to the extent the individual owns assets situated in the UK. As a matter of UK law, it is not clear whether the situs of an ADS for UK inheritance tax purposes is determined by the place where the depositary is established and records the entitlements of the deposit holders, or by the situs of the underlying share which the ADS represents, but HMRC may take the view that the ADSs, as well as the ordinary shares, are or represent UK-situs assets.
However, an individual who is domiciled in the US (for the purposes of the Estate and Gift Tax Convention (the Convention)), and is not a UK national as defined in the Convention, will not be subject to UK inheritance tax (to the extent UK inheritance tax applies) in respect of the ordinary shares or ADSs on the individual’s death or on a transfer of the ordinary shares or ADSs during their lifetime, provided that any applicable US federal gift or estate tax is paid, unless the ordinary shares or ADSs are part of the business property of a UK permanent establishment or pertain to a UK fixed base of an individual used for the performance of independent personal services. Where the ordinary shares or ADSs have been placed in trust by a settlor, they may be subject to UK inheritance tax unless, when the trust was created, the settlor was domiciled in the US and was not a UK national. If no relief is given under the Convention, inheritance tax may be charged on death and also on the amount by which the value of an individual’s estate is reduced as a result of any transfer made by way of gift or other undervalue transfer, broadly within seven years of death, and in certain other circumstances. Where the ordinary shares or ADSs are subject to both UK inheritance tax and to US federal gift or estate tax, the Convention generally provides for either a credit against US federal tax liabilities for UK inheritance tax paid or for a credit against UK inheritance tax liabilities for US federal tax paid, as the case may be.
UK stamp duty and SDRT
Neither stamp duty nor Stamp Duty Reserve Tax (SDRT) will generally be payable in the UK on the purchase or transfer of an ADS, provided that the ADS and any separate instrument or written agreement of transfer are executed and remain at all times outside the UK. UK legislation does however provide for stamp duty or SDRT to be payable at the rate of 1.5% on the amount or value of the consideration (or, in some cases, the value of the ordinary shares) where ordinary shares are transferred to a person (or a nominee or agent of a person) whose business is or includes issuing depositary receipts or the provision of clearance services. In accordance with the terms of the deposit agreement, any tax or duty payable on deposits of ordinary shares by the depositary or by the custodian of the depositary will typically be charged to the party to whom ADSs are delivered against such deposits. However, such transfers will not attract stamp duty or SDRT where they satisfy the conditions of an exemption, including exemptions which can apply to certain capital raising or qualifying listing arrangements.
The discussion above assumes that the provisions affecting stamp duty and SDRT contained in the Finance Bill currently proceeding through the UK Parliament (which, broadly, provide for the repeal of certain 1.5% SDRT charges on the issue of securities by a UK company to depositary receipt issuers and clearance services and the exemptions mentioned above which can apply to certain transfers of securities made in the course of capital raising or qualifying listing arrangements) are enacted in substantively the same form as currently published and have retroactive effect from 1 January 2024. Until the Finance Bill receives Royal Assent (which is likely to be later in 2024), relevant provisions affecting stamp duty and SDRT have been given provisional statutory effect, as if they were contained in an Act of Parliament, under (in the case of SDRT) the Provisional Collection of Taxes Act 1968 and (in the case of stamp duty) the Finance Act 1973, through resolutions of the
| 256 | IHG | Annual Report and Form 20-F 2023 |
House of Commons passed on 27 November 2023. Specific professional advice should be sought before paying a 1.5% SDRT or stamp duty charge in any circumstances.
A transfer of the underlying ordinary shares will generally be subject to stamp duty or SDRT, normally at the rate of 0.5% of the amount or value of the consideration (rounded up to the next multiple of £5 in the case of stamp duty). A transfer of ordinary shares from a nominee to its beneficial owner, including the transfer of underlying ordinary shares from the depositary to an ADS holder, under which no beneficial interest passes, will not be subject to stamp duty or SDRT.
Any UK stamp duty or SDRT imposed upon transfers of ADSs or ordinary shares will not be creditable for US federal income tax purposes. US Holders should consult their tax advisers regarding whether any such UK stamp duty or SDRT may be deductible or reduce the amount of gain (or increase the amount of loss) recognised upon a sale or other disposition of the ADSs or ordinary shares.
US backup withholding and information reporting
Payments of dividends and sales proceeds with respect to ADSs and ordinary shares may be reported to the IRS and to the US holder. Backup withholding may apply to these reportable payments if the US holder fails to provide an accurate taxpayer identification number or certification of exempt status, or fails to report all interest and dividends required to be shown on its US federal income tax returns. Certain US holders (including, among others, corporations) are not subject to information reporting and backup withholding. The amount of any backup withholding from a payment to a US holder will be allowed as a credit against the holder’s US federal income tax liability and may entitle the holder to a refund, provided that the required information is furnished in a timely manner to the IRS. US holders should consult their tax advisers as to their qualification for exemption from backup withholding and the procedure for obtaining an exemption.
Certain US holders who are individuals (and certain specified entities), may be required to report information relating to their ownership of non-US securities unless the securities are held in accounts at financial institutions (in which case the accounts may be reportable if maintained by non-US financial institutions). US holders should consult their tax advisers regarding any reporting obligations they may have with respect to the Company’s ordinary shares or ADSs.
Disclosure controls and procedures
As of the end of the period covered by this report, the Group carried out an evaluation under the supervision and with the participation of the Group’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Group’s disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) of the Securities Exchange Act 1934).
These are defined as those controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act 1934 is recorded, processed, summarised and reported within the specified periods. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Group’s disclosure controls and procedures were effective.
| Shareholder information | IHG | Annual Report and Form 20-F 2023 | 257 |
Additional Information
Shareholder information continued
Summary of significant corporate governance
differences from NYSE listing standards
The Group’s statement of compliance with the principles and provisions specified in the UK Corporate Governance Code issued in July 2018 by the Financial Reporting Council (the Code) is set out on pages 141 and 142.
IHG has also adopted the corporate governance requirements of the US Sarbanes-Oxley Act and related rules and of the NYSE, to the extent that they are applicable to it as a foreign private issuer. As a foreign private issuer, IHG is required to disclose any significant ways in which its corporate governance practices differ from those followed by US companies. These are as follows:
Basis of regulation
The Code contains a series of principles and provisions. Listed companies are required to state how they have applied the Code’s principles, and the provisions operate on a ‘comply or explain’ basis, where any areas of non-compliance should be disclosed with an explanation for the non-compliance.
In contrast, US companies listed on the NYSE are required to adopt and disclose corporate governance guidelines adopted by the NYSE.
Independent Directors
The Code’s principles recommend that at least half the Board, excluding the Chair, should consist of independent non-executive directors. As at 16 February 2024, the Board consisted of the Chair, independent at the time of her appointment, two Executive Directors and eight independent Non-Executive Directors. NYSE listing rules applicable to US companies state that companies must have a majority of independent directors. The NYSE has set out six bright line tests for director independence. The Board’s judgement is that all of its Non-Executive Directors are independent. However, it did not explicitly take into consideration the NYSE’s tests in reaching this determination.
Chair and Chief Executive Officer
The Code recommends that the Chair and Chief Executive Officer should not be the same individual to ensure that there is a clear division of responsibility for the running of the Company’s business. There is no corresponding requirement for US companies. The roles of Chair and Chief Executive Officer were, as at 16 February 2024 and throughout 2023, fulfilled by separate individuals.
Committees
The Company has a number of Board Committees which are similar in purpose and constitution to those required for domestic companies under NYSE rules. The NYSE requires US companies to have audit, remuneration and nominating/corporate governance committees composed entirely of independent directors, as defined under the NYSE rules. The Company’s Nomination, Audit and Remuneration Committees consist entirely of Non-Executive Directors who are independent under the standards of the Code, which may not necessarily be the same as the NYSE independence standards. The nominating/governance committee is responsible for identifying individuals qualified to become Board members and to recommend to the Board a set of corporate governance principles. As the Company is subject to the Code, the Company’s Nomination Committee is responsible for nominating, for approval by the Board, candidates for appointment to the Board, including recommending suitable candidates for the role of Senior Independent Non-Executive Director. The Company’s Nomination Committee consists of the Chair and independent Non-Executive Directors.
The Chair of the Company is not a member of the Audit Committee. As set out on page 94, the Audit Committee is chaired by an independent Non-Executive Director who, in the Board’s view, has the experience and qualifications to satisfy the criterion under US rules for an ‘audit committee financial expert’.
Non-Executive Director meetings
NYSE rules require that non-management Directors of US companies must meet on a regular basis without management present, and independent Directors must meet separately at least once per year. The Code recommends: (i) the Board Chair to hold meetings with the Non-Executive Directors without the Executive Directors present; and (ii) the Non-Executive Directors to meet at least annually without the Chair present to appraise the Chair’s performance. The Company’s Non-Executive Directors have met frequently without Executive Directors being present, and intend to continue this practice, after every Board meeting if possible.
Shareholder approval of equity compensation plans
The NYSE rules require that shareholders must be given the opportunity to vote on all equity compensation plans and material revisions to those plans. The Company complies with UK requirements, which are similar to the NYSE rules. The Board does not, however, explicitly take into consideration the NYSE’s detailed definition of ‘material revisions’.
Code of Conduct
The NYSE requires companies to adopt a code of business conduct and ethics, applicable to Directors, officers and employees. Any waivers granted to Directors or officers under such a code must be promptly disclosed. As set out on pages 39 and 40, IHG’s Code of Conduct is applicable to all Directors, officers and employees, and is available on the Company’s website at ihgplc.com/corporate-governance/code-of-conduct. No waivers have been granted under the Code of Conduct.
Compliance certification
Each chief executive of a US company must certify to the NYSE each year that he or she is not aware of any violation by the Company of any NYSE corporate governance listing standard. As the Company is a foreign private issuer, the Company’s Chief Executive Officer is not required to make this certification. However, he is required to notify the NYSE promptly in writing after any of the Company’s executive officers become aware of any non-compliance with those NYSE corporate governance rules applicable to the Company.
| 258 | IHG | Annual Report and Form 20-F 2023 |
Return of funds
Since March 2003, the Group has returned over £7 billion of funds to shareholders by way of special dividends, capital returns and share repurchase programmes.
| Return of funds programme |
Timing | Total return | Returned to date | |||||||||||||||
| £501m special dividenda | Paid in December 2004 | £501m | £501m | |||||||||||||||
| £250m share buyback | Completed in 2004 | £250m | £250m | |||||||||||||||
| £996m capital returna | Paid in July 2005 | £996m | £996m | |||||||||||||||
| £250m share buyback | Completed in 2006 | £250m | £250m | |||||||||||||||
| £497m special dividenda | Paid in June 2006 | £497m | £497m | |||||||||||||||
| £250m share buyback | Completed in 2007 | £250m | £250m | |||||||||||||||
| £709m special dividenda | Paid in June 2007 | £709m | £709m | |||||||||||||||
| £150m share buyback | N/A | b | £150m | £120m | ||||||||||||||
| $500m special dividendac | Paid in October 2012 | £315m | d | £315m | e | |||||||||||||
| ($500m | ) | ($505m | ) | |||||||||||||||
| $500m share buyback | Completed in 2014 | £315m | d | £315m | ||||||||||||||
| ($500m | ) | ($500m | )f | |||||||||||||||
| $350m special dividend | Paid in October 2013 | £229m | g | £228m | ||||||||||||||
| ($350m | ) | ($355m | )h | |||||||||||||||
| $750m special dividenda | Paid in July 2014 | £447m | i | £446m | ||||||||||||||
| ($750m | ) | ($763m | )j | |||||||||||||||
| $1,500m special dividenda | Paid in May 2016 | £1,038m | k | £1,038m | ||||||||||||||
| ($1,500m | ) | ($1,500m | ) | |||||||||||||||
| $400m special dividenda | Paid in May 2017 | £309m | l | £310m | ||||||||||||||
| ($400m | ) | ($404m | ) | |||||||||||||||
| $500m special dividenda | Paid in January 2019 | £389m | m | £388m | ||||||||||||||
| ($500m | ) | ($510m | ) | |||||||||||||||
| $500m share buyback | Completed in January 2023 | £432m | £432m | |||||||||||||||
| ($496m | ) | ($496m | ) | |||||||||||||||
| $750m share buyback | Completed in December | £595m | £595m | |||||||||||||||
| 2023 | ($746m | ) | ($746m | ) | ||||||||||||||
| Total | £7,672m | £7,640m | ||||||||||||||||
| a | Accompanied by a share consolidation. |
| b | This programme was superseded by the share buyback programme announced on 7 August 2012. |
| c | IHG changed the reporting currency of its Consolidated Financial Statements from sterling to US dollars effective from the Half-Year Results as at 30 June 2008. |
| d | The dividend was first determined in US dollars and converted to sterling immediately before announcement at the rate of $1=£0.63, as set out in the circular detailing the special dividend and share buyback programme published on 14 September 2012. |
| e | Sterling dividend translated at $1=£0.624. |
| f | Translated into US dollars at the average rates of exchange for the relevant years (2014 $1=£0.61; 2013 $1=£0.64; 2012 $1 = £0.63). |
| g | The dividend was first determined in US dollars and converted to sterling immediately before announcement at the rate of $1=£0.65, as announced in the Half-Year Results to 30 June 2013. |
| h | Sterling dividend translated at $1=£0.644. |
| i | The dividend was first determined in US dollars and converted to sterling immediately before announcement at the rate translated at $1=£0.597. |
| j | Sterling dividend translated at $1=£0.5845. |
| k | The dividend was first determined in US dollars and converted to sterling at the rate of $1 = £0.6923, as announced on 12 May 2016. |
| l | The dividend was first determined in US dollars and converted to sterling at the rate of $1 = £0.7724, as announced on 11 May 2017. |
| m | The dividend was first determined in US dollars and converted to sterling at the rate of £1 = $1.2860, as announced on 17 January 2019. |
| Shareholder information | IHG | Annual Report and Form 20-F 2023 | 259 |
Additional Information
Shareholder information continued
Purchases of equity securities by
the Company and affiliated purchaser
The Group’s $750m share buyback programme was announced on 21 February 2023 and completed on 8 December 2023. As at 31 December 2023, 10,643,334 shares had been repurchased at an average price of £55.8797 per share (approximately £595m).
| Total number of shares (or units) purchased |
Average price paid per share (or unit) (£) |
Total number of shares as part of publicly |
Maximum number of shares (or units) that |
|||||||||||||||||||||
| Month 1 (no purchases this month) | – | – | – | 18,401,631 | a | |||||||||||||||||||
| Month 2 | 197,021 | 55.4399 | 197,021 | 18,401,631 | a | |||||||||||||||||||
| Month 3 | 53,665 | 53.8770 | 53,665 | 18,401,631 | a | |||||||||||||||||||
| Month 4 | 3,284,657 | 54.6737 | 3,284,657 | 18,401,631 | a | |||||||||||||||||||
| Month 5 | 622,030 | 53.6625 | 622,030 | 17,515,456 | b | |||||||||||||||||||
| Month 6 | 998,070 | 54.1602 | 998,070 | 17,515,456 | b | |||||||||||||||||||
| Month 7 | 2,415,477 | 54.1101 | 2,415,477 | 17,515,456 | b | |||||||||||||||||||
| Month 8 | 419,276 | 57.2867 | 419,276 | 17,515,456 | b | |||||||||||||||||||
| Month 9 | 2,073,696 | 61.1512 | 2,073,696 | 17,515,456 | b | |||||||||||||||||||
| Month 10 | 210,503 | 58.9185 | 210,503 | 17,515,456 | b | |||||||||||||||||||
| Month 11 | 368,361 | 59.4679 | 368,361 | 17,515,456 | b | |||||||||||||||||||
| Month 12 | 578 | 64.7148 | 578 | 17,515,456 | b | |||||||||||||||||||
| a | Reflects the resolution passed at the Company’s AGM held on 6 May 2022. |
| b | Reflects the resolution passed at the Company’s AGM held on 5 May 2023. |
Dividend history
The table below sets forth the amounts of ordinary dividends on each ordinary share and special dividends, in respect of each financial year indicated.
| Interim dividend | Final dividend | Total dividend | Special dividend | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| pence | cents | pence | cents | pence | cents | pence | cents | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 38.7 | 48.3 | N/A | a | 104 | N/A | a | 152.3 | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 37.8 | 43.9 | 76.08 | 94.5 | 113.88 | 138.4 | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | – | – | 67.50 | 85.9 | 67.50 | 85.9 | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 32.0 | 39.9 | – | b | – | b | 32.0 | 39.9 | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 | 27.7 | 36.3 | 60.4 | 78.1 | 88.1 | 114.4 | 203.8 | ce | 262.1 | ce | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 24.4 | 33.0 | 50.2 | 71.0 | 74.6 | 104.0 | 156.4 | c | 202.5 | c | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2016 | 22.6 | 30.0 | 49.4 | 64.0 | 72.0 | 94.0 | 438.2 | c | 632.9 | c | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2015 | 17.7 | 27.5 | 40.3 | 57.5 | 58.0 | 85.0 | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2014 | 14.8 | 25.0 | 33.8 | 52.0 | 48.6 | 77.0 | 174.9 | c | 293.0 | c | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2013 | 15.1 | 23.0 | 28.1 | 47.0 | 43.2 | 70.0 | 87.1 | 133.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2012 | 13.5 | 21.0 | 27.7 | 43.0 | 41.2 | 64.0 | 108.4 | c | 172.0 | c | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2011 | 9.8 | 16.0 | 24.7 | 39.0 | 34.5 | 55.0 | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2010 | 8.0 | 12.8 | 22.0 | 35.2 | 30.0 | 48.0 | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 7.3 | 12.2 | 18.7 | 29.2 | 26.0 | 41.4 | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2008d | 6.4 | 12.2 | 20.2 | 29.2 | 26.6 | 41.4 | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2007 | 5.7 | 11.5 | 14.9 | 29.2 | 20.6 | 40.7 | 200 | c | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2006 | 5.1 | 9.6 | 13.3 | 25.9 | 18.4 | 35.5 | 118 | c | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| a | The sterling amount of the final dividend will be announced on 25 April 2024 using the average of the daily exchange rates for the three working days commencing 22 April 2024. |
| b | The Board withdrew its recommendation of a final dividend in respect of 2019 of 85.9¢ per share. |
| c | Accompanied by a share consolidation. |
| d | IHG changed the reporting currency of its Consolidated Financial Statements from sterling to US dollars effective from the Half-Year Results as at 30 June 2008. Starting with the interim dividend for 2008, all dividends have first been determined in US dollars and converted into sterling prior to payment. |
| e | This special dividend was announced on 19 October 2018 and paid on 29 January 2019. |
| 260 | IHG | Annual Report and Form 20-F 2023 |
Shareholder profiles
Shareholder profile by type as at 31 December 2023
| Category of shareholder | Number of shareholders |
Percentage of total shareholders |
Number of ordinary shares |
Percentage of issued share capital |
||||||||||||||||||
| Private individuals | 27,873 | 95.24 | 6,903,273 | 4.01 | ||||||||||||||||||
| Nominee companies | 1,054 | 3.60 | 130,457,086 | 75.73 | ||||||||||||||||||
| Limited and public limited companies | 176 | 0.60 | 16,828,012 | 9.77 | ||||||||||||||||||
| Other corporate bodies | 157 | 0.54 | 18,060,803 | 10.48 | ||||||||||||||||||
| Banks and unknown | 7 | 0.02 | 7,592 | 0 | ||||||||||||||||||
| Total | 29,267 | 100 | 172,256,766 | 100 | ||||||||||||||||||
Shareholder profile by size as at 31 December 2023
| Range of shareholdings | Number of shareholders |
Percentage of total shareholders |
Number of ordinary shares |
Percentage of issued share capital |
||||||||||||||||
| 1–199 | 20,303 | 69.37 | 1,178,392 | 0.68 | ||||||||||||||||
| 200–499 | 4,958 | 16.94 | 1,550,178 | 0.90 | ||||||||||||||||
| 500–999 | 1,956 | 6.68 | 1,357,640 | 0.79 | ||||||||||||||||
| 1,000–4,999 | 1,349 | 4.61 | 2,639,651 | 1.53 | ||||||||||||||||
| 5,000–9,999 | 173 | 0.59 | 1,202,834 | 0.70 | ||||||||||||||||
| 10,000–49,999 | 275 | 0.94 | 6,322,715 | 3.67 | ||||||||||||||||
| 50, 000–99,999 | 84 | 0.29 | 5,741,501 | 3.33 | ||||||||||||||||
| 100,000–499,999 | 126 | 0.43 | 27,664,401 | 16.06 | ||||||||||||||||
| 500,000–999,999 | 19 | 0.06 | 12,789,629 | 7.42 | ||||||||||||||||
| 1,000,000 and above | 24 | 0.08 | 111,809,825 | 64.91 | ||||||||||||||||
| Total | 29,267 | 100 | 172,256,766 | 100 | ||||||||||||||||
Shareholder profile by geographical location as at 31 December 2023
| Country/Jurisdiction | Percentage of issued share capital |
|||
| UK | 35.8% | |||
| Rest of Europe | 20.3% | |||
| North America (including ADRs) | 41.8% | |||
| Rest of world | 2.1% | |||
| Total | 100% |
The geographical profile presented is based on an analysis of shareholders (by manager) of 10,000 shares or above where geographical ownership is known. This analysis only captures 93% of total issued share capital. Therefore, the known percentage distributions have been multiplied by 100/93 to achieve the figures shown in the table above.
As of 16 February 2024, 13,057,667 ADRs equivalent to 13,057,667 ordinary shares, or approximately 7.58% of the total issued share capital, were outstanding and were held by 405 holders. Since certain ordinary shares are registered in the names of nominees, the number of shareholders on record may not be representative of the number of beneficial owners.
As of 16 February 2024, there were a total of 30,018 recorded holders of ordinary shares, of whom 228 had registered addresses in the US and held a total of 275,706 ordinary shares (0.16% of the total issued share capital).
| Shareholder information | IHG | Annual Report and Form 20-F 2023 | 261 |
Additional Information
Exhibits
The following exhibits are filed as part of this Annual Report on Form 20-F with the SEC, and are publicly available through the SEC’s website.
Visit sec.gov and search InterContinental Hotels Group PLC under Company Filings.
| a | Incorporated by reference. |
| 262 | IHG | Annual Report and Form 20-F 2023 |
Forward-looking statements
The Annual Report and Form 20-F 2023 contains certain forward-looking statements as defined under US legislation (Section 21E of the Securities Exchange Act of 1934) with respect to the financial condition, results of operations and business of the Group and certain plans and objectives of the Board of Directors of InterContinental Hotels Group PLC with respect thereto. Such statements include, but are not limited to, statements made in the Chair’s statement and in the Chief Executive Officer’s review. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’, or other words of similar meaning. These statements are based on assumptions and assessments made by the Group’s management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.
By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty. There are a number of factors that could cause actual results and developments to differ materially from those expressed in, or implied by, such forward-looking statements, including, but not limited to: the Group’s exposure to a competitive and changing industry; the Group’s reliance on the reputation of its existing brands and exposure to inherent reputation risks; the Group’s exposure to inherent uncertainties associated with brand development and expansion; the Group’s exposure to a variety of risks related to identifying, securing and retaining franchise and management agreements; the Group’s exposure to the risks of hotel industry overcapacity; the Group’s requirement to have the right people, skills and capability to manage growth and change; the risk that the Group’s collective bargaining activity could disrupt operations, increase labour costs or interfere with the ability of management to focus on executing business strategies; the Group’s exposure to cybersecurity and data privacy risks; the Group’s exposure to intellectual property risks; the risk that the Group’s reputation and the value of its brands are influenced by the perception of various stakeholders of the Group; the Group’s requirements to comply with existing and changing regulations and act in accordance with societal expectations across numerous countries, territories and jurisdictions; the Group’s
exposure to the risk of litigation; the potential for domestic and international environmental laws and regulations to cause the Group to incur substantial costs or subject the Group to potential liabilities; the Group’s financial performance being affected by changes in tax laws; the Group’s dependence on a wide range of external stakeholders and business partners; the Group’s exposure to a variety of risks associated with safety, security and crisis management; the Group’s reliance on the resilience of its reservation system and other key technology platforms and the exposure to risks that could disrupt their operation and/or integrity; the Group’s exposure to political and economic developments; the Group’s exposure to continued disruption and consequences from the war in Ukraine; the Group’s exposure to disruption and consequences from the conflict in the Middle East; the potential for the Group to face difficulties insuring its business; the Group’s exposure to risks related to executing and realising benefits from strategic transactions, including acquisitions and restructuring; the Group’s exposure to a variety of risks associated with its financial stability and ability to borrow and satisfy debt covenants; the dependence of the Group’s operations on maintaining sufficient liquidity to meet all foreseeable medium-term requirements and provide headroom against unforeseen obligations; the Group’s exposure to an impairment of the carrying value of its brands, goodwill or other tangible and intangible assets negatively affecting its consolidated operating results; the Group’s exposure to fluctuations in exchange rates, currency devaluations or restructurings and to interest rate risk in relation to its borrowings; the potential for the Group to be affected by credit risk on treasury transactions; the Group’s exposure to inherent risks in relation to changing technology and systems; the Group’s exposure to competition from online travel agents and intermediaries; the Group’s exposure to the risk of events or stakeholder expectations that adversely impact domestic or international travel, including climate change; and the Group’s exposure to risks relating to its commitments in relation to climate change.
The main factors that could affect the business and financial results are described in the Strategic Report of the Annual Report and Form 20-F 2023.
| Forward-looking statements | IHG | Annual Report and Form 20-F 2023 |
263 |
Additional Information
Form 20-F cross-reference guide
The table below references information in this document that will be included in the Company’s Annual Report on Form 20-F for 2023 filed with the SEC.
| Item | Form 20-F caption | Location in this document | Page | |||||||||
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| 1 | Identity of Directors, senior management and advisers | Not applicable | – | |||||||||
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| 2 | Offer statistics and expected timetable | Not applicable | – | |||||||||
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| 3 | Key information | |||||||||||
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| 3A – Selected financial data | Shareholder information: Dividend history | 260 | ||||||||||
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| 3B – Capitalisation and indebtedness | Not applicable | – | ||||||||||
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| 3C – Reason for the offer and use of proceeds | Not applicable | – | ||||||||||
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| 3D – Risk factors | Group information: Risk factors | 242-247 | ||||||||||
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| 4 | Information on the Company | |||||||||||
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| 4A – History and development of the Company | Group information: History and developments | 242 | ||||||||||
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| Shareholder information: Return of funds | 259 | |||||||||||
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| Useful information: Contacts | 271 | |||||||||||
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| 4B – Business overview | Strategic Report | 2-88 | ||||||||||
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| Group information: Working Time Regulations 1998 | 252 | |||||||||||
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| Group Information: Risk factors | 242-247 | |||||||||||
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| 4C – Organisational structure | Strategic Report: Our Culture | 38-40 | ||||||||||
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| Group Financial Statements: Note 33 – Group companies | 214-216 | |||||||||||
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| Group Information: History and developments | 242 | |||||||||||
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| 4D – Property, plant and equipment | Strategic Report: Key performance indicators | 60-63 | ||||||||||
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| Directors’ Report: Greenhouse gas (GHG) emissions | 238-240 | |||||||||||
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| Group Financial Statements: Note 13 – Property, plant and equipment | 189-190 | |||||||||||
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| 4A | Unresolved staff comments | None | – | |||||||||
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| 5 | Operating and financial review and prospects | |||||||||||
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| 5A – Operating results | Strategic Report: Key performance indicators | 60-63 | ||||||||||
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| Strategic Report: Performance | 65-88 | |||||||||||
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| Group Financial Statements: Accounting policies | 161-172 | |||||||||||
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| Group Financial Statements: New accounting standards | 172 | |||||||||||
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| Viability statement | 50-51 | |||||||||||
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| 5B – Liquidity and capital resources | Strategic Report: Our Business Model – Capital allocation and dividend policy | 12-13 | ||||||||||
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| Viability statement | 50-51 | |||||||||||
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| Strategic Report: Performance – Sources of liquidity | 70 | |||||||||||
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| Group Financial Statements: Note 18 – Cash and cash equivalents | 195 | |||||||||||
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| Group Financial Statements: Note 22 – Loans and other borrowings | 197-198 | |||||||||||
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| Group Financial Statements: Note 24 – Financial risk management and derivative financial instruments | 199-203 | |||||||||||
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| Group Financial Statements: Note 25 – Classification and measurement of financial instruments | 204-205 | |||||||||||
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| Group Financial Statements: Note 26 – Reconciliation of (loss)/profit for the year to cash flow from operations before contract acquisition costs | 206 | |||||||||||
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| 5C – Research and development; intellectual property | Not applicable | – | ||||||||||
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| 5D – Trend information | Strategic Report: Performance | 65-88 | ||||||||||
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| Strategic Report: Trends shaping our industry | 14-15 | |||||||||||
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| 5E – Off-balance sheet arrangements | Strategic Report: Performance – Off-balance sheet arrangements | 70 | ||||||||||
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| 5G – Safe harbour | Additional Information: Forward-looking statements | 263 | ||||||||||
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| Non-GAAP financial measures | Strategic Report: Performance | 65-88 | ||||||||||
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| Other financial information | 226-234 | |||||||||||
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| Group Financial Statements: Note 23 – Net debt | 198-199 | |||||||||||
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| 264 | IHG | Annual Report and Form 20-F 2023 |
| Item | Form 20-F caption | Location in this document | Page | |||||||||
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| 6 | Directors, senior management and employees | |||||||||||
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| 6A – Directors and senior management | Governance: Our Board of Directors and Our Executive Committee | 92-99 | ||||||||||
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| 6B – Compensation | Directors’ Remuneration Report | 116-140 | ||||||||||
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| Group Financial Statements: Note 27 – Retirement benefits | 207-209 | |||||||||||
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| Group Financial Statements: Note 31 – Related party disclosures | 213 | |||||||||||
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| Group Financial Statements: Note 28 – Share-based payments | 209-210 | |||||||||||
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| 6C – Board practices | Governance structure and Board activities | 100-104 | ||||||||||
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| Executive Directors’ benefits upon termination of office | 249 | |||||||||||
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| 6D – Employees | Group Financial Statements: Note 4 – Staff costs and Directors’ remuneration | 178 | ||||||||||
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| Group information: Working Time Regulations 1998 | 252 | |||||||||||
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| Directors’ Report: Employees and Code of Conduct | 236-237 | |||||||||||
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| 6E – Share ownership | Directors’ Remuneration Report: Annual Report on Directors’ remuneration – Scheme interests awarded during 2022 and 2023 | 131 | ||||||||||
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| Directors’ Remuneration Report: Annual Report on Directors’ remuneration – Shares and awards held by Executive Directors at 31 December 2023: number of shares | 133 | |||||||||||
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| Group Financial Statements: Note 28 – Share-based payments | 209-210 | |||||||||||
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| Group information: Directors’ and Executive Committee members’ shareholdings | 249 | |||||||||||
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| 6F – Disclosure of a registrant’s action to recover erroneously awarded compensation |
Not applicable | – | ||||||||||
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| 7 | Major shareholders and related party transactions | |||||||||||
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| 7A – Major shareholders | Directors’ Report: Major institutional shareholders | 235 | ||||||||||
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| Shareholder information: Shareholder profiles | 261 | |||||||||||
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| 7B – Related party transactions | Group Financial Statements: Note 15 – Investment in associates | 192-193 | ||||||||||
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| Group Financial Statements: Note 31 – Related party disclosures | 213 | |||||||||||
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| 7C – Interests of experts and counsel | Not applicable | – | ||||||||||
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| 8 | Financial Information | |||||||||||
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| 8A – Consolidated statements and other | Directors’ Report: Dividends | 235 | ||||||||||
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| financial information | Group Financial Statements | 143-216 | ||||||||||
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| Group information: Legal proceedings | 254 | |||||||||||
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| Other financial information | 226-234 | |||||||||||
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| 8B – Significant changes | None | – | ||||||||||
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| 9 | The offer and listing | |||||||||||
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| 9A – Offer and listing details | Useful information: Trading markets | 269 | ||||||||||
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| 9B – Plan of distribution | Not applicable | – | ||||||||||
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| 9C – Markets | Useful information: Trading markets | 269 | ||||||||||
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| 9D – Selling shareholders | Not applicable | – | ||||||||||
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| 9E – Dilution | Not applicable | – | ||||||||||
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| 9F – Expenses of the issue | Not applicable | – | ||||||||||
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| 10 | Additional information | |||||||||||
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| 10A – Share capital | Not applicable | – | ||||||||||
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| 10B – Memorandum and articles of association | Group information: Articles of Association | 251-252 | ||||||||||
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| Group information: Rights attaching to shares | 251-252 | |||||||||||
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| 10C – Material contracts | Group information: Material contracts | 253 | ||||||||||
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| 10D – Exchange controls | Group information: Exchange controls and restrictions on payment of dividends | 253 | ||||||||||
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| 10E – Taxation | Shareholder information: Taxation | 255-257 | ||||||||||
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| 10F – Dividends and paying agents | Not applicable | – | ||||||||||
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| 10G – Statement by experts | Not applicable | – | ||||||||||
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||||||||||
| 10H – Documents on display | Useful information: Investor information – Documents on display | 269 | ||||||||||
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| 10I – Subsidiary information | Not applicable | – | ||||||||||
|
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| Form 20-F cross-reference guide | IHG | Annual Report and Form 20-F 2023 | 265 |
Additional Information
Form 20-F cross-reference guide continued
| Item | Form 20-F caption | Location in this document | Page | |||||||||
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|||||||||
| 11 | Quantitative and qualitative disclosures about market risk | Group Financial Statements: Note 24 – Financial risk management and derivative financial instruments | 199-203 | |||||||||
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| 12 | Description of securities other than equity securities | |||||||||||
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| 12A – Debt securities | Not applicable | – | ||||||||||
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| 12B – Warrants and rights | Not applicable | – | ||||||||||
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||||||||||
| 12C – Other securities | Not applicable | – | ||||||||||
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||||||||||
| 12D – American depositary shares | Group information: Description of securities other than equity securities | 250 | ||||||||||
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| Additional Information: Investor Information | 269-270 | |||||||||||
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| Additional Information: Contacts | 271 | |||||||||||
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| 13 | Defaults, dividend arrearages and delinquencies | Not applicable | – | |||||||||
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|||||||||
| 14 | Material modifications to the rights of security holders and use of proceeds | Not applicable | – | |||||||||
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| 15 | Controls and Procedures | |||||||||||
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| Shareholder information: Disclosure controls and procedures | 257 | |||||||||||
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| Statement of Directors’ Responsibilities: Management’s report on internal control over financial reporting | 144 | |||||||||||
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| Independent Auditor’s US Report | 151-153 | |||||||||||
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| 16 | 16A – Audit committee financial expert | Governance: Audit Committee Report | 107-111 | |||||||||
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| Shareholder information: Summary of significant corporate governance differences from NYSE listing standards – Committees | 258 | |||||||||||
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||||||||||
| 16B – Code of ethics | Directors’ Report: Employees and Code of Conduct | 236-237 | ||||||||||
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|
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| Strategic Report: Our culture | 38-40 | |||||||||||
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|
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|||||||||||
| Shareholder information: Summary of significant corporate governance differences from NYSE listing standards | 258 | |||||||||||
|
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||||||||||
| 16C – Principal accountant fees and services | Governance: Audit Committee Report – External auditor | 109 | ||||||||||
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|
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| Governance: Audit Committee Report – Non-audit services | 109 | |||||||||||
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| Group Financial Statements: Note 5 – Auditor’s remuneration | 178 | |||||||||||
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| 16D – Exemptions from the listing standards for audit committees |
Not applicable | – | ||||||||||
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| 16E – Purchase of equity securities by the issuer and affiliated purchasers |
Shareholder information: Purchases of equity securities by the Company and affiliated purchasers | 260 | ||||||||||
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| 16F – Change in registrant’s certifying accountant | Not applicable | – | ||||||||||
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||||||||||
| 16G – Corporate Governance | Shareholder information: Summary of significant corporate governance differences from NYSE listing standards | 258 | ||||||||||
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| 16H – Mine safety disclosure | Not applicable | – | ||||||||||
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||||||||||
| 16I – Disclosure regarding foreign jurisdictions that prevent inspections |
Not applicable | – | ||||||||||
|
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|
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||||||||||
| 16J – Insider trading policies | Not applicable | – | ||||||||||
|
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|
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||||||||||
| 16K – Cybersecurity | Additional Information: Cybersecurity | 248 | ||||||||||
|
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|||||||||
| 17 | Financial statements | Not applicable | – | |||||||||
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|||||||||
| 18 | Financial statements | Group Financial Statements | 143-216 | |||||||||
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| 19 | Exhibits | Additional Information: Exhibits | 262 | |||||||||
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| 266 | IHG | Annual Report and Form 20-F 2023 |
Glossary
ADR
an American Depositary Receipt, being a receipt evidencing title to an ADS.
ADR Depositary
J.P. Morgan Chase Bank N.A.
ADS
an American Depositary Share as evidenced by an ADR, being a registered negotiable security, listed on the New York Stock Exchange, representing one ordinary share of 20 340/399 pence each of the Company.
AGM
Annual General Meeting.
APP
Annual Performance Plan.
Average daily rate
rooms revenue divided by the number of room nights sold.
Capital expenditure
purchases of property, plant and equipment, intangible assets, associate and joint venture investments, and other financial assets, plus contract acquisition costs (key money).
Captive
the Group’s captive insurance company, SCH Insurance Company.
Code
IHG’s Code of Conduct.
Colleague
individuals who work at IHG corporate offices, reservation centres, managed, owned, leased, managed lease and franchised hotels collectively.
Companies Act
the UK Companies Act 2006, as amended from time to time.
Company or Parent Company
InterContinental Hotels Group PLC.
Comparable RevPAR
a comparison for a grouping of hotels that have traded in all months in financial years being compared. Principally excludes new hotels, hotels closed for major refurbishment and hotels sold in either of the two years.
Compound Annual Growth Rate (CAGR)
growth over a period of years expressed as the constant rate of growth that would produce the same growth if compounded annually.
Constant currency
a prior-year value translated using the current year’s average exchange rates.
Currency swap
an exchange of a deposit and a borrowing, each denominated in a different currency, for an agreed period of time.
DAP
Deferred Award Plan.
Deferred Compensation Plan or DCP
a US plan that allows for the additional provision for retirement within a dedicated trust, either through employee deferral of salary with matching company contributions, deferral of APP earnings or through direct company contribution.
Derivatives
financial instruments used to reduce risk, the price of which is derived from an underlying asset, index or rate.
DE&I
Diversity, equity & inclusion.
EMEAA
Europe, Middle East, Asia and Africa (excludes Greater China).
Employee engagement survey
our employee engagement survey, known as the Colleague HeartBeat, completed by IHG employees or those colleagues who are employed at managed or managed lease hotels.
Enterprise contribution to revenue
the percentage of room revenue booked through IHG managed channels and sources: direct via our websites, apps and call centres; through our interfaces with Global Distribution Systems (GDS) and agreements with Online Travel Agencies (OTAs); other distribution partners directly connected to our reservation system; and Global Sales Office business or IHG One Rewards members that book directly at a hotel.
ERG
employee resource group.
ESG
Environmental, social and governance.
Executive officers
defined by the SEC as the president, any vice president in charge of a principal business unit, division or function (such as sales, administration or finance), any officer who performs a policy making function, or any other person who performs similar policy making functions.
Fee business
IHG’s franchised and managed businesses combined.
FERA
Fuel and energy related emissions.
Franchised hotels
hotels operated under an IHG brand license by a franchisee. IHG receives a fixed percentage of rooms revenue and neither owns, leases nor operates the property.
Franchisee
an owner who uses a brand under licence from IHG.
FRC
UK Financial Reporting Council.
Group or IHG
the Company and its subsidiaries.
Guest Love
IHG’s guest satisfaction measurement tool used to measure brand preference and guest satisfaction.
Guest Reservation System or GRS
our global electronic guest reservation system.
Hedging
the reduction of risk, normally in relation to foreign currency or interest rate movements, by making offsetting commitments.
Hotel revenue
revenue from all revenue-generating activity undertaken by managed, owned, leased and managed lease hotels, including room nights, food and beverage sales.
IASB
International Accounting Standards Board.
IFRS
International Financial Reporting Standards as issued by the IASB and adopted under UK law.
IHG PLC
InterContinental Hotels Group PLC.
International Sustainability Standards Board (ISSB)
formed by the IFRS to create sustainability-related disclosure standards that provide investors with consistent and comparable information about companies’ sustainability-related risks and opportunities.
Journey to Tomorrow
IHG’s responsible business plan to create positive change by 2030.
Liquidated damages
payments received in respect of the early termination of franchise and management agreements.
| Glossary | IHG | Annual Report and Form 20-F 2023 | 267 |
Additional Information
Glossary continued
Listing Rules
regulations subject to the oversight of the Financial Conduct Authority, which set out the obligations of UK listed companies.
LTIP
Long Term Incentive Plan.
Managed hotels
hotels operated by IHG under a management agreement on behalf of the hotel owner. IHG generates revenue through a fixed percentage of the total hotel revenue and a proportion of hotel profit, and neither leases nor owns the property.
Managed lease
properties which are held through a lease but with the same characteristics as management agreements.
Management agreement
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.
Net rooms supply
net total number of IHG System hotel rooms.
NYSE
New York Stock Exchange.
Occupancy rate
rooms occupied by hotel guests, expressed as a percentage of rooms that are available.
Ordinary share
ordinary shares of 20 340/399 pence each in the Company.
Owned, leased and managed lease hotels
hotels operated by IHG where IHG is, or effectively acts as, the owner, with responsibility for assets, employees and running costs. The entire revenue and profit of the hotels are recorded in IHG’s financial statements.
Owner
the owner of a hotel property.
Pipeline
hotels/rooms due to enter the IHG System at a future date. A hotel enters the pipeline once a contract has been signed and appropriate fees paid.
% pts
a percentage point is the unit for the arithmetic difference of two percentages.
Reimbursable revenues
reimbursements from managed and franchised hotels for costs incurred by IHG, for example the cost of IHG employees working in managed hotels. The related revenues and costs are presented gross in the Group income statement and there is no impact to profit.
Revenue management
the employment of pricing and segment strategies to optimise the revenue generated from the sale of room nights.
RevPAR or Revenue per available room
rooms revenue divided by the number of room nights that are available (can be mathematically derived from occupancy rate multiplied by average daily rate).
Revolving Credit Facility or RCF
the Group’s syndicated bank revolving credit facility.
Room count
number of rooms franchised, managed, owned, leased or managed lease by IHG.
Rooms revenue
revenue generated from the sale of room nights.
Royalties
fees, based on rooms revenue, that a franchisee pays to the Group.
Science-based targets (SBTs)
measurable, actionable and time-bound carbon reduction targets, based on the best available science and in line with the scale of reductions required to keep global warming below 2°C or 1.5°C from pre-industrial levels.
Science Based Targets initiative (SBTi)
helps businesses commit to and meet SBTs by independently assessing and approving any targets that are set.
SEC
US Securities and Exchange Commission.
Subsidiary
a company over which the Group exercises control.
System
hotels/rooms operating under franchise and management agreements together with IHG owned, leased and managed lease hotels/ rooms, globally (the IHG System) or on a regional basis, as the context requires.
System Fund or Fund
assessment fees and contributions collected from hotels within the IHG System which fund activities that drive revenue to our hotels including marketing, the IHG One Rewards loyalty programme and our distribution channels.
Task Force on Climate-related Financial Disclosures (TCFD)
created by the Financial Stability Board to improve and increase reporting of climate-related financial information and to help inform investors and others about the risks they face related to climate change.
Total Shareholder Return or TSR
the theoretical growth in value of a shareholding over a period, by reference to the beginning and ending share price, and assuming that dividends, including special dividends, are reinvested to purchase additional units of the equity.
UK Corporate Governance Code
a Code issued in 2018 by the Financial Reporting Council in the UK, which guides best practice for the governance of listed companies.
Working capital
the sum of inventories, receivables and payables of a trading nature, excluding financing and taxation items.
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For the definitions of our Key performance measures (including Non-GAAP measures) see pages 84 to 88. |
| 268 | IHG | Annual Report and Form 20-F 2023 |
Useful information
Investor information
Website and electronic communication
As part of IHG’s commitment to reduce the cost and environmental impact of producing and distributing printed documents in large quantities, this Annual Report and Form 20-F 2023 has been made available to shareholders through our website at ihgplc.com/investors under Annual Report. Shareholders may electronically appoint a proxy to vote on their behalf at the 2024 AGM. Shareholders who hold their shares through CREST may appoint proxies through the CREST electronic proxy appointment service, by using the procedures described in the CREST Manual.
Shareholder hotel discount
IHG offers discounted hotel stays (subject to availability) for registered shareholders only, through a controlled-access website. This is not available to shareholders who hold shares through nominee companies, ISAs or ADRs. For further details please contact the Company Secretary’s office (see page 271).
Responsible Business Report
In line with our commitment to responsible business practices, this year we have produced a Responsible Business Report showcasing our approach to responsible business and progress against our Responsible Business Targets.
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Visit ihgplc.com/responsible-business for further information. |
Modern Slavery Statement
In accordance with the UK Modern Slavery Act 2015, we have produced a Modern Slavery Statement.
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Visit ihgplc.com/reporting for further information. |
Registrar
For information on a range of shareholder services, including enquiries concerning individual shareholdings, notification of a shareholder’s change of address and amalgamation of shareholder accounts (in order to avoid duplicate mailing of shareholder communications), shareholders should contact the Company’s Registrar, Equiniti, on +44 (0) 371 384 2030a.
Dividend services
Dividend Reinvestment Plan (DRIP)
The Company offers a DRIP for shareholders to purchase additional IHG shares with their cash dividends. For further information about the DRIP, please contact our Registrar helpline on +44 (0) 371 384 2030a.
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Visit shareview.co.uk/info/drip for a DRIP application form and information booklet. |
Bank mandate
We encourage shareholders to have their dividends paid directly into their UK bank or building society accounts, to ensure efficient payment and clearance of funds on the payment date. For further information, please contact our Registrar (see page 271).
Overseas payment service
It is also possible for shareholders to have their dividends paid directly to their bank accounts in a local currency. Charges are payable for this service.
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Visit shareview.co.uk/info/ops for further information. |
Out-of-date/unclaimed dividends
If you think that you have out-of-date dividend cheques or unclaimed dividend payments, please contact our Registrar (see page 271).
Individual Savings Account (ISA)
Equiniti offers a Stocks and Shares ISA that can invest in IHG shares.
For further information, please contact Equiniti on +44 (0) 371 384 2030a.
Share-dealing services
Equiniti offers the following share-dealing facilities.
Postal dealing
+44 (0) 371 384 2030 from the UK and overseasa
Telephone dealing
For more information, call +44 (0)371 384 2030b
Internet dealing
Visit shareview.co.uk for more information.
Changes to the base cost of IHG shares
Details of all the changes to the base cost of IHG shares held from April 2004 to January 2019, for UK Capital Gains Tax purposes, may be found on our website at ihgplc.com/investors under Shareholder centre in the Tax information section.
‘Gone away’ shareholders
Working with ProSearch (an asset reunification company), we continue to look for shareholders who have not kept their contact details up to date. We have funds waiting to be claimed and are committed to doing what we can to pay these to their rightful owners. Please contact ProSearch on +44 (0) 371 384 2735c or visit prosearchassets.com for further details.
| a | Lines are open from 08:30 to 17:30 Monday to Friday, excluding UK public holidays. |
| b | Lines are open from 08:00 to 18:00 Monday to Friday, excluding UK public holidays. |
| c | Lines are open from 09:00 to 17:00 Monday to Friday, excluding UK public holidays. |
Shareholder security
Many companies have become aware that their shareholders have received unsolicited telephone calls or correspondence concerning investment matters. These are typically from ‘brokers’ who target UK shareholders, offering to sell them what often turn out to be worthless or high-risk shares in US or UK investments. These operations are commonly known as ‘boiler rooms’. More detailed information on this or similar activity can be found at fca.org.uk/consumers on the Financial Conduct Authority website.
Details of any share dealing facilities that the Company endorses will be included in Company mailings.
Trading markets
The principal trading market for the Company’s ordinary shares is the London Stock Exchange (LSE). The ordinary shares are also listed on the NYSE, trading in the form of ADSs evidenced by ADRs. Each ADS represents one ordinary share. The Company has a sponsored ADR facility with J.P. Morgan Chase Bank, N.A., as ADR Depositary.
American Depositary Receipts (ADRs)
The Company’s shares are listed on the NYSE in the form of American Depositary Shares, evidenced by ADRs and traded under the symbol ‘IHG’. Each ADR represents one ordinary share. All enquiries regarding ADR holder accounts and payment of dividends should be directed to J.P. Morgan Chase Bank, N.A., our ADR Depositary bank (contact details shown on page 271).
Documents on display
Documents referred to in this Annual Report and Form 20-F that are filed with the SEC can be found at the SEC’s public reference room located at 100 F Street, NE Washington, DC 20549. For further information and copy charges please call the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically and the Company’s SEC filings since 22 May 2002 are also publicly available through the SEC’s website at sec.gov Copies of the Company’s Articles of Association can be obtained via the website at ihgplc.com/investors under Corporate governance or from the Company’s registered office on request.
| Useful information | IHG | Annual Report and Form 20-F 2023 | 269 |
Additional Information
Useful information continued
Financial calendars
| Dividends | ||||
| 2023 | ||||
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| 2023 Interim dividend | ||||
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| Ex-dividend date | 31 August | |||
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| Record date | 1 September | |||
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| Payment date | 5 October | |||
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| 2024 | ||||
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| 2023 Final dividend of 104¢ per ordinary sharea | ||||
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| Ex-dividend date | 4 April | |||
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| Record date | 5 April | |||
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| Payment date | 14 May | |||
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| a | The sterling amount of the final dividend will be announced on 25 April 2024 using the average of the daily exchange rates for the three working days commencing 22 April 2024. |
| Other dates | ||||
| 2023 | ||||
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| Financial year end | 31 December | |||
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| 2024 | ||||
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| Announcement of Preliminary Results for 2023 | 20 February | |||
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| Announcement of 2024 First Quarter | 3 May | |||
| Trading Update | ||||
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| Annual General Meeting | 3 May | |||
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| Announcement of Half-Year Results for 2024 | 6 August | |||
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| Announcement of 2024 Third Quarter | 22 October | |||
| Trading Update | ||||
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| Financial year end | 31 December | |||
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| 2025 | ||||
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| Announcement of Preliminary Results for 2024 | February | |||
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| 270 | IHG | Annual Report and Form 20-F 2023 |
Contacts
Registered office
IHG Hotels & Resorts, 1 Windsor Dials, Arthur Road, Windsor,
SL4 1RS, United Kingdom
Telephone:
+44 (0) 1753 972 000
ihgplc.com
For general information about the Group’s business, please contact the Corporate Affairs department at the above address. For all other enquiries, please contact the Company Secretary’s office at the above address.
Registrar
Equiniti, Aspect House, Spencer Road, Lancing, West Sussex,
BN99 6DA, United Kingdom
Telephone:
+44 (0) 345 607 6838
shareview.co.uk
ADR Depositary
Shareowner Services, PO Box 64874, St. Paul, MN 55164-0874,
United States of America
Telephone:
+1 800 401 1957 (US calls) (toll-free)
+1 800 468 9716 (non-US calls)
Enquiries: shareowneronline.com under contact us
adr.com
Auditor
PricewaterhouseCoopers LLP
Investment bankers
BofA Securities
Goldman Sachs
Solicitors
Freshfields Bruckhaus Deringer LLP
Stockbrokers
BofA Securities
IHG® One Rewards
If you wish to enquire about, or join, IHG Rewards, visit ihg.com/onerewards or telephone:
+800 2222 7172b (Austria, Belgium, Denmark, Finland, France, Germany, Hungary, Ireland, Israel, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and UK)
+44 1950 499004c (all other countries/regions in Europe and Africa)
1 888 211 9874 (US and Canada)
001 800 272 9273c (Mexico)
+1 801 975 3013c (Spanish) (Central and South America)
+1 801 975 3063c (English) (Central and South America)
+973 6 500 9 296a (Middle East)
+800 2222 7172b (Australia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore and Thailand)
800 830 1128a or 021 20334848a (Mainland China)
800 965 222 (China Hong Kong)
0800 728 (China Macau)
00801 863 366 (China Taiwan)
+632 8857 8788c (all other countries/regions in Asia Pacific)
| + | Denotes international access code. 00 or 011 in most countries. |
| a | Toll charges apply. |
| b | Universal international freephone number. |
| c | International calling rates may apply. |
| Useful information | IHG | Annual Report and Form 20-F 2023 | 271 |
Designed and produced by
Design Bridge and Partners, London.
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Printed by Park Communications, a Carbon Neutral
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Park works to the EMAS standard and its Environmental
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This publication has been manufactured using 100%
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| 272 | IHG | Annual Report and Form 20-F 2023 |
IHG is proud of its people and the care shown for the communities in which it operates. We are pleased to feature photos of some of our people, as well as some of our community activities throughout this Annual Report and Form 20-F.
InterContinental Hotels Group PLC 1 Windsor Dials Arthur Road Windsor Berkshire SL4 1RS Switchboard +44 (0) 1753 972000 ihgplc.com Make a booking at ihg.com
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on Form 20-F on its behalf.
| INTERCONTINENTAL HOTELS GROUP PLC (Registrant) |
||
| By: | /s/ Michael Glover |
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| Name: | Michael Glover |
|
| Title: | Chief Financial Officer | |
| Date: | February 29, 2024 | |
Exhibit 2(d)
DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT
As of December 31, 2023, InterContinental Hotels Group PLC (the “Company” or “IHG”) had the following series of securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker symbol |
Name of each exchange on which registered |
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| American Depositary Shares | IHG | New York Stock Exchange | ||
| Ordinary Shares of 20340⁄399 pence each | IHG | New York Stock Exchange* |
| * | Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission. |
Capitalized terms used but not defined herein have the meanings given to them in the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2023.
ORDINARY SHARES
The following is a summary of the material terms of the ordinary shares of nominal value of 20340⁄399, as set forth in our Articles of Association and the material provisions of U.K. law. This description is a summary and does not purport to be complete. You are encouraged to read our Articles of Association, which are filed as an exhibit to the Group’s Annual Report on Form 20-F for the fiscal year ended December 31, 2021, incorporated by reference into this document.
Share Capital
The Company’s issued share capital at December 31, 2023 consisted of 172,256,766 ordinary shares of 20340/399 pence each, including 7,006,782 shares held in treasury, which constituted 4.07% of the total issued share capital (including treasury shares). There are no special control rights or restrictions on share transfers or limitations on the holding of any class of shares.
During 2023, 500,000 shares were transferred from treasury to the employee share ownership trust.
As far as is known to management, IHG is not directly or indirectly owned or controlled by another company or by any government. The Board focuses on shareholder value-creation. When it decides to return capital to shareholders, it considers all of its options, including share buybacks and special dividends.
Trading Markets
The principal trading market for the Company’s ordinary shares is the London Stock Exchange (LSE). The ordinary shares are also listed on the NYSE, trading in the form of ADSs evidenced by ADRs. Each ADS represents one ordinary share. The Company has a sponsored ADR facility with J.P. Morgan Chase Bank, N.A. as ADR Depositary.
Rights Attaching to Ordinary Shares
Dividend Rights and Rights to Share in the Company’s Profits The Company’s Board of Directors may declare and pay to shareholders such interim dividends as appear to them to be justified by the Company’s financial position.
Under English law, dividends are payable on the Company’s ordinary shares only out of profits available for distribution, as determined in accordance with accounting principles generally accepted in the UK and by the Companies Act. No dividend will bear interest as against the Company.
Holders of the Company’s ordinary shares are entitled to receive such dividends as may be declared by the shareholders in general meeting, rateably according to the amounts paid up on such shares, provided that the dividend cannot exceed the amount recommended by the Directors.
If authorised by an ordinary resolution of the shareholders, the Board of Directors may also direct payment of a dividend in whole or in part by the distribution of specific assets (and in particular of paid-up shares or debentures of any other company). Any dividend unclaimed by a member (or by a person entitled by virtue of transmission on death or bankruptcy or otherwise by operation of law) after six years from the date the dividend was declared, or became due for payment, will be forfeited and will revert to the Company.
Voting Rights
The holders of ordinary shares are entitled, in respect of their holdings of such shares, to receive notice of general meetings and to attend, speak and vote at such meetings in accordance with the Articles.
Voting at any general meeting of shareholders is by a show of hands unless a poll, which is a written vote, is duly demanded. On a show of hands, every shareholder who is present in person or by proxy at a general meeting has one vote regardless of the number of shares held. Resolutions put to the members at electronic general meetings shall be voted on by a poll, which poll votes may be cast by such electronic means as the Board in its sole discretion deems appropriate for the purposes of the meeting.
On a poll, every shareholder who is present in person or by proxy has one vote for every share held by that shareholder. A poll may be demanded by any of the following:
| • | The Chair of the meeting; |
| • | At least five shareholders present in person or by proxy and entitled to vote at the meeting; |
| • | Any shareholder or shareholders present in person or by proxy representing in the aggregate not less than one-tenth of the total voting rights of all shareholders entitled to vote at the meeting; or |
| • | Any shareholder or shareholders present in person or by proxy holding shares conferring a right to vote at the meeting and on which there have been paid up sums in the aggregate at least equal to one-tenth of the total sum paid up on all the shares conferring that right. |
A proxy form will be treated as giving the proxy the authority to demand a poll, or to join others in demanding one.
The necessary quorum for a general meeting is two persons carrying a right to vote upon the business to be transacted, whether present in person or by proxy.
Matters are transacted at general meetings of the Company by the proposing and passing of resolutions, of which there are two kinds:
| • | An ordinary resolution, which includes resolutions for the election of Directors, the approval of financial statements, the cumulative annual payment of dividends, the appointment of the Auditor, the increase of share capital or the grant of authority to allot shares. |
| • | A special resolution, which includes resolutions amending the Articles, disapplying statutory pre-emption rights, modifying the rights of any class of the Company’s shares at a meeting of the holders of such class or relating to certain matters concerning the Company’s winding up or changing the Company’s name. |
An ordinary resolution requires the affirmative vote of a majority of the votes of those persons present and entitled to vote at a meeting at which there is a quorum.
Special resolutions require the affirmative vote of not less than three quarters of the persons present and entitled to vote at a meeting at which there is a quorum.
AGMs must be convened upon advance written notice of 21 days. Other meetings must be convened upon advance written notice of 14 days. The days of delivery or receipt of the notice are not included. The notice must specify the nature of the business to be transacted. The Board of Directors may, if they choose, make arrangements for shareholders, who are unable to attend the place of the meeting, to participate at other places. The Articles also allow for shareholders to attend and participate in shareholder meetings by electronic means.
Variation of Rights
If, at any time, the Company’s share capital is divided into different classes of shares, the rights attached to any class may be varied, subject to the provisions of the Companies Act, with the consent in writing of holders of three-quarters in nominal value of the issued shares of that class or upon the adoption of a special resolution passed at a separate meeting of the holders of the shares of that class. At every such separate meeting, all of the provisions of the Articles relating to proceedings at a general meeting apply, except that the quorum is to be the number of persons (which must be two or more) who hold or represent by proxy not less than one-third in nominal value of the issued shares of that class.
Rights in a Winding-Up
Except as the Company’s shareholders have agreed or may otherwise agree, upon the Company’s winding up, the balance of assets available for distribution is to be distributed among the holders of ordinary shares according to the amounts paid up on the shares held by them:
| • | After the payment of all creditors including certain preferential creditors, whether statutorily preferred creditors or normal creditors; and |
| • | Subject to any special rights attaching to any class of shares. |
This distribution is generally to be made in cash. A liquidator may, however, upon the adoption of a special resolution of the shareholders, divide among the shareholders the whole or any part of the Company’s assets in kind.
Limitations on Voting and Shareholding
There are no limitations imposed by English law or the Articles on the right of non-residents or foreign persons to hold or vote the Company’s ordinary shares, other than the limitations that would generally apply to all of the Company’s shareholders.
Exchange controls and restrictions on payment of dividends
Other than economic sanctions which may be in force in the UK from time to time, there are no restrictions under the Articles or under English law that limit the right of non-resident or foreign owners to hold or vote the ordinary shares or the ADSs. In addition, the Articles contain certain limitations on the voting and other rights of any holder of ordinary shares whose holding may, in the opinion of the Directors, result in the loss or failure to secure the reinstatement of any licence or franchise from any US governmental agency held by Six Continents Hotels, Inc. or any subsidiary thereof.
Share Awards and Grants to Employees
Our current policy is to settle the majority of awards or grants under the Company’s share plans with shares purchased in the market or from shares held in treasury; however, the Company continues to review this policy. The Company’s share plans incorporate the current Investment Associations’ guidelines on dilution which provide that commitments to new shares or re-issue treasury shares under executive plans should not exceed 5% of the issued ordinary share capital of the Company (adjusted for share issuance and cancellation) in any 10-year period.
As at December 31, 2023, no options were outstanding. The Company has not utilised the authority given by shareholders at any of its AGMs to allot shares for cash without first offering such shares to existing shareholders.
Employee Share Ownership Trust (ESOT)
IHG operates an ESOT for the benefit of employees and former employees. The ESOT receives treasury shares from the Company and purchases ordinary shares in the market and releases them to current and former employees in satisfaction of share awards.
Certain shares that have been allocated to share plan participants under the Annual Performance Plan (APP) are held in a nominee account on behalf of those participants by Computershare Investors Plc (Nominee). The shares held by the Nominee have been allocated to share plan participants on terms that entitle those participants to request or require the Nominee to exercise the voting rights relating to those shares. The Nominee shall exercise those votes in accordance with the directions of the participants. Shares that have not been allocated to share plan participants under such terms continue to be held by the ESOT and the trustee may vote or abstain from exercising their voting rights in relation to those shares, or accept or reject any offer relating to the shares, in any way it sees fit.
As at 31 December 2023, the Nominee held 225,688 ordinary shares in the Company, in the form of unvested share plan awards, allocated to APP participants.
Unless otherwise requested by the Company, the trustee of the ESOT waives all ordinary dividends on the shares held in the ESOT, other than shares which have been allocated to participants on terms which entitle them to the benefit of dividends, except for such amount per share as shall, when multiplied by the number of shares held by it on the relevant date, equal one pence or less.
AMERICAN DEPOSITARY SHARES
The following is a summary of the general terms and provisions of the Second Amended and Restated Deposit Agreement (the “Deposit Agreement”) under which the Depositary will deliver the American Depositary Shares (“ADSs”). The Deposit Agreement is among us, J.P. Morgan Chase Bank, N.A., as Depositary, and all registered holders and beneficial owners from time to time of ADSs issued under it. This summary does not purport to be complete. You should read the Amended and Restated Deposit Agreement, which we have filed with the SEC as an exhibit to the Form F-6 filed on November 4, 2021. You may also read the Deposit Agreement at the corporate trust offices of J.P. Morgan Chase Bank, N.A. The principal executive office of the Depositary and its corporate trust office is currently located at J.P. Morgan Depositary Receipts, 383 Madison Avenue, Floor 11, New York, NY 10179, United States.
American Depositary Shares
The Company’s ordinary shares are listed on the NYSE in the form of ADSs, evidenced by American Depositary Receipts (“ADRs”) and traded under the symbol ‘IHG’. Each ADR represents one ordinary share.
Voting Rights
The Deposit Agreement has granted certain indirect rights to vote to the ADR holders. ADR holders may not attend the Company’s general meetings in person. ADR holders exercise their voting rights by instructing the Depositary to exercise the voting rights attached to the registered ordinary shares underlying the ADRs. The Depositary exercises the voting rights for registered ordinary shares underlying ADRs for which no voting instructions have been given by providing a discretionary proxy to an uninstructed independent designee pursuant to paragraph 12 of the form of ADR. The same voting restrictions apply to ADR holders as to those holding ordinary shares of the Company (i.e., the application of the United Kingdom Disclosure and Transparency Rules with regard to the notification to the Company of certain interests in the Company).
As soon as practicable after receipt from the Company of notice of any meeting or solicitation of consents or proxies of holders of ordinary shares or other deposited securities, the Depositary will distribute to holders a notice stating (a) such information as is contained in such notice and any solicitation materials, (b) that each holder on the record date set by the Depositary therefor will, subject to any provisions of United Kingdom law, be entitled to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the deposited securities represented by the ADSs evidenced by such holder’s ADRs and (c) the manner in which such instructions may be given, including instructions to give a discretionary proxy to a person designated by the Company.
Upon actual receipt by the ADR department of the Depositary of instructions of a holder on such record date in the manner and on or before the time established by the Depositary for such purpose, the Depositary will endeavor insofar as practicable and permitted under the provisions of or governing deposited securities to vote or cause to be voted the deposited securities represented by the ADSs evidenced by such holder’s ADRs in accordance with such instructions. The Depositary will not itself exercise any voting discretion in respect of any deposited securities. To the extent such instructions are not so received by the Depositary from any holder, the Depositary shall deem such holder to have so instructed the Depositary to give a discretionary proxy to a person designated by the Company and the Depositary shall endeavor insofar as practicable and permitted under the provisions of or governing deposited securities to give a discretionary proxy to a person designated by the Company to vote the deposited securities represented by the ADSs evidenced by such holder’s ADRs as to which such instructions are so given, provided that no such instruction shall be deemed given and no discretionary proxy shall be given with respect to any matter (a) as to which the Company informs the Depositary (and the Company agrees to provide such information promptly in writing) that (i) the Company does not wish such proxy given, (ii) substantial opposition exists or (iii) materially affects the rights of holders of ordinary shares and (b) unless, with respect to such meeting, the Depositary has been provided with an opinion of counsel to the Company, in form and substance satisfactory to the Depositary, to the effect that (i) the granting of such discretionary proxy does not subject the Depositary to any reporting obligations in the United Kingdom, (ii) the granting of such proxy will not result in a violation of United Kingdom law, rule, regulation or permit, (iii) the voting arrangement and deemed instruction as contemplated herein will be given effect under United Kingdom law, and (iv) the granting of such discretionary proxy will not under any circumstances result in the ordinary shares represented by the ADSs being treated as assets of the Depositary under United Kingdom law. The Depositary may, but is not obligated to, require a certification by the Company as to the non-existence of the circumstances described in (a)(ii) and (a)(iii) above and shall incur no liability in connection with any matter related to such deemed instruction or the failure to provide such deemed instruction.
Share Dividends and Other Distributions
Subject to paragraphs 4 and 5 of the form ADR, to the extent practicable, the Depositary will distribute to each ADR holder entitled thereto on the record date set by the Depositary therefor at such ADR holder’s address shown on the ADR Register, in proportion to the number of deposited securities (on which the following distributions on deposited securities are received by the custodian) represented by ADSs evidenced by such holder’s ADRs:
(a) Cash: Any US dollars available to the Depositary resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof authorized in paragraph 10 (“Cash”) of the form of ADR, on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain holders, and (iii) deduction of the Depositary’s and/or its agents’ fees and expenses in (1) converting any foreign currency to US dollars by sale or in such other manner as the Depositary may determine to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or US dollars to the US by such means as the Depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner.
(b) Shares. (i) Additional ADRs evidencing whole ADSs representing any ordinary shares available to the Depositary resulting from a dividend or free distribution on deposited securities consisting of ordinary shares (a “Share Distribution”) and (ii) US dollars available to it resulting from the net proceeds of sales of ordinary shares received in a Share Distribution, which ordinary shares would give rise to fractional ADSs if additional ADRs were issued therefor, as in the case of Cash.
(c) Rights. (i) Warrants or other instruments in the discretion of the Depositary representing rights to acquire additional ADRs in respect of any rights to subscribe for additional ordinary shares or rights of any nature available to the Depositary as a result of a distribution on deposited securities (“Rights”), to the extent that the Company timely furnishes to the Depositary evidence satisfactory to the Depositary that the Depositary may lawfully distribute the same (the Company has no obligation to so furnish such evidence), or (ii) to the extent the Company does not so furnish such evidence and sales of Rights are practicable, any US dollars available to the Depositary from the net proceeds of sales of Rights as in the case of Cash, or (iii) to the extent the Company does not so furnish such evidence and such sales cannot practicably be accomplished by reason of the non-transferability of the Rights, limited markets therefor, their short duration or otherwise, nothing (and any Rights may lapse).
(d) Other Distributions. (i) Securities or property available to the Depositary resulting from any distribution on deposited securities other than Cash, Share Distributions and Rights (“Other Distributions”), by any means that the Depositary may deem equitable and practicable, or (ii) to the extent the Depositary deems distribution of such securities or property not to be equitable and practicable, any US dollars available to the Depositary from the net proceeds of sales of Other Distributions as in the case of Cash.
The Depositary will distribute US dollars by checks drawn on a bank in the US for whole dollars and cents (any fractional cents will be withheld without liability and dealt with by the Depositary in accordance with its then current practices), pursuant to paragraph 10 of the form of ADR.
Deposit, Withdrawal and Cancellation
Subject to paragraphs 4 and 5 of the form of ADR, upon surrender of (i) a certificated ADR in form satisfactory to the Depositary at the transfer office or (ii) proper instructions and documentation in the case of a Direct Registration ADR, the holder hereof is entitled to delivery, or to the extent in dematerialized form from, the custodian’s office of the deposited securities at the time represented by the ADSs evidenced by this ADR. At the request, risk and expense of the holder, the Depositary may deliver such deposited securities at such other place as may have been requested by the holder. Notwithstanding any other provision of the deposit agreement or this ADR, the withdrawal of deposited securities may be restricted only for the reasons set forth in General Instruction I.A.(1) of Form F-6 (as such instructions may be amended from time to time) under the Securities Act of 1933.
Reclassification, Recapitalizations and Mergers
If the Company takes certain actions that affect the deposited securities, including (i) any change in par value, split-up, consolidation, cancellation or other reclassification of deposited securities, (ii) any Share Distribution or Other Distribution not distributed to holders or (iii) any cash, securities or property available to the Depositary in respect of the Deposited Securities from any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all the assets of the company, then the Depositary may choose to:
| (a) | amend the applicable ADRs; |
| (b) | distribute additional or amended ADRs; and |
| (c) | distribute cash, securities or property on the record date set by the Depositary to reflect the transaction. |
Amendment and Termination
The ADRs and the Deposit Agreement may be amended by the Company and the Depositary, provided that any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or that shall otherwise prejudice any substantial existing right of holders, shall become effective 30 days after notice of such amendment shall have been given to the holders. Every holder of an ADR at the time any amendment to the Deposit Agreement so becomes effective shall be deemed, by continuing to hold such ADR, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby.
The Depositary may, and shall at the written direction of the Company, terminate the Deposit Agreement and this ADR by mailing notice of such termination to the holders at least 30 days prior to the date fixed in such notice for such termination, subject to the provisions of paragraph 17 of the form ADR. After the date so fixed for termination, the Depositary and its agents will perform no further acts under the Deposit Agreement and this ADR, except to receive and hold (or sell) distributions on deposited securities and deliver deposited securities being withdrawn. As soon as practicable after the expiration of six months from the date so fixed for termination, the Depositary shall sell the deposited securities and shall thereafter (as long as it may lawfully do so) hold in a segregated account the net proceeds of such sales, together with any other cash then held by it under the Deposit Agreement, without liability for interest, in trust for the pro rata benefit of the holders of ADRs not theretofore surrendered.
After making such sale, the Depositary shall be discharged from all obligations in respect of the Deposit Agreement and this ADR, except for its obligations to the Company under Section 16 of the Deposit Agreement and to account for such net proceeds and other cash. After the date so fixed for termination, the Company shall be discharged from all obligations under the Deposit Agreement except for its obligations to the Depositary and its agents.
Limitation on Obligations and Liability to ADR Holders
The Depositary, the Company, their agents and each of them shall: (a) incur no liability (i) if any present or future law, rule, fiat, order or decree of the United States, the United Kingdom or any other country, or of any governmental or regulatory authority or any securities exchange or market or automated quotation system, the provisions of or governing any deposited securities, any present or future provision of the Company’s charter, any act of God, war, terrorism, nationalization or other circumstance beyond its control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with, any act which the Deposit Agreement or this ADR provides shall be done or performed by it or them (including, without limitation, voting pursuant to paragraph 12 of the form ADR), or (ii) by reason of any exercise or failure to exercise any discretion given it in the Deposit Agreement or the ADR (including, without limitation, any failure to determine that any distribution or action maybe lawful or reasonably practicable); (b) assume no liability except to perform its obligations to the extent they are specifically set forth in this ADR and the Deposit Agreement without gross negligence or willful misconduct; (c) in the case of the Depositary and its agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or this ADR; (d) in the case of the Company and its agents hereunder be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or this ADR, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required; or (d) not be liable for any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting shares for deposit, any holder, or any other person believed by it to be competent to give such advice or information.
The Depositary, its agents and the Company may rely and shall be protected in acting upon any written notice, request, direction, instruction or document believed by them to be genuine and to have been signed, presented or given by the proper party or parties. The Depositary shall be under no obligation to inform holders or any other holders of an interest in any ADSs about the requirements of English law, rules or regulations or any changes therein or thereto. The Depositary and its agents will not be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any such vote is cast or for the effect of any such vote. The Depositary and its agents may own and deal in any class of securities of the Company and its affiliates and in ADRs. The Company has agreed to indemnify the Depositary and its agents under certain circumstances and the Depositary and its agents have agreed to indemnify the Company under certain circumstances. No disclaimer of liability under the Securities Act is intended by any provision hereof.
Books of Depositary
The Depositary will keep books at its principal office for the registration and transfer of ADRs, which will be open for your inspection at all reasonable times. Such inspection shall be for the purpose of communicating with holders in the interest of the business of the Company or a matter relating to the Deposit Agreement.
7
Exhibit 4(a)(i)
TRUST DEED
EXECUTION VERSION
21 SEPTEMBER 2023
INTERCONTINENTAL HOTELS GROUP PLC
and
IHG FINANCE LLC
(together, the Issuers)
and
INTERCONTINENTAL HOTELS GROUP PLC
and
IHG FINANCE LLC
and
SIX CONTINENTS LIMITED
and
INTERCONTINENTAL HOTELS LIMITED
(together, the Guarantors)
and
U.S. BANK TRUSTEES LIMITED
(the Trustee)
AMENDED AND RESTATED TRUST DEED
relating to a £4,000,000,000
EURO MEDIUM TERM NOTE PROGRAMME
Freshfields Bruckhaus Deringer LLP
100 Bishopsgate
London EC2P 2SR
CONTENTS
| CLAUSE |
PAGE | |||||
| 1. |
DEFINITIONS AND INTERPRETATION |
3 | ||||
| 2. |
AMOUNT AND ISSUE OF THE NOTES |
14 | ||||
| 3. |
COVENANT TO REPAY |
15 | ||||
| 4. |
GUARANTEE |
17 | ||||
| 5. |
THE NOTES |
20 | ||||
| 6. |
CANCELLATION OF NOTES AND RECORDS |
21 | ||||
| 7. |
COVENANT TO COMPLY WITH THE TRUST DEED |
23 | ||||
| 8. |
COVENANTS BY THE ISSUERS AND THE GUARANTORS |
23 | ||||
| 9. |
AMENDMENTS AND SUBSTITUTION |
30 | ||||
| 10. |
BREACH |
34 | ||||
| 11. |
ENFORCEMENT |
34 | ||||
| 12. |
APPLICATION OF MONEYS |
35 | ||||
| 13. |
TERMS OF APPOINTMENT |
38 | ||||
| 14. |
COSTS AND EXPENSES |
46 | ||||
| 15. |
APPOINTMENT AND RETIREMENT |
49 | ||||
| 16. |
NOTICES |
51 | ||||
| 17. |
LAW AND JURISDICTION |
52 | ||||
| 18. |
SEVERABILITY |
53 | ||||
| 19. |
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 |
53 | ||||
| 20. |
COUNTERPARTS |
53 | ||||
| SCHEDULE 1 TERMS AND CONDITIONS OF THE NOTES |
54 | |||||
| SCHEDULE 2 FORM OF GLOBAL NOTES |
130 | |||||
| SCHEDULE 3 FORM OF GLOBAL REGISTERED NOTE CERTIFICATES |
193 | |||||
| SCHEDULE 4 PROVISIONS FOR MEETINGS OF NOTEHOLDERS |
219 | |||||
Page I
THIS AMENDED AND RESTATED TRUST DEED is made on 21 September 2023 (this Trust Deed)
BETWEEN
| (1) |
INTERCONTINENTAL HOTELS GROUP PLC (the Parent) as an issuer and as a guarantor in respect of issuances by IHG Finance LLC; |
| (2) |
IHG FINANCE LLC as an issuer (together with the Parent in its capacity as an issuer, each an Issuer and together the Issuers) and as a guarantor from (and including) the Guarantor Accession Date (as defined in the Terms and Conditions) in respect of Notes issued by the Parent; |
| (3) |
SIX CONTINENTS LIMITED as a guarantor; |
| (4) |
INTERCONTINENTAL HOTELS LIMITED as a guarantor (together with (i) the Parent in its capacity as guarantor in respect of issuances by IHG Finance LLC, (ii) IHG Finance LLC in its capacity as guarantor from (and including) the Guarantor Accession Date in respect of Notes issued by the Parent and (iii) Six Continents Limited, each a Guarantor and together, the Guarantors); and |
| (5) |
U.S. BANK TRUSTEES LIMITED (the Trustee, which expression includes, where the context admits, all persons for the time being the trustee or trustees of this Trust Deed). |
WHEREAS
(A) The Parent, Six Continents Limited and InterContinental Hotels Limited and HSBC Corporate Trustee Company (UK) Limited are party to a trust deed dated 27 November 2009, as supplemented by the first supplemental trust deed dated 7 July 2011, and as amended and restated by the amended and restated trust deed dated 9 November 2012, the amended and restated trust deed dated 16 June 2015, the amended and restated trust deed dated 11 August 2016 and the amended and restated trust deed dated 14 September 2020 (the Principal Trust Deed) relating to the Euro Medium Term Note Programme established by the Parent, Six Continents Limited and InterContinental Hotels Limited, pursuant to which, the Issuers may issue from time to time Notes as set out herein (the Programme). The Parent, the Guarantors and the Trustee desire to amend and restate the Principal Trust Deed in its entirety as set forth in this Trust Deed to effect changes including the addition of IHG Finance LLC as an issuer and guarantor, the increase of the Authorised Amount (as defined below) to £4,000,000,000 and the replacement of HSBC Corporate Trustee Company (UK) Limited as trustee with the Trustee for all future issuances under the Programme.
(B) The Trustee has agreed to act as trustee of this Trust Deed on the following terms and conditions.
(C) Notes up to a maximum nominal amount from time to time outstanding of £4,000,000,000 (subject to increase as provided in the Dealer Agreement (as defined below)) (the Authorised Amount) may be issued pursuant to the Programme. Any Notes issued under the Programme on or after the date hereof shall be issued pursuant to this Trust Deed.
Page 2
This does not affect any Notes issued under the Programme or any rights or obligations accrued or incurred under the Principal Trust Deed prior to the date of this Trust Deed. For the avoidance of doubt, HSBC Corporate Trustee Company (UK) Limited will continue to act as trustee in respect of notes issued under the Principal Trust Deed.
NOW THIS TRUST DEED WITNESSES AND IT IS HEREBY DECLARED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Trust Deed the following expressions have the following meanings:
Additional Rating Agency means Moody’s and Fitch;
Agency Agreement means, in relation to the Notes of any Series, the amended and restated agency agreement dated 21 September 2023 (as further amended, modified and restated from time to time) between the Issuers, the Guarantors, the Trustee, Elavon Financial Services DAC and Elavon Financial Services DAC, UK Branch appointing the initial Paying Agent, the Registrar, the Calculation Agent and the Transfer Agent in relation to such Series and any other agreement for the time being in force appointing Successor paying agents, a Successor registrar, a Successor calculation agent or Successor transfer agents in relation to such Series, together with any agreement for the time being in force amending or modifying with the prior written approval of the Trustee any of the aforesaid agreements in relation to such Series;
Agents means, in relation to the Notes of any Series, the Principal Paying Agent, the other Paying Agents, the Registrar, the Calculation Agent, the Transfer Agent or any of them;
Appointee means any attorney, manager, agent, delegate, nominee, custodian, receiver or other person appointed by the Trustee under this Trust Deed;
Auditors means the auditors for the time being of the Relevant Issuer or, as the case may be, a Guarantor and, in the event of any of them being unable or unwilling to carry out any action requested of them pursuant to this Trust Deed, means such other firm of chartered accountants in England as may be nominated in writing by the Trustee for the purpose;
Authorised Signatory means in relation to each Issuer and each Guarantor, any person who (a) is a Director of such Issuer or, as the case may be, such Guarantor or (b) has been notified to the Trustee by any such Director as being an Authorised Signatory pursuant to sub-clause 8(p) (Authorised Signatories); Calculation Agent means, in relation to the Notes of any Series, the institution at its Specified Office initially appointed as calculation agent in relation to such Notes pursuant to the Agency Agreement and/or, if applicable, Successor calculation agent in relation to such Notes at its Specified Office;
Bearer Note means a Note issued in bearer form;
Page 3
CGN Permanent Global Note means a Permanent Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is not applicable;
CGN Temporary Global Note means a Temporary Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is not applicable;
Change of Control has the meaning given to such term in Condition 2(a) (Interpretation - Definitions);
Clearstream means Clearstream Banking SA;
the Code means the U.S. Internal Revenue Code of 1986;
Common Safekeeper means an ICSD in its capacity as common safekeeper or a person nominated by the ICSDs to perform the role of common safekeeper;
Conditions means:
| (a) |
in relation to the Bearer Notes of any Series, the terms and conditions to be endorsed on, or incorporated by reference in, the Bearer Notes of any such Series, in the form set out in Schedule 1 or in such other form, having regard to the terms of the Notes of the relevant Series, as may be agreed between the Relevant Issuer, the Principal Paying Agent, the Trustee and the relevant Dealer(s) as modified and supplemented by the Final Terms(s) applicable to such Series, as any of the same may from time to time be modified in accordance with this Trust Deed and any reference in this Trust Deed to a particular numbered Condition shall be construed in relation to the Bearer Notes of such Series accordingly; and |
| (b) |
in relation to the Registered Notes of any Series, the terms and conditions to be endorsed on, or incorporated by reference in, the Note Certificates in respect of such Series, in the form set out in Schedule 1 or in such other form, having regard to the terms of the relevant Series, as may be agreed between the Relevant Issuer, the Registrar, the Trustee and the relevant Dealer(s) as modified and supplemented by the Final Terms applicable to such Series, as any of the same may from time to time be modified in accordance with the provisions of this Trust Deed and any reference in this Trust Deed to a particular numbered Condition shall be construed in relation to the Registered Notes of such Series accordingly; |
Couponholder means the holder of a Coupon;
Page 4
Contractual Currency means, in relation to any payment obligation of any Note, the currency in which that payment obligation is expressed and, in relation to Clause 14.1 (Remuneration), pounds sterling or such other currency as may be agreed between the Relevant Issuer and the Trustee from time to time; Coupons means any bearer interest coupons appertaining to the Bearer Notes of any Series in or substantially in the form set out in Part D of Schedule 2, in the case of Notes issued by the Parent and Part I of Schedule 2, in the case of Notes issued by IHG Finance LLC, appertaining to the Notes of any Series and for the time being outstanding or, as the context may require, a specific number thereof and includes any replacement Coupons issued pursuant to Condition 14 (Replacement of Notes, Coupons and Talons) and, where the context so permits, the Talons appertaining to the Definitive Notes of such Series;
Dealer Agreement means the agreement between the Issuers, the Guarantors and the Dealers named therein concerning the purchase of Notes to be issued pursuant to the Programme as amended from time to time or any restatement thereof for the time being in force;
Dealers means any person appointed as a Dealer by the Dealer Agreement and any other person which the Issuers or the Relevant Issuer (as the case may be) may appoint as a Dealer and notice of whose appointment has been given to the Principal Paying Agent and the Trustee by the Issuers or the Relevant Issuer (as the case may be) in accordance with the provisions of the Dealer Agreement but excluding any entity whose appointment has been terminated in accordance with the terms of the Dealer Agreement and notice of whose termination has been given to the Principal Paying Agent and the Trustee by the Issuers or the Relevant Issuer (as the case may be) in accordance with the provisions of the Dealer Agreement and references to the relevant Dealer(s) mean, in relation to any Note, the Dealer(s) with whom the Relevant Issuer has agreed the issue and purchase of such Note;
Definitive Notes means Bearer Notes in definitive form issued or, as the case may be, required to be issued by the Relevant Issuer in accordance with the provisions of the Dealer Agreement or any other agreement between the Relevant Issuer and the relevant Dealer(s), the Agency Agreement and this Trust Deed in exchange for a Temporary Global Note or part thereof or a Permanent Global Note (all as indicated in the relevant Final Terms), such Bearer Notes in definitive form being in the form or substantially in the form set out in Part C of Schedule 2, in the case of Notes issued by the Parent and Part H of Schedule 2, in the case of Notes issued by IHG Finance LLC;
Director means any Director of an Issuer or, as the case may be, a Guarantor, from time to time;
Drawdown Prospectus means a prospectus specific to a Tranche of Notes which may be constituted either (a) by a single document or (b) by a registration document and a securities note;
Euroclear means Euroclear Bank SA/NV;
Event of Default means any one of the circumstances described in Condition 12 (Events of Default) (but, in the case of Conditions 12(b), (d) and (f) to (i) inclusive, only if the Trustee shall have certified in writing that such event is in its opinion materially prejudicial to the interests of the Noteholders); FATCA means Sections 1471 through 1474 of the Code (including any regulations thereunder or official interpretation thereof), intergovernmental agreements between the United States and other jurisdictions facilitating the implementation thereof, and any law implementing any such intergovernmental agreement;
Page 5
Extraordinary Resolution has the meaning set out in Schedule 4 (Provisions for Meetings of Noteholders);
FATCA Information has the meaning given to it in Clause 8(ff);
FATCA Withholding means any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to FATCA;
Final Terms has the meaning ascribed to it in the Dealer Agreement;
Fitch means Fitch Ratings Ltd or any successor;
Fixed Rate Note means a Note on which interest is calculated at a fixed rate payable in arrear on a fixed date or dates in each year and on redemption or on such other dates as may be agreed between the Relevant Issuer, the Relevant Guarantors and the relevant Dealer(s) (as indicated in the relevant Final Terms);
Floating Rate Note means a Note on which interest is calculated at a floating rate payable at intervals of one, two, three, six or twelve months or at such other intervals as may be agreed between the Relevant Issuer, the Relevant Guarantors and the relevant Dealer(s) (as indicated in the relevant Final Terms);
FSMA means the Financial Services and Markets Act 2000;
Global Note means a CGN Temporary Global Note, a CGN Permanent Global Note, an NGN Temporary Global Note or an NGN Permanent Global Note;
Global Registered Note Certificate means, in relation to any Series of Registered Notes, any Global Registered Note Certificate issued or to be issued pursuant to Clause 5.2 (Global Registered Note Certificates) in or substantially in the form set out in Part A of Schedule 3, in the case of Notes issued by the Parent, or Part C of Schedule 3, in the case of Notes issued by IHG Finance LLC;
Guarantor Accession Certificate means a certificate signed by two Authorised Signatories of the Parent, addressed to the Trustee, certifying that the Parent has caused IHG Finance LLC to provide the Outstanding Notes Guarantee and delivered in accordance with Condition 1(e);
Guarantor Accession Date means the date of the Guarantor Accession Certificate;
Individual Note Certificate means, in relation to any Series of Registered Notes, any Individual Note Certificate representing a Noteholder’s entire holding of Notes, in or substantially in the form set out in Part B of Schedule 3, in the case of Notes issued by the Parent, or Part D of Schedule 3, in the case of Notes issued by IHG Finance LLC; Issue Date means, in relation to any Note, the date of issue of such Note pursuant to the Dealer Agreement or any other relevant agreement between the Relevant Issuer, the Relevant Guarantors and the relevant Dealer(s);
Page 6
ICSDs means Clearstream and Euroclear;
Interest Commencement Date means, in relation to any interest-bearing Note, the date specified in the relevant Final Terms from which such Note bears interest or, if no such date is specified therein, the Issue Date;
Liabilities or Liability means any loss, damage, cost, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever (including, without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any value added tax or similar tax charged or chargeable in respect thereof and legal fees and expenses on a full indemnity basis;
London Stock Exchange means the London Stock Exchange plc;
Material Subsidiary has the meaning set out in Condition 2(a) (Interpretation - Definitions);
Moody’s means Moody’s Investors Service Limited or any successor;
New Safekeeping Structure means a structure where a Global Registered Note Certificate which is registered in the name of a Common Safekeeper (or its nominee) for Euroclear and/or Clearstream and/or any other relevant clearing system and the Global Registered Note Certificate will be deposited on or about the issue date with the Common Safekeeper for Euroclear and/or Clearstream;
NGN Permanent Global Note means a Permanent Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is applicable;
NGN Temporary Global Note means a Temporary Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is applicable;
Note Certificate means, in relation to any Series, any Global Registered Note Certificate or Individual Note Certificate and includes any replacement Note Certificate issued pursuant to Condition 14 (Replacement of Notes, Coupons and Talons);
Noteholder and (in relation to a Note) holder means, in the case of a Bearer Note, the bearer of a Note, or, in the case of a Registered Note, a person in whose name a Note is registered in the Register (or in the case of joint holders, the first named thereof), save that, for so long as the Notes of any Series are represented by a Global Note or Global Registered Note Certificate, each person who has for the time being a particular principal amount of such Notes credited to his securities account in the records of Clearstream or Euroclear shall be deemed to be the Noteholder in respect of the principal amount of such Notes for all purposes hereof other than for the purpose of payments in respect thereof, the right to which shall be vested, as against the Relevant Issuer and the Trustee, solely in the bearer, in the case of a Bearer Note, or registered holder, in the case of a Registered Note, of such Global Note or Global Registered Note Certificate, as applicable, in accordance with and subject to the terms of this Trust Deed and such Global Note or Global Registered Note Certificate; Notes means the notes of each Series constituted in relation to or by this Trust Deed which shall, in the case of Bearer Notes, be in or substantially in the form set out in Schedule 2 and, in the case of Registered Notes, be represented by a Note Certificate in or substantially in the form set out in Schedule 3 and, for the time being outstanding or, as the case may be, a specific number thereof and includes any replacement Notes of such Series issued pursuant to Condition 14 (Replacement of Notes, Coupons and Talons) and (except for the purposes of Clauses 5.1 (Global Notes), 5.2 (Global Registered Note Certificate) and 5.4 (Signature)) each Global Note or Global Registered Note Certificate in respect of such Series for so long as it has not been exchanged in accordance with the terms thereof;
Page 7
outstanding means, in relation to the Notes of any Series, all the Notes of such Series other than:
| (a) |
those which have been redeemed in accordance with the Conditions and this Trust Deed; |
| (b) |
those in respect of which the date for redemption in accordance with the provisions of the Conditions has occurred and for which the redemption moneys (including all interest accrued thereon to the date for such redemption) have been duly paid to the Trustee or the Principal Paying Agent in the manner provided for in the Agency Agreement (and, where appropriate, notice to that effect has been given to the Noteholders in accordance with Condition 18 (Notices)) and remain available for payment in accordance with the Conditions; |
| (c) |
those which have been purchased and surrendered for cancellation as provided in Condition 9(k) (Redemption and Purchase - Cancellation) and notice of the cancellation of which has been given to the Trustee; |
| (d) |
those which have become void under Condition 13 (Prescription); |
| (e) |
in the case of Bearer Notes only: |
| (i) |
those mutilated or defaced Notes which have been surrendered or cancelled and in respect of which replacement Notes have been issued pursuant to Condition 14 (Replacement of Notes, Coupons and Talons); or |
| (ii) |
(for the purpose only of ascertaining the aggregate nominal amount of Notes outstanding and without prejudice to the status for any other purpose of the relevant Notes) those Notes which are alleged to have been lost, stolen or destroyed and in respect of which replacements have been issued pursuant to Condition 14 (Replacement of Notes, Coupons and Talons); |
Page 8
provided that for each of the following purposes, namely:
| (i) |
the right to attend and vote at any meeting of the holders of Notes of any Series, passing an Extraordinary Resolution (as defined in Schedule 4 (Provisions for Meetings of Noteholders) in writing or passing an Extraordinary Resolution by way of electronic consents given through the relevant clearing systems as envisaged by Schedule 4 (Provisions for Meetings of Noteholders); |
| (ii) |
the determination of how many and which Notes of any Series are for the time being outstanding for the purposes of Clauses 11.1 (Legal Proceedings) and 9.1 (Waiver), Conditions 12 (Events of Default), 16 (Meetings of Noteholders; Modification and Waiver) and 17 (Enforcement) and Schedule 4 (Provisions for Meetings of Noteholders); |
| (iii) |
any discretion, power or authority, whether contained in this Trust Deed or provided by law, which the Trustee is required to exercise in or by reference to the interests of the holders of the Notes of any Series or any of them; and |
| (iv) |
the determination by the Trustee whether any event, circumstance, matter or timing is, in its opinion, materially prejudicial to the interests of the holders of the Notes of any Series; |
those Notes (if any) of the relevant Series which are for the time being held by any person (including but not limited to the Relevant Issuer, any Relevant Guarantor or any Subsidiary) for the benefit of the Relevant Issuer, any Relevant Guarantor or any Subsidiary of the Parent shall (unless and until ceasing to be so held) be deemed not to remain outstanding;
Outstanding Notes Guarantee has the meaning given to it in Condition 1(e);
Parent means InterContinental Hotels Group PLC;
Paying Agents means, in relation to the Notes of any Series, the several institutions (including, where the context permits, the Principal Paying Agent) at their respective Specified Offices appointed pursuant to the relative Agency Agreement and/or, if applicable, any additional and/or Successor paying agents in relation to such Series at their respective Specified Offices;
Permanent Global Note means, in relation to any Series, a Global Note to be issued pursuant to Clause 5.1 (Global Notes) in the form or substantially in the form set out in Part B of Schedule 2 in the case of Notes issued by the Parent, or Part G of Schedule 2 in the case of Notes issued by IHG Finance LLC;
Potential Event of Default means an event or circumstance which could, with the giving of notice, lapse of time, the issuing of a certificate and/or fulfilment of any other requirement provided for in Condition 12 (Events of Default), become an Event of Default; Principal Paying Agent means, in relation to the Notes of any Series, the institution at its Specified Office initially appointed as issuing and principal paying agent in relation to such Series pursuant to the relative Agency Agreement or, if applicable, any Successor principal paying agent in relation to such Series at its Specified Office;
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Put Option has the meaning given to such term in Condition 9(f) (Redemption and Purchase – Redemption at the option of Noteholders);
Rating Agency means S&P or any of its respective successors or any Substitute Rating Agency and, for the purposes of Condition 9(g) (Redemption and Purchase – Change of Control Redemption), includes any Additional Rating Agency;
Register means the register maintained by the Registrar at its Specified Office;
Registered Note means a Note issued in registered form;
Registrar means, in relation to the Registered Notes of any Series, the institution at its Specified Office initially appointed as registrar in relation to such Notes pursuant to the relative Agency Agreement and/or, if applicable, any successor registrar in relation to such Notes at its Specified Office;
Relevant Date has the meaning ascribed to it in Condition 2(a) (Interpretation - Definitions);
Relevant Guarantor means:
| (a) |
in respect of Notes issued by the Parent, Six Continents Limited, InterContinental Hotels Limited and, from (and including) the Guarantor Accession Date, IHG Finance LLC; and |
| (b) |
in respect of Notes issued by IHG Finance LLC, the Parent, Six Continents Limited and InterContinental Hotels Limited; |
Relevant Issuer means, in relation to any Tranche of Notes, whichever of the Parent or IHG Finance LLC as is specified as the issuer of such Notes in the relevant Final Terms, as the case may be;
Reserved Matter has the meaning set out in paragraph 1 of Schedule 4 (Provisions for Meetings of Noteholders);
repay includes redeem and vice versa and repaid, repayable, repayment, redeemed, redeemable and redemption shall be construed accordingly;
Series means a Tranche of Notes together with any further Tranche or Tranches of Notes expressed to be consolidated and form a single series with the Notes of the original Tranche and the terms of which are identical (save for the Issue Date and/or the Interest Commencement Date but including as to whether or not the Notes are listed); Substitute Rating Agency means any rating agency of international standing substituted for the Rating Agency by the Parent from time to time with the prior written approval of the Trustee, such approval not to be unreasonably withheld or delayed;
Specified Office has the meaning given in the Agency Agreement;
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Subsidiary has the meaning set out in Condition 2(a) (Interpretation - Definitions);
Successor means, in relation to the Agents, such other or further person as may from time to time be appointed pursuant to the Agency Agreement as an Agent;
Successor in Business means in respect of a company (the Original Company):
| (a) |
a company or other entity to whom the Original Company validly and effectually, in accordance with all enactments, orders and regulations in force for the time being and from time to time, transfers the whole or substantially the whole of its business, undertaking and assets for the purpose of assuming and conducting the business of the Original Company in its place; or |
| (b) |
any other entity which acquires in any other manner the whole or substantially the whole of the undertaking, property and assets of the Original Company and carries on as a successor to the Original Company the whole or substantially the whole of the business carried on by the Original Company prior thereto; |
S&P means S&P Global Ratings UK Limited or any successor;
Talonholder means the holder of a Talon;
Talons means any bearer talons appertaining to the Bearer Notes of any Series or, as the context may require, a specific number thereof and includes any replacement Talons issued pursuant to Condition 14 (Replacement of Notes, Coupons and Talons);
Temporary Global Note means, in relation to any Series, a Global Note to be issued pursuant to Clause 5.1 (Global Notes) in the form or substantially in the form set out in Part A of Schedule 2 in the case of Notes issued by the Parent, or Part F of Schedule 2 in the case of Notes issued by IHG Finance LLC;
this Trust Deed means this Trust Deed and the Schedules (as from time to time modified in accordance with the provisions contained herein) and (unless the context requires otherwise) includes any deed or other document executed in accordance with the provisions hereof (as from time to time modified as aforesaid) and expressed to be supplemental hereto;
Tranche means all Notes of the same Series with the same Issue Date and Interest Commencement Date;
Transfer Agents means, in relation to the Notes of any Series, the institution(s) at their respective Specified Offices initially appointed pursuant to the Agency Agreement and/or, if applicable, any Successor transfer agents in relation to such Series at their respective Specified Offices;
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Trustee Acts means both the Trustee Act 1925 and the Trustee Act 2000 of England and Wales;
Written Resolution has the meaning set out in Schedule 4 (Provisions for Meetings of Noteholders); and
Zero Coupon Note means a Note on which no interest is payable.
1.2 Principles of interpretation
In this Trust Deed:
| (a) |
Statutory modification: a provision of any statute shall be deemed also to refer to any statutory modification, amendment or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under such modification, amendment or re-enactment; |
| (b) |
Additional amounts: principal and/or interest in respect of the Notes of any Series shall be deemed also to include references to any additional amounts, any redemption amounts and any premium which may be payable under the Conditions; |
| (c) |
Relevant Currency: relevant currency shall be construed as a reference to the currency in which payments in respect of the Notes and/or Coupons of the relevant Series are to be made as indicated in the relevant Final Terms; |
| (d) |
Tax: costs, charges or expenses shall include any value added tax or similar tax charged or chargeable in respect thereof; |
| (e) |
Enforcement of rights: an action, remedy or method of judicial proceedings for the enforcement of rights of creditors shall include, in respect of any jurisdiction other than England, references to such action, remedy or method of judicial proceedings for the enforcement of rights of creditors available or appropriate in such jurisdictions as shall most nearly approximate thereto; |
| (f) |
Clauses and Schedules: any reference to a Schedule or a Clause, sub-clause, paragraph or sub-paragraph is, unless otherwise stated, to a schedule hereto or a clause, sub-clause, paragraph or sub-paragraph hereof respectively; |
| (g) |
Clearing systems: Euroclear and/or Clearstream shall, wherever the context so admits (but not in the case of any Notes in NGN form), be deemed to include references to any additional or alternative clearing system approved by the Relevant Issuer and the Trustee; |
| (h) |
Trust corporation: a trust corporation denotes a corporation entitled by rules made under the Public Trustee Act 1906 to act as a custodian trustee or entitled pursuant to any other legislation applicable to a trustee in any jurisdiction other than England to act as trustee and carry on trust business under the laws of the country of its incorporation; |
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| (i) |
Coupons: in the case of any Notes which are Zero Coupon Notes or Registered Notes, references to Coupons and Couponholders in this Trust Deed are not applicable to such Notes; |
| (j) |
Gender: words denoting the masculine gender shall include the feminine gender also, words denoting individuals shall include companies, corporations and partnerships, words importing the singular number shall include the plural and, in each case, vice versa; |
| (k) |
Records: any reference to the records of an ICSD shall be to the records that each of the ICSDs holds for its customers which reflect the amount of such customers’ interests in the Notes (but excluding any interest in any Notes of one ICSD shown in the records of another ICSD); |
| (l) |
Drawdown Prospectus: each reference to Final Terms shall, in the case of a Series of Notes which is the subject of a Drawdown Prospectus be read and construed as a reference to the final terms of the Notes set out in such Drawdown Prospectus; |
| (m) |
Guarantees: all references in this Trust Deed to guarantees or to an obligation being guaranteed shall be deemed to include respectively references to indemnities or to an indemnity being given in respect thereof; and |
| (n) |
Proceedings: all references in these presents to taking proceedings against the Relevant Issuer and/or the Relevant Guarantors shall be deemed to include references to proving in the winding up of the Relevant Issuer and/or any Relevant Guarantor (as the case may be). |
1.3 The Conditions
In this Trust Deed, unless the context requires or the same are otherwise defined, words and expressions defined in the Conditions and not otherwise defined herein shall have the same meaning in this Trust Deed. In the event of an inconsistency between this Trust Deed and the Conditions, this Trust Deed shall prevail.
1.4 Headings
The headings and sub-headings are for ease of reference only and shall not affect the construction of this Trust Deed.
1.5 The Schedules
The schedules are part of this Trust Deed and shall have effect accordingly.
1.6 Written Notices/Approvals
Any reference to a written notice or approval being given by the Trustee shall, for the avoidance of doubt, be deemed to include such notice being given by email.
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2. AMOUNT AND ISSUE OF THE NOTES
2.1 Amount of the Notes
The Notes will be issued in Series in an aggregate nominal amount from time to time outstanding not exceeding the Authorised Amount and, for the purpose of determining such aggregate nominal amount, Clause 4.1.14 of the Dealer Agreement shall apply.
2.2 Prior to each Issue Date
By not later than 3.00 p.m. (London time) on the fourth business day in London (which for this purpose shall be a day on which commercial banks are open for business in London) preceding each proposed Issue Date, the Relevant Issuer shall:
| (a) |
deliver or cause to be delivered to the Trustee a draft of the relevant Final Terms and, if applicable, notify the Trustee of any proposed changes to the draft Final Terms delivered to the Trustee; and |
| (b) |
notify the Trustee in writing without delay of the Issue Date and the nominal amount of the Notes of the relevant Tranche. |
For the avoidance of doubt, the Trustee shall not be required in any case to approve such Final Terms.
2.3 Constitution of Notes
Upon the issue of the Temporary Global Note, in the case of Bearer Notes, or the Note Certificate, in the case of Registered Notes, initially representing the Notes of any Tranche, such Notes shall become constituted by this Trust Deed without further formality.
2.4 Further legal opinions
After each anniversary of this Trust Deed and prior to the first issue of any Notes, on each occasion when a legal opinion is delivered to a Dealer pursuant to Clause 5.11 of the Dealer Agreement and on such other occasions as the Trustee so requests, the Issuers (failing whom the Guarantors) will procure, at no cost to the Trustee, that further legal opinions in such form and with such content as the Trustee may require from the legal advisers specified in the Dealer Agreement or in the relevant jurisdiction approved by the Trustee are delivered to the Trustee, provided that the Trustee shall not be required to approve the applicable legal opinions. In each such case, receipt by the Trustee of the relevant opinion shall be a condition precedent to the issue of Notes pursuant to this Trust Deed.
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3. COVENANT TO REPAY
3.1 Covenant to repay
Each Relevant Issuer covenants with the Trustee that it shall, as and when the Notes of any Series or any of them become due to be redeemed or any principal on the Notes of any Series or any of them becomes due to be repaid in accordance with the Conditions, unconditionally pay or procure to be paid to or to the order of the Trustee in immediately available freely transferable funds in the relevant currency the principal amount of the Notes of such Series or any of them becoming due for payment on that date and shall (subject to the provisions of the Conditions and except in the case of Zero Coupon Notes), until all such payments (both before and after judgment or other order of a court of competent jurisdiction) are duly made, unconditionally pay or procure to be paid to or to the order of the Trustee as aforesaid on the dates provided for in the Conditions interest (which shall accrue from day to day) on the principal amount (or such other amount as may be specified in the Final Terms) of the Notes or any of them of such Series outstanding from time to time as set out in the Conditions (subject to Clause 3.3 (Interest on Floating Rate Notes following Event of Default)) provided that:
| (a) |
every payment of principal, interest or other sum due in respect of such Notes or any of them made to the Principal Paying Agent or the Registrar, as the case may be, in the manner provided in the Agency Agreement shall satisfy pro tanto, to the extent of such payment, the relevant covenant by the Issuers contained in this Clause except to the extent that there is default in the subsequent payment thereof to the relevant Noteholders or Couponholders (as the case may be) in accordance with the Conditions; |
| (b) |
if any payment of principal or interest in respect of such Notes or any of them is made after the due date, payment shall be deemed not to have been made until either the full amount is paid to the relevant Noteholders or Couponholders (as the case may be) or, if earlier, the seventh day after notice has been given to the relevant Noteholders or Couponholders (as the case may be) in accordance with the Conditions that the full amount has been received by the Principal Paying Agent or the Registrar, as the case may be, or the Trustee except, in the case of payment to the Principal Paying Agent or the Registrar, as the case may be, to the extent that there is failure in the subsequent payment to the Noteholders or Couponholders (as the case may be) under the Conditions; and |
| (c) |
in any case where payment of the whole or any part of the principal amount due in respect of any Note is improperly withheld or refused upon due presentation of the relevant Note or (if so provided for in the Conditions) the relevant Note Certificate (as the case may be) interest shall accrue on the whole or such part of such principal amount (except in the case of Zero Coupon Notes, to which the provision of Condition 8 (Zero Coupon Note Provisions) shall apply) from the date of such withholding or refusal until the date either on which such principal amount due is paid to the relevant Noteholders or, if earlier, the seventh day after which notice is given to the relevant Noteholders in accordance with the Conditions that the full amount payable in respect of the said principal amount is available for collection by the relevant Noteholders provided that on further due presentation of the relevant Note or (if so provided for in the Conditions) the relevant Note Certificate (as the case may be) such payment is in fact made. |
The Trustee will hold the benefit of this covenant and the other covenants in this Trust Deed on trust for the Noteholders and Couponholders in accordance with their respective interests.
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3.2 Following an Event of Default
At any time after any Event of Default or Potential Event of Default shall have occurred or the Notes of all or any Series shall otherwise have become due and repayable or the Trustee shall have received any money which it proposes to pay under Clause 12 (Application of Moneys) to the relevant Noteholders and/or Couponholders, the Trustee may:
| (a) |
by notice in writing to the Relevant Issuer, the Relevant Guarantors, the Principal Paying Agent and the other Agents require the Principal Paying Agent and the other Agents or any of them: |
| (i) |
to act thereafter, until otherwise instructed by the Trustee, as Agents of the Trustee under the provisions of this Trust Deed on the terms provided in the Agency Agreement (with consequential amendments as necessary and save that the Trustee’s liability under any provisions thereof for the indemnification, remuneration and payment of out-of-pocket expenses of the Agents shall be limited to amounts for the time being held by the Trustee on the trusts of this Trust Deed in relation to the Notes on the terms of this Trust Deed and available to the Trustee for such purpose) and thereafter to hold all Notes, Coupons and Note Certificates and all sums, documents and records held by them in respect of Notes, Coupons and Note Certificates on behalf of the Trustee; and/or |
| (ii) |
to deliver up all Notes, Coupons and Note Certificates and all sums, documents and records held by them in respect of Notes, Coupons and Note Certificates to the Trustee or as the Trustee shall direct in such notice provided that such notice shall be deemed not to apply to any document or record which the relevant Agent is obliged not to release by any law or regulation; and |
| (b) |
by notice in writing to the Relevant Issuer and the Relevant Guarantors require each of them to make all subsequent payments in respect of Notes, Coupons and Note Certificates to or to the order of the Trustee and, with effect from the issue of any such notice until such notice is withdrawn, proviso 3.1(a) to Clause 3.1 (Covenant to repay) and (so far as it concerns payments by such Issuer and the Guarantors) Clause 12.3 (Payments to Noteholders and Couponholders) shall cease to have effect. |
3.3 Interest on Floating Rate Notes following Event of Default
If Floating Rate Notes become immediately due and repayable under Condition 12 (Events of Default) the rate and/or amount of interest payable in respect of them will be calculated at the same intervals as if such Notes had not become due and repayable, the first of which will commence on the expiry of the Interest Period (as defined in the Conditions) during which the Notes of the relevant Series become so due and repayable in accordance with Condition 12 (Events of Default) (with consequential amendments as necessary) except that the rates of interest need not be published.
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3.4 Currency of payments
All payments in respect of, under and in connection with this Trust Deed and the Notes to the relevant Noteholders and Couponholders shall be made in the relevant currency as required by the Conditions.
3.5 Separate Series
The Notes of each Series shall form a separate Series of Notes and accordingly, unless for any purpose the Trustee in its absolute discretion shall otherwise determine, all the provisions of this Trust Deed shall apply mutatis mutandis separately and independently to the Notes of each Series and in such Clauses and Schedule the expressions “Notes”, “Noteholders”, “Coupons”, “Couponholders”, “Talons” and “Talonholders” shall be construed accordingly.
4. GUARANTEE
4.1 (i) In respect of Notes issued by the Parent, Six Continents Limited, InterContinental Hotels Limited and, from (and including) the Guarantor Accession Date, IHG Finance LLC; and (ii) in respect of Notes issued by IHG Finance LLC, the Parent, Six Continents Limited and InterContinental Hotels Limited, hereby irrevocably and unconditionally and on a joint and several basis, and notwithstanding the release of any other guarantor or any other person under the terms of any composition or arrangement with any creditors of the Relevant Issuer, guarantee to the Trustee:
| (a) |
the due and punctual payment in accordance with the provisions of this Trust Deed of the principal of and premium (if any) and interest on the Notes and of any other amounts payable by the Relevant Issuer under this Trust Deed; and |
| (b) |
the due and punctual performance and observance by the Relevant Issuer of each of the other provisions of this Trust Deed on the Relevant Issuer’s part to be performed or observed. |
4.2 Before any Notes may be issued by IHG Finance LLC under the Programme and before any Notes may be guaranteed by IHG Finance LLC under the Programme, the Parent will (i) cause IHG Finance LLC to provide the Outstanding Notes Guarantee in respect of any outstanding notes issued by the Parent under the Programme prior to the date hereof, and (ii) deliver the Guarantor Accession Certificate to the Trustee (and provide notice thereof to Noteholders pursuant to Condition 18 (Notices)) certifying that the requirements set out in (i) above have been satisfied pursuant to Condition 1(e).
Following provision by IHG Finance LLC of the Outstanding Notes Guarantee, the Parent will, prior to any subsequent issue of Notes by the Parent, deliver the Guarantor Accession Certificate to the Trustee.
4.3 If the Relevant Issuer fails for any reason whatsoever punctually to pay any such principal, premium, interest or other amount, the Relevant Guarantors shall cause each and every such payment to be made as if the Relevant Guarantors instead of the Relevant Issuer were expressed to be the primary obligor under this Trust Deed and not merely as surety (but without affecting the nature of the Relevant Issuer’s obligations) to the intent that the holder of the relevant Note or Coupon or the Trustee (as the case may be) shall receive the same amounts in respect of principal, premium, interest or such other amount as would have been receivable had such payments been made by the Relevant Issuer.
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4.4 If any payment received by the Trustee or any Noteholder or Couponholder under the provisions of this Trust Deed shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Relevant Issuer or, without limitation, on any other event) be avoided or set aside for any reason, such payment shall not be considered as discharging or diminishing the liability of the Relevant Guarantors and this guarantee shall continue to apply as if such payment had at all times remained owing by the Relevant Issuer and the Relevant Guarantors shall indemnify the Trustee and the Noteholders and/or Couponholders (as the case may be) in respect thereof provided that the obligations of the Relevant Issuer and/or the Relevant Guarantors under this sub-clause shall, as regards each payment made to the Trustee or any Noteholder or Couponholder which is avoided or set aside, be contingent upon such payment being reimbursed to the Relevant Issuer or other persons entitled through the Relevant Issuer.
4.5 Each of the Relevant Guarantors hereby agrees that its obligations under this Clause shall be unconditional and that it shall be fully liable irrespective of the validity, regularity, legality or enforceability against the Relevant Issuer of, or of any defence or counter-claim whatsoever available to the Relevant Issuer in relation to, its obligations under this Trust Deed, whether or not any action has been taken to enforce the same or any judgment obtained against the Relevant Issuer, whether or not any of the other provisions of this Trust Deed have been modified, whether or not any time, indulgence, waiver, authorisation or consent has been granted to the Relevant Issuer by or on behalf of the Noteholders or the Couponholders or the Trustee, whether or not any determination has been made by the Trustee pursuant to Clause 9 (Amendments and Substitution) whether or not there have been any dealings or transactions between the Relevant Issuer, any of the Noteholders or Couponholders or the Trustee, whether or not the Relevant Issuer has been dissolved, liquidated, merged, consolidated, bankrupted or has changed its status, functions, control or ownership, whether or not the Relevant Issuer has been prevented from making payment by foreign exchange provisions applicable at its place of registration or incorporation and whether or not any other circumstances have occurred which might otherwise constitute a legal or equitable discharge of or defence to any guarantor. Accordingly, the validity of this guarantee shall not be affected by reason of any invalidity, irregularity, illegality or unenforceability of all or any of the obligations of the Relevant Issuer under this Trust Deed and this guarantee shall not be discharged nor shall the liability of a Guarantor under this Trust Deed be affected by any act, thing or omission or means whatever whereby its liability would not have been discharged if it had been the principal debtor.
4.6 Without prejudice to the provisions of Clause 11 (Enforcement) the Trustee may determine from time to time whether or not it will enforce this guarantee which it may do without making any demand of or taking any proceedings against the Relevant Issuer and may from time to time make any arrangement or compromise with the Relevant Guarantors in relation to this guarantee which the Trustee may consider expedient in the interests of the Noteholders.
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4.7 The Relevant Guarantors waive diligence, presentment, demand of payment, filing of claims with a court in the event of dissolution, liquidation, merger or bankruptcy of the Relevant Issuer, any right to require a proceeding first against the Relevant Issuer, protest or notice with respect to this Trust Deed or the indebtedness evidenced thereby and all demands whatsoever and covenants that this guarantee shall be a continuing guarantee, shall extend to the ultimate balance of all sums payable and obligations owed by the Relevant Issuer under this Trust Deed, shall not be discharged except by complete performance of the obligations in this Trust Deed and is additional to, and not instead of, any security or other guarantee or indemnity at any time existing in favour of any person, whether from the Relevant Guarantors or otherwise.
4.8 If any moneys shall become payable by the Relevant Guarantors under this guarantee the Relevant Guarantors shall not, so long as the same remain unpaid, without the prior written consent of the Trustee:
| (a) |
in respect of any amounts paid by it under these guarantees, exercise any rights of subrogation or contribution or, without limitation, any other right or remedy which may accrue to it in respect of or as a result of any such payment; or |
| (b) |
in respect of any other moneys for the time being due to the Relevant Guarantors by the Relevant Issuer, claim payment thereof or exercise any other right or remedy. |
(including in either case claiming the benefit of any security or right of set-off or, on the liquidation of the Relevant Issuer, proving in competition with the Trustee). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation of the Relevant Issuer, any payment or distribution of assets of the Relevant Issuer of any kind or character, whether in cash, property or securities, shall be received by the Relevant Guarantors before payment in full of all amounts payable under this Trust Deed shall have been made to the Noteholders, the Couponholders and the Trustee, such payment or distribution shall be received by the Relevant Guarantors on trust to pay the same over immediately to the Trustee for application in or towards the payment of all sums due and unpaid under this Trust Deed in accordance with Clause 12 (Application of Moneys).
4.9 Until all amounts which may be or become payable by the Relevant Issuer under this Trust Deed have been irrevocably paid in full, the Trustee may:
| (a) |
refrain from applying or enforcing any other moneys, security or rights held or received by the Trustee in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise), and the Relevant Guarantors shall not be entitled to the benefit of the same; and |
| (b) |
hold in a suspense account any moneys received from the Relevant Guarantors or an account of the Relevant Guarantors’ liability under this guarantee, without liability to pay interest on those moneys. |
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5. THE NOTES
5.1 Global Notes
| (a) |
The Bearer Notes of each Tranche will initially be together represented by a Temporary Global Note. Each Temporary Global Note shall (save as may be specified in the relevant Final Terms) be exchangeable, in accordance with its terms, for interests in a Permanent Global Note or Definitive Notes together with, where applicable, (except in the case of Zero Coupon Notes) Coupons, and where applicable Talons attached. |
| (b) |
Each Permanent Global Note shall be exchangeable, in accordance with its terms, for Definitive Notes. |
| (c) |
All Global Notes shall be prepared, completed and delivered to a common depositary (in the case of a CGN) or common safekeeper (in the case of a NGN) for Euroclear and Clearstream in accordance with the provisions of the Dealer Agreement or to another appropriate depositary in accordance with any other agreement between the Relevant Issuer and the relevant Dealer(s) and, in each case, the Agency Agreement. |
5.2 Global Registered Note Certificates
| (a) |
The Registered Notes of each Tranche will initially be evidenced by a Global Registered Note Certificate. |
| (b) |
Interests in the Global Registered Note Certificate shall be exchangeable, in accordance with their terms, for Individual Note Certificates. |
5.3 Definitive Notes
Definitive Notes will be security printed in accordance with applicable legal and stock exchange requirements substantially in the form set out in Part C of Schedule 2 in the case of Notes issued by the Parent or Part H of Schedule 2 in the case of Notes issued by IHG Finance LLC. Any Coupons and Talons will also be security printed in accordance with the same requirements and will be attached to the Definitive Notes at the time of issue. Definitive Notes will be endorsed with the Conditions and shall have endorsed thereon or attached thereto a copy of the relevant Final Terms (or the relevant provisions thereof).
5.4 Individual Note Certificates
Individual Note Certificates will be security printed in accordance with applicable legal and stock exchange requirements substantially in the form set out in Part B of Schedule 3, in the case of Notes issued by the Parent, or Part D of Schedule 3, in the case of Notes issued by IHG Finance LLC. Individual Note Certificates will be endorsed with the Conditions.
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5.5 Signature
The Global Notes, the Definitive Notes and the Note Certificates will be signed electronically or manually by a duly authorised person designated by the Relevant Issuer and will be authenticated electronically or manually by or on behalf of the Principal Paying Agent (in the case of Global Notes and Definitive Notes) or the Registrar (in the case of Note Certificates) and if applicable, will be effectuated electronically or manually by or on behalf of the Common Safekeeper. The Relevant Issuer may use the electronic signature of a person who at the date such signature was originally produced was such a duly authorised person even if at the time of issue of any Global Note, Definitive Note or Note Certificate they are no longer so authorised. Global Notes, Definitive Notes or Note Certificates so executed, duly authenticated and, if applicable, duly effectuated will be binding and valid obligations of the Relevant Issuer.
5.6 Entitlement to treat holder as owner
The Relevant Issuer, the Relevant Guarantors, the Trustee and any Agent may deem and treat the holder of any Note or the holder of any Coupon as the absolute owner of such Note or Coupon, as the case may be, free of any equity, set-off or counterclaim on the part of the Relevant Issuer or any Relevant Guarantor against the original or any intermediate holder of such Note or Coupon (whether or not such Note or Coupon shall be overdue and notwithstanding any notation of ownership or other writing thereon or any notice of previous loss or theft of such Note or Coupon) for all purposes save as otherwise herein provided in relation to any Global Note or Global Registered Note Certificate and, except as ordered by a court of competent jurisdiction or as required by applicable law, the Relevant Issuer, the Guarantors, the Trustee and any Agent shall not be affected by any notice to the contrary. All payments made to any such holder shall be valid and, to the extent of the sums so paid, effective to satisfy and discharge the liability for the moneys payable upon the Notes.
5.7 Further Notes
The Relevant Issuer shall be at liberty from time to time (but subject always to the provisions of this Trust Deed) without the consent of the Noteholders or Couponholders to create and issue further Notes having terms and conditions the same as the Notes of any Series (or the same in all respects save for the amount and date of the first payment of interest thereon) and so that the same shall be consolidated and form a single series with the outstanding Notes of a particular Series.
6. CANCELLATION OF NOTES AND RECORDS
6.1 The Relevant Issuer shall procure that all Notes issued by it which are (a) redeemed or (b) purchased by or on behalf of the Relevant Issuer, a Relevant Guarantor or any Subsidiary and surrendered for cancellation or (c) which, being mutilated or defaced, have been surrendered and replaced pursuant to Condition 14 (Replacement of Notes, Coupons and Talons) (together in each case, in the case of Definitive Notes, with all unmatured Coupons attached thereto or delivered therewith), and all Coupons paid in accordance with the relevant Conditions or which, being mutilated or defaced, have been surrendered and replaced pursuant to Condition 14 (Replacement of Notes, Coupons and Talons), shall forthwith be cancelled by or on behalf of the Relevant Issuer and a certificate stating:
| (i) |
the aggregate nominal amount of Notes which have been redeemed and the aggregate amounts in respect of Coupons which have been paid; |
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| (ii) |
the serial numbers of such Definitive Notes; |
| (iii) |
the total numbers (where applicable, of each denomination) by maturity date of such Coupons; |
| (iv) |
the aggregate amount of interest paid (and the due dates of such payments) on Global Notes; |
| (v) |
the aggregate nominal amount of Notes (if any) which have been purchased by or on behalf of the Issuer, any Guarantor or any Subsidiary and cancelled and the serial numbers of such Definitive Notes and, in the case of Definitive Notes, the total number (where applicable, of each denomination) by maturity date of the Coupons and Talons attached thereto or surrendered therewith; |
| (vi) |
the aggregate nominal amounts of Notes and the aggregate amounts in respect of Coupons which have been so surrendered and replaced and the serial numbers of such Definitive Notes and the total number (where applicable, of each denomination) by maturity date of such Coupons and Talons; |
| (vii) |
the total number (where applicable, of each denomination) by maturity date of the unmatured Coupons missing from Definitive Notes bearing interest at a fixed rate which have been redeemed or surrendered and replaced and the serial numbers of the Definitive Notes to which such missing unmatured Coupons appertained; and |
| (viii) |
the total number (where applicable, of each denomination) by maturity date of Talons which have been exchanged for further Coupons, |
shall be given to the Trustee by or on behalf of the Relevant Issuer as soon as possible and in any event within one month after the end of each calendar quarter during which any such redemption, purchase, payment, exchange or replacement (as the case may be) takes place. The Trustee may accept such certificate as conclusive evidence of redemption, purchase, payment, exchange or replacement pro tanto of the Notes or payment of interest thereon or exchange of the relative Talons respectively and of cancellation of the relative Notes and Coupons.
6.2 The Relevant Issuer shall procure (a) that the Principal Paying Agent or the Registrar, as the case may be, shall keep a full and complete record of all Notes, Coupons and Talons issued by it (other than serial numbers of Coupons) and of their redemption, any cancellation or any payment (as the case may be) and of all replacement notes, coupons or talons issued in substitution for lost, stolen, mutilated, defaced or destroyed Notes, Coupons or Talons, (b) that the Principal Paying Agent or the Registrar, as the case may be, shall in respect of the Coupons of each maturity retain (in the case of Coupons other than Talons) until the expiry of ten years from the Relevant Date in respect of such Coupons and (in the case of Talons indefinitely) either all paid or exchanged Coupons of that maturity or a list of the serial numbers of Coupons of that maturity still remaining unpaid or unexchanged and (c) that such records and Coupons (if any) shall be made available to the Trustee at all reasonable times.
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7. COVENANT TO COMPLY WITH THE TRUST DEED
7.1 Covenant to comply with the Trust Deed
Each of the Issuers and each Guarantor severally covenants with the Trustee to comply with those provisions of this Trust Deed and the Conditions which are expressed to be binding on it and to perform and observe the same. The Notes and the Coupons are subject to the provisions contained in this Trust Deed, all of which shall be binding upon the Issuers, the Guarantors, the Noteholders, the Couponholders and all persons claiming through or under them respectively. The Trustee shall hold the benefit of this covenant upon trust for itself and the Noteholders and the Couponholders according to its and their respective interests.
7.2 Trustee may enforce Conditions
The Trustee shall itself be entitled to enforce the obligations of the Relevant Issuer and each Relevant Guarantor under the Notes and the Conditions as if the same were set out and contained in this Trust Deed which shall be read and construed as one document with the Notes.
8. COVENANTS BY THE ISSUERS AND THE GUARANTORS
So long as any of the Notes remains outstanding, the Issuers and the Guarantors will each:
| (a) |
Books of account: at all times keep and (in the case of the Parent only) procure that all its Subsidiaries keep such books of account as may be necessary to comply with all applicable laws and so as to enable the financial statements of the Relevant Issuer or, as the case may be, the Relevant Guarantor to be prepared (if required by applicable law) and, if the Trustee, in its sole opinion, determines that it is necessary to request access to such books of account, allow the Trustee and any person appointed by it, to whom the Relevant Issuer, the Relevant Guarantor or the relevant Subsidiary (as the case may be) shall have no reasonable objection, free access to the same at all reasonable times during normal business hours and to discuss the same with responsible officers of the Parent; |
| (b) |
Event of Default: give notice in writing to the Trustee forthwith of the coming into existence of any security interest which would require any security to be given to the Notes pursuant to Condition 5 (Negative Pledge) or of the occurrence of any Event of Default, Potential Event of Default, Change of Control or Change of Control Put Event and without waiting for the Trustee to take any further action; |
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| (c) |
Certificate of Compliance: provide to the Trustee within seven days of any request by the Trustee and at the time of the despatch to the Trustee of the Parent’s annual balance sheet and profit and loss account, and in any event not later than 180 days after the end of its financial year, a certificate, signed by two Authorised Signatories of the Relevant Issuer or, as the case may be, the Relevant Guarantor certifying that up to a specified date not earlier than seven days prior to the date of such certificate (the Certified Date) the Relevant Issuer or, as the case may be, the Relevant Guarantor has complied with its obligations under this Trust Deed and the Notes (or, if such is not the case, giving details of the circumstances of such non-compliance) and that as at such date there did not exist nor had there existed at any time prior thereto since the Certified Date in respect of the previous such certificate (or, in the case of the first such certificate, since the date of this Trust Deed) any Event of Default, Potential Event of Default, Change of Control Put Event, Change of Control or other matter which could affect the ability of the Relevant Issuer or, as the case may be, the relevant Guarantor to perform its obligations under this Trust Deed or (if such is not the case) specifying the same; |
| (d) |
Financial statements: send to the Trustee and to the Principal Paying Agent (if the same are produced) as soon as practicable after their date of publication and in the case of annual financial statements in any event not more than 180 days after the end of each financial year, two copies of the Parent’s or, as the case may be, the Relevant Guarantor’s consolidated annual balance sheet and profit and loss account and of every balance sheet, profit and loss account, report or other notice, statement or circular issued (or which under any legal or contractual obligation should be issued) to the Parents’ members or holders of debentures or its creditors (or any class of them) or, as the case may be, the Relevant Guarantor in their capacity as such at the time of the actual (or legally or contractually required) issue or publication thereof and procure that the same are made available for inspection or collection by Noteholders and Couponholders at the Specified Offices of the Paying Agents, as soon as practicable thereafter; |
| (e) |
Information: so far as permitted by applicable law, at all times give to the Trustee such information, opinions, certificates and other evidence as it shall require in accordance with its fiduciary duties and obligations to the Noteholders and in such form as it shall require (including, without limitation, the certificates called for by the Trustee pursuant to Clause 8(c) (Certificate of Compliance)) for the exercise of its duties, trusts, powers, authorities and discretions vested in it under this Trust Deed or by operation of law; |
| (f) |
Notes held by the Relevant Issuer and the Relevant Guarantors: send to the Trustee forthwith upon being so requested in writing by the Trustee a certificate of the Relevant Issuer or, as the case may be, the Relevant Guarantor (signed on its behalf by two Authorised Signatories) setting out the total number of Notes of each Series which at the date of such certificate are held by or for the benefit of the Relevant Issuer, the Relevant Guarantor or any Subsidiary; |
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| (g) |
Execution of further Documents: so far as permitted by applicable law, at all times execute all such further documents and do all such further acts and things as may be necessary at any time or times in the opinion of the Trustee to give effect to the provisions of this Trust Deed; |
| (h) |
Notices to Noteholders: send or procure to be sent to the Trustee not less than five business days in London prior to the date of publication (unless a shorter period is agreed between the Relevant Issuer and the Trustee), for the Trustee’s approval, one copy of each notice to be given to the Noteholders in accordance with Condition 18 (Notices) and not publish such notice without such approval (such approval not to be unreasonably withheld or delayed and unless so expressed, not to constitute approval of such notice for the purpose of Section 21 of the Financial Services and Markets Act 2000) provided that such approval shall not be required in respect of notices required to be published by applicable laws and regulations, and, upon publication of any notice to Noteholders, send to the Trustee a copy of such notice; |
| (i) |
Notification of non-payment: use its reasonable endeavours to procure that the Principal Paying Agent notifies the Trustee forthwith in the event that it does not, on or before the due date for payment in respect of the Notes or Coupons of any Series or any of them receive unconditionally the full amount in the relevant currency of the moneys payable on such due date on all such Notes or Coupons; |
| (j) |
Notification of late payment: in the event of the unconditional payment to the Principal Paying Agent or the Trustee of any sum due in respect of any of the Notes or the Coupons or any of them being made after the due date for payment thereof, forthwith give notice to the Noteholders that such payment has been made in accordance with Condition 18 (Notices); |
| (k) |
Notification of redemption or payment: not less than the number of days specified in the relevant Condition prior to the redemption or payment date in respect of any Note or Coupon give to the Trustee notice in writing of the amount of such redemption or payment pursuant to the Conditions and duly proceed to redeem or pay such Notes or Coupons accordingly; |
| (l) |
Tax or optional redemption: if the Relevant Issuer gives notice to the Trustee that it intends to redeem the Notes pursuant to Conditions 9(b) (Redemption and Purchase – Redemption for tax reasons) or 9(c) (Redemption and Purchase – Redemption at the option of the relevant Issuer (Issuer Call Option)) and prior to the Relevant Issuer giving such notice to the Noteholders, provide such information to the Trustee as the Trustee requires in order to satisfy itself of the matters referred to in such Condition; |
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| (m) |
Obligations of Agents: observe and comply with its obligations and use all reasonable endeavours to procure that the Agents observe and comply with all their obligations under the Agency Agreement, procure that the Registrar maintains the Register and notify the Trustee immediately if it becomes aware of any material breach or failure by an Agent in relation to the Notes or Coupons and at all times maintain Agents and a Calculation Agent in accordance with the Conditions; |
| (n) |
Change of taxing jurisdiction: if before the Relevant Date for any Note or Coupon the Relevant Issuer or any Relevant Guarantor shall become subject generally to the taxing jurisdiction of any territory or any political sub-division thereof or any authority therein or thereof having power to tax other than or in addition to the Relevant Jurisdiction(s), immediately upon becoming aware thereof notify the Trustee of such event and (unless the Trustee otherwise agrees) enter forthwith into a trust deed supplemental hereto, giving to the Trustee an undertaking or covenant in form and manner satisfactory to the Trustee in terms corresponding to the terms of Condition 11 (Taxation) with the substitution of (or, as the case may be, the addition to) the references therein to the Relevant Jurisdiction with references to that other or additional territory to whose taxing jurisdiction, or that of a political subdivision thereof or an authority therein or thereof, the Relevant Issuer or, as the case may be, the relevant Guarantor shall have become subject as aforesaid, such trust deed also to modify Condition 11 (Taxation) so that such Condition shall make reference to that other or additional territory; |
| (o) |
Listing: at all times use reasonable endeavours to maintain the admission to listing, trading and/or quotation of the Notes of each Series by the relevant competent authority, stock exchange and/or quotation system on which they are admitted to listing, trading and/or quotation on issue as indicated in the relevant Final Terms or, if it is unable to do so having used all reasonable endeavours or, if the Trustee considers that the maintenance of such admission to listing, trading and/or quotation is certified by two Authorised Signatories of the Relevant Issuer to be unduly burdensome or impractical and the Trustee is of the opinion that to do so would not be materially prejudicial to the interests of the Noteholders, use reasonable endeavours to obtain and maintain admission to listing, trading and/or quotation of the Notes on such other competent authority, stock exchange and/or quotation system as the Relevant Issuer and the Relevant Guarantors may (with the approval of the Trustee) decide and give notice of the identity of such other competent authority, stock exchange or quotation system to the Noteholders; |
| (p) |
Authorised Signatories: upon the execution hereof and thereafter forthwith upon any change of the same, deliver to the Trustee (with a copy to the Principal Paying Agent) a list of the Authorised Signatories of each Issuer and each Guarantor, together with certified specimen signatures of the same; |
| (q) |
Payments: pay moneys payable by it to the Trustee hereunder without set off, counterclaim, deduction or withholding, unless otherwise compelled by law and in the event of any deduction or withholding compelled by law pay such additional amount as will result in the payment to the Trustee of the amount which would otherwise have been payable by it to the Trustee hereunder; |
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| (r) |
Notification of amendment to agreements: notify the Trustee of any amendment to the Dealer Agreement, and any amendment(s) to or waiver(s) of the terms of this Trust Deed and the Agency Agreement; |
| (s) |
Auditor’s certificates: cause to be prepared and certified by the Auditors in respect of each financial accounting period accounts in such form as will comply with all relevant legal and accounting requirements and all requirements for the time being of the relevant stock exchange; |
| (t) |
Further documents: at all times execute and do all such further documents, acts and things as may be necessary at any time or times in the reasonable opinion of the Trustee to give effect to this Trust Deed; |
| (u) |
Appointment and removal of Agents: give notice to the Noteholders in accordance with Condition 18 (Notices) of any appointment, resignation or removal of any Agent or Calculation Agent (other than the appointment of the initial Agents and Calculation Agent) after having obtained the prior written approval of the Trustee thereto or any change of any Agent’s specified office and (except as provided by the Agency Agreement or the Conditions) at least 30 days prior to such event taking effect; provided always that so long as any of the Notes remains outstanding in the case of the termination of the appointment of the Calculation Agent or so long as any of the Notes or Coupons remains liable to prescription in the case of the termination of the appointment of the Principal Paying Agent or Registrar, as the case may be, no such termination shall take effect until a new Calculation Agent, Principal Paying Agent or Registrar (as the case may be) has been appointed on terms previously approved in writing by the Trustee; |
| (v) |
Subsidiaries: in respect of the Parent only, procure its Subsidiaries to comply with all applicable provisions of Condition 9 (Redemption and Purchase); |
| (w) |
Documents available for inspection: use reasonable endeavours to procure that each Agent makes available for inspection by Noteholders and Couponholders at its specified office copies of this Trust Deed, the Agency Agreement and the then latest audited balance sheet and profit and loss account (consolidated if applicable) of the Issuers and the Guarantors (if available); |
| (x) |
[U.S. Paying Agent: if, in accordance with the provisions of the Conditions, interest in respect of the Notes becomes payable at the specified office of any Paying Agent in the United States of America promptly give notice thereof to the relative Noteholders in accordance with Condition 18 (Notices);] |
| (y) |
Dealer Agreement: promptly provide the Trustee with copies of all supplements and/or amendments and/or restatements of the Dealer Agreement; |
| (z) |
List of Material Subsidiaries: give to the Trustee (i) on the date hereof and (ii) at the same time as sending to it the certificates referred to in paragraph (c) above, a certificate signed by two Authorised Signatories of the Parent addressed to the Trustee (with a form and content satisfactory to the Trustee) listing those Subsidiaries of the Parent which as at the date hereof, as at the |
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| Certified Date (as defined in paragraph (c) above) of the relevant certificate given under paragraph (c) above or, as the case may be, as at the first day on which the then latest audited consolidated accounts of the Parent became available were Material Subsidiaries for the purposes of Condition 12 (Events of Default); |
| (aa) |
Change in Material Subsidiaries: give to the Trustee, as soon as reasonably practicable after the acquisition or disposal of any company which thereby becomes or ceases to be a Material Subsidiary or after any transfer is made to any Subsidiary of the Parent which thereby becomes a Material Subsidiary, a certificate by two Authorised Signatories of the Parent addressed to the Trustee (with a form and content satisfactory to the Trustee) to such effect; |
| (bb) |
Coupons: upon due surrender in accordance with the Conditions, pay the face value of all Coupons (including Coupons issued in exchange for Talons) appertaining to all Notes purchased by the Relevant Issuer, the Relevant Guarantors or any other Subsidiary of the Parent; |
| (cc) |
Legal Opinions: prior to making any modification or amendment or supplement to this Trust Deed, procure the delivery of (a) legal opinion(s) as to English and any other relevant law, addressed to the Trustee, dated the date of such modification or amendment or supplement, as the case may be, and in a form acceptable to the Trustee from legal advisers acceptable to the Trustee; |
| (dd) |
Euroclear and Clearstream: use all reasonable endeavours to procure that Euroclear and/or Clearstream (as the case may be) issue(s) any record, certificate or other document requested by the Trustee as soon as practicable after such request; |
| (ee) |
Notice of rating downgrade: promptly notify the Trustee upon becoming aware that any of the ratings assigned to the Notes has been downgraded or withdrawn; |
| (ff) |
FATCA Information: to the extent it is legally permissible to do so to take commercially reasonable efforts to provide upon request by the Trustee to the Trustee, and consents to the collection and processing by the Trustee of, any authorisations, waivers, forms, documentation and other information relating to its status and required to be collected or reported by the Trustee under FATCA (FATCA Information). The Trustee shall treat such forms, documentation or other information relating to or provided by an Issuer as confidential, but the Issuers consent, solely to the extent required for or in connection with the Trustee’s compliance with FATCA, to the disclosure, transfer and reporting of such FATCA Information to any relevant government or taxing authority, any member of the Trustee’s Group, any sub-contractors, agents, service providers or associates of the Trustee’s Group, and a member of the Trustee’s Group, including transfers to jurisdictions which do not have strict data protection or similar laws. The Issuers agree to inform the Trustee promptly in writing if there are any changes to the FATCA Information supplied to the Trustee from time to time; |
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| (gg) |
FATCA Withholding: use commercially reasonable efforts to provide to the Trustee, upon reasonable request by the Trustee, with information necessary and required for the Trustee to determine whether it is required by applicable law to make any FATCA Withholding from a payment it makes under this Agreement; |
| (hh) |
Information Reporting & Sharing: within ten business days of a written request by the Trustee, supply to the Trustee such forms, documentation and other information relating to the Issuers or the Guarantors, as applicable, their operations, or any Notes as the Trustee reasonably requests for the purposes of the Trustee’s compliance with applicable law and shall notify the Trustee reasonably promptly in the event that either the Issuers or the Guarantors become aware that any of the forms, documentation or other information provided is (or becomes) inaccurate in any material respect; provided, however, that the Issuers and/or the Guarantors, as applicable, shall not be required to provide any forms, documentation or other information pursuant to this clause to the extent that: (i) any such form, documentation or other information (or the information required to be provided on such form or documentation) is not reasonably available and cannot be obtained by using reasonable efforts; or (ii) doing so would or might in the reasonable opinion of the Issuers or the Guarantors, as applicable, constitute a breach of any: (a) applicable law; (b) fiduciary duty; or (c) duty of confidentiality; |
| (ii) |
Benchmark Amendment certificate and Benchmark Replacement Conforming Changes certificate: no later than notifying the Trustee, pursuant to Condition 7(i)(a)(iv) (Benchmark Amendments) or Condition 7(i)(b)(ii) (Benchmark Replacement Conforming Changes), as applicable, the Relevant Issuer shall deliver to the Trustee a certificate (on which the Trustee shall be entitled to rely on without further enquiry or liability) signed by two Authorised Signatories of the Relevant Issuer: |
| (i) |
confirming (x) that a Benchmark Event or a Benchmark Transition Event (as applicable) has occurred, (y) the Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread or, as the case may be, the Benchmark Replacement and (z) the specific terms of the Benchmark Amendments or Benchmark Replacement Conforming Changes (if any), as applicable, in each case as determined in accordance with the provisions of Condition 7(i) (Benchmark Discontinuation); |
| (ii) |
certifying that the Benchmark Amendments or the Benchmark Replacement Conforming Changes, as applicable, are necessary to ensure the proper operation of (as applicable) (A) such Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread or (B) such Benchmark Replacement; and |
| (iii) |
certifying that (i) the Relevant Issuer has duly consulted with an Independent Adviser with respect to each of the matters above or, if that is not the case, (ii) explaining, in reasonable detail, why the relevant Issuer has not done so. |
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9. AMENDMENTS AND SUBSTITUTION
9.1 Waiver
Without prejudice to Clause 9.4 (Rating Confirmations), the Trustee may, without any consent or sanction of the Noteholders or Couponholders and without prejudice to its rights in respect of any subsequent breach, Event of Default or Potential Event of Default, from time to time and at any time, but only if and in so far as in its opinion the interests of the Noteholders shall not be materially prejudiced thereby, authorise or waive, on such terms and conditions (if any) as shall seem expedient to it, any breach or proposed breach by any Issuer or any Guarantor of any of the covenants or provisions contained in this Trust Deed or the Notes or Coupons (other than a proposed breach or breach relating to the subject of a Reserved Matter) or determine that any Event of Default or Potential Event of Default shall not be treated as such for the purposes of this Trust Deed; any such authorisation, waiver or determination shall be binding on the Noteholders and the Couponholders and, if, but only if, the Trustee shall so require, the Relevant Issuer shall cause such authorisation, waiver or determination to be notified to the Noteholders as soon as practicable thereafter in accordance with the Conditions; provided that the Trustee shall not exercise any powers conferred upon it by this Clause in contravention of any express direction by an Extraordinary Resolution or of a request in writing made by the holders of not less than 20 per cent. in aggregate principal amount of the Notes then outstanding (but so that no such direction or request shall affect any authorisation, waiver or determination previously given or made) or so as to authorise or waive any such breach or proposed breach relating to any of the matters the subject of the Reserved Matters as specified and defined in Schedule 4 (Provisions for Meetings of Noteholders).
9.2 Modifications
Without prejudice to Clause 9.4 (Rating Confirmations), the Trustee may from time to time and at any time without any consent or sanction of the Noteholders or Couponholders concur with the Issuers and the Guarantors in making (a) any modification to this Trust Deed (other than in respect of Reserved Matters as specified and defined in Schedule 4 (Provisions for Meetings of Noteholders) or any provision of this Trust Deed referred to in that specification), the Conditions, the Agency Agreement or the Notes which in the opinion of the Trustee it may be proper to make provided the Trustee is of the opinion that such modification will not be materially prejudicial to the interests of the Noteholders or (b) any modification to this Trust Deed, the Conditions, the Agency Agreement or the Notes if in the opinion of the Trustee such modification is of a formal, minor or technical nature or made to correct a manifest error. Any such modification shall be binding on the Noteholders and the Couponholders and, unless the Trustee otherwise agrees, the Relevant Issuer shall cause such modification to be notified to the Noteholders as soon as practicable thereafter in accordance with Condition 18 (Notices).
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In addition, the Trustee shall agree to vary or amend the Conditions, this Trust Deed and/or the Agency Agreement to give effect to certain amendments without the requirement for the consent or approval of Noteholders of the relevant Notes of Coupons on the basis set out in Condition 7(i) (Benchmark Discontinuation) provided however it shall not be obliged to concur with the Relevant Issuer in respect of any Benchmark Amendments (as defined in the Conditions) which, in its reasonable opinion, would have the effect of (i) exposing it to any liabilities against which it has not been indemnified and/or prefunded and/or secured to its satisfaction or (ii) imposing more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce or amend the protective provisions in this Trust Deed, the Conditions and/or the Agency Agreement. For the avoidance of doubt, none of the Trustee, the Paying Agents or the Calculation Agent will be responsible for determining whether or not a Benchmark Event has occurred.
9.3 Substitution
| (a) |
Procedure: Without prejudice to Clause 9.4 (Rating Confirmations), the Trustee may (1) without the consent of the Noteholders or the Couponholders, agree to the substitution, in place of the Relevant Issuer (or of any previous substitute under this Clause) of a Relevant Guarantor or its successor in business or any Subsidiary of the Parent (hereinafter called the Substituted Obligor) as the principal debtor under this Trust Deed in relation to the Notes and Coupons of any Series and under the Notes and Coupons of that Series and (2) without the consent of the Noteholders or the Couponholders, agree to the substitution of any Subsidiary of any Guarantor (also a Substituted Obligor) in place of a Guarantor (or any previous substitute under this Clause) as a guarantor under this Trust Deed in relation to the Notes and Coupons of any Series and under the Notes and Coupons of that Series, in each case provided that: |
| (i) |
a trust deed is executed or some other written form of undertaking is given by the Substituted Obligor to the Trustee, in form and manner satisfactory to the Trustee, agreeing to be bound by the terms of this Trust Deed, the Notes and the Coupons (with any consequential amendments which the Trustee may deem appropriate) as fully as if the Substituted Obligor had been named in this Trust Deed and on the Notes and the Coupons as the principal debtor in place of the Relevant Issuer or, as the case may be, as the guarantor in place of the relevant Guarantor (or of any previous substitute under this Clause); |
| (ii) |
the Relevant Issuer, the Relevant Guarantors and the Substituted Obligor execute such other deeds, documents and instruments (if any) as the Trustee may require in order that the substitution is fully effective, and comply with such other requirements as the Trustee may direct in the interests of the Noteholders and the Couponholders; |
| (iii) |
an unconditional and irrevocable guarantee in form and substance satisfactory to the Trustee shall have been given (x) in the case of the substitution of the Relevant Issuer as provided in (1) above, by the Relevant Issuer and each of the Relevant Guarantors or, if one of the Relevant Guarantors or its successor in business has become the Substituted Obligor, by the Relevant Issuer and the remaining Relevant Guarantors or (y) in the case of the substitution of a Guarantor as provided in (2) above, by each of the Guarantors, of the obligations of the Substituted Obligor under this Trust Deed and the Notes; |
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| (iv) |
the Trustee is satisfied that (i) the Substituted Obligor has obtained all governmental and regulatory approvals and consents necessary for its assumption of liability as principal debtor or, as the case may be, as a guarantor in respect of this Trust Deed and the Notes and the Coupons in place of the Relevant Issuer and/or, as the case may be, the Relevant Guarantors or the relevant Guarantor (or such previous substitute as aforesaid) and (ii) the Relevant Issuer and/or, as the case may be, the Relevant Guarantors or the relevant Guarantor has obtained all governmental and regulatory approvals and consents necessary for the guarantee to be fully effective as referred to in sub-clause 9.3(c) and (iii) such approvals and consents are at the time of substitution in full force and effect; |
| (v) |
(without prejudice to the generality of the preceding sub-clauses of this sub-clause 9.3(a)) where the Substituted Obligor is incorporated, domiciled or resident in or is otherwise subject generally to the taxing jurisdiction of any territory or any political sub-division thereof or any authority of or in such territory having power to tax (the Substituted Territory) other than or in addition to the territory, the taxing jurisdiction of which (or to any such authority of or in which) the Relevant Issuer or, as the case may be, the relevant Guarantor is subject generally (the Issuer’s Territory), the Substituted Obligor will (unless the Trustee otherwise agrees) give to the Trustee an undertaking in form and manner satisfactory to the Trustee in terms corresponding to the terms of Condition 11 (Taxation) with the substitution for the reference in that Condition to the relevant Issuer’s Territory of references to the Substituted Territory and in such event the Trust Deed and Notes and Coupons will be interpreted accordingly; |
| (vi) |
without prejudice to the rights of reliance of the Trustee under sub-clause 9.3(d) (Directors’ certification) the Trustee is satisfied that the said substitution is not materially prejudicial to the interests of the Noteholders; |
| (vii) |
the Rating Agency has confirmed in writing to the Trustee that the substitution of the Substituted Obligor will not result in: |
| (A) |
in respect of any Series of Notes which is not specifically rated by any rating agency, a downgrading of the then current credit rating of any rating agency applicable to the class of debt represented by the Notes; or |
| (B) |
in respect of any Series of Notes which is specifically rated by any rating agency, a downgrading of the then current credit rating applicable to such Series of Notes by such rating agency; |
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| (b) |
Change of law: in connection with any proposed substitution of the Relevant Issuer or any Relevant Guarantor or any previous substitute, the Trustee may, in its absolute discretion and without the consent of the Noteholders or the Couponholders agree to a change of the law from time to time governing the Notes and the Coupons and this Trust Deed provided that such change of law, in the opinion of the Trustee, would not be materially prejudicial to the interests of the Noteholders; |
| (c) |
Extra duties: the Trustee shall be entitled to refuse to approve any Substituted Obligor if, pursuant to the law of the country of incorporation of the Substituted Obligor, the assumption by the Substituted Obligor of its obligations hereunder imposes responsibilities on the Trustee over and above those which have been assumed under this Trust Deed; |
| (d) |
Directors’ certification: if any two Directors of the Substituted Obligor certify that immediately prior to the assumption of its obligations as Substituted Obligor under this Trust Deed the Substituted Obligor is solvent after taking account of all prospective and contingent liabilities resulting from its becoming the Substituted Obligor, the Trustee need not have regard to the financial condition, profits or prospects of the Substituted Obligor or compare the same with those of the Relevant Issuer or, as the case may be, the relevant Guarantor (or of any previous substitute under this Clause); |
| (e) |
Interests of Noteholders: in connection with any proposed substitution, the Trustee shall not have regard to, or be in any way liable for, the consequences of such substitution for individual Noteholders or the Couponholders resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory and no Noteholder or Couponholder shall, in connection with any such substitution, be entitled to claim from the Relevant Issuer or, as the case may be, the relevant Guarantor any indemnification or payment in respect of any tax consequence of any such substitution upon individual Noteholders or Couponholders; |
| (f) |
Release of Issuer or, as the case may be, the relevant Guarantor: any agreement by the Trustee pursuant to sub-clause 9.3(a) (Procedure) shall, if so expressed, operate to release the Relevant Issuer or, as the case may be, the relevant Guarantor (or such previous substitute as aforesaid) from any or all of its obligations as principal debtor or, as the case may be, as guarantor, in respect of the Notes and Coupons and this Trust Deed (but without prejudice to its liabilities under any guarantee given pursuant to sub-clause 9.3(c) (Extra duties)). Not later than fourteen days after the execution of any such documents as aforesaid and after compliance with the said requirements of the Trustee, the Substituted Obligor shall cause notice thereof to be given to the Noteholders; and |
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| (g) |
Completion of substitution: upon the execution of such documents and compliance with the said requirements, the Substituted Obligor shall be deemed to be named in this Trust Deed and the Notes and Coupons as the principal debtor in place of the Relevant Issuer or, as the case may be, the guarantor in place of the relevant Guarantor (or in each case of any previous substitute under this Clause) and this Trust Deed, the Agency Agreement, the Notes and the Coupons shall thereupon be deemed to be amended in such manner as shall be necessary to give effect to the substitution and without prejudice to the generality of the foregoing any references in this Trust Deed, the Agency Agreement, in the Notes and Coupons to the Relevant Issuer or, as the case may be, the relevant Guarantor shall be deemed to be references to the Substituted Obligor. |
9.4 Rating Confirmations
For the purposes of determining whether or not the exercise by the Trustee of any of its trusts, powers, authorities, duties and discretions under this Trust Deed (including, without limitation, any modification, waiver, authorisation, determination or substitution), is materially prejudicial to the interests of the Noteholders of any Series of Notes, the Trustee shall be entitled to rely on (but is not bound by) any S&P or any Substituted Rating Agency confirmation received in respect thereof.
10. BREACH
Any breach of or failure to comply by the Issuers or the Guarantors with any such terms and conditions as are referred to in Clauses 8 (Covenants by the Issuers and the Guarantors) and 9 (Amendments and Substitution) shall constitute a default by the Issuers or the Guarantors (as the case may be) in the performance or observance of a covenant or provision binding on it under or pursuant to this Trust Deed.
11. ENFORCEMENT
11.1 Legal proceedings
The Trustee may at any time, at its discretion and without further notice, institute such proceedings against the Relevant Issuer or any Relevant Guarantor as it may think fit to recover any amounts due in respect of the Notes which are unpaid or to enforce any of its rights under this Trust Deed or the Conditions but it shall not be bound to take any such proceedings or any other action under this Trust Deed or the Notes unless (a) it shall have been so directed by an Extraordinary Resolution or so requested in writing by the holders of at least one-fifth in principal amount of the outstanding Notes and (b) it shall have been indemnified and/or secured and/or prefunded to its satisfaction against all Liabilities to which it may thereby become liable and all Liabilities incurred by it in connection therewith and provided that the Trustee shall not be held liable for the consequence of taking any such action and may take such action without having regard to the effect of such action on individual Noteholders or Couponholders. Only the Trustee may enforce the provisions of the this Trust Deed and the Notes and Coupons and no Noteholder or Couponholder shall be entitled to proceed directly against the Relevant Issuer and/or any Relevant Guarantor unless the Trustee, having become bound so to proceed, fails, or is unable, to do so within 60 days and such failure or inability is continuing.
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11.2 Evidence of default
Proof that:
| (a) |
as regards any specified Note the Relevant Issuer has made default in paying any principal due in respect of such Note shall (unless the contrary be proved) be sufficient evidence that the Relevant Issuer has made the like default as regards all other Notes in respect of which a corresponding payment is then due; |
| (b) |
as regards any specified Coupon or any specified Registered Note the Relevant Issuer has made default in paying any interest due in respect of such Coupon or Registered Note shall (unless the contrary be proved) be sufficient evidence that the Relevant Issuer has made the like default as regards all other Coupons or Registered Notes in respect of which a corresponding payment is then due; and |
| (c) |
as regards any Talon, the Relevant Issuer has made default in exchanging such Talon for further Coupons and a further Talon as provided by its terms shall (unless the contrary be proved) be sufficient evidence that the Relevant Issuer has made the like default as regards all other Talons which are then available for exchange, |
and for the purposes of sub-clauses 11.2(a) and 11.2(b) a payment shall be a “corresponding” payment notwithstanding that it is due in respect of a Note of a different denomination from that in respect of the above specified Note.
12. APPLICATION OF MONEYS
12.1 Application of moneys
All moneys received by the Trustee in respect of the Notes of any Series or amounts payable under this Trust Deed will despite any appropriation of all or part of them by the Relevant Issuer or, as the case may be, any Relevant Guarantor (including any moneys which represent principal or interest in respect of Notes or Coupons which have become void under the Conditions) shall, unless and to the extent attributable, in the opinion of the Trustee, to a particular Series of the Notes, be apportioned pari passu and rateably between each Series of the Notes, and all moneys received by the Trustee under this Trust Deed from the Relevant Issuer or, as the case may be, any Relevant Guarantor to the extent attributable in the opinion of the Trustee to a particular Series of the Notes or which are apportioned to such Series as aforesaid, be held by the Trustee on trust to apply them (subject to Clause 12.2 (Deposits):
| (a) |
first, in payment or satisfaction of those Liabilities incurred by the Trustee or any Appointee in the preparation, maintenance and execution of the trusts of this Trust Deed (including remuneration and any additional remuneration of the Trustee); |
| (b) |
secondly, in or towards payment pari passu and rateably of all interest remaining due and unpaid in respect of the Notes of the relevant Series and all principal moneys due on or in respect of the Notes of that Series provided that where the Notes of more than one Series become so due and payable, such |
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| monies shall be applied as between the amounts outstanding in respect of the different Series pari passu and rateably (except where, in the opinion of the Trustee, such monies are paid in respect of a specific Series or several specific Series, in which event such monies shall be applied solely to the amounts outstanding in respect of that Series or those Series respectively); and |
| (c) |
thirdly, the balance (if any) in payment to the Relevant Issuer (without prejudice to, or liability in respect of, any question as to how such payments shall be dealt with as between the Relevant Issuer and the Relevant Guarantors and any other person). |
Without prejudice to this Clause 12, if the Trustee holds any moneys which represent principal or interest in respect of Notes which have become void or in respect of which claims have been prescribed under Condition 13 (Prescription), the Trustee will hold such moneys on the above trusts.
12.2 Deposits
| (a) |
No provision of these presents shall (a) confer on the Trustee any right to exercise any investment discretion in relation to the assets subject to the trust constituted by these presents and, to the extent permitted by law, Section 3 of the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by these presents and (b) require the Trustee to do anything which may cause the Trustee to be considered a sponsor of a covered fund under Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any regulations promulgated thereunder. |
| (b) |
The Trustee may deposit moneys in respect of the Notes in its name in an account at such bank or other financial institution and in such currency as the Trustee may, in its absolute discretion, think fit in light of the cash needs of the transaction and not for purposes of generating income. If that bank or financial institution is the Trustee or a subsidiary, holding or associated company of the Trustee, the Trustee need only account for an amount of interest equal to the amount of interest which would, at then current rates, be payable by it on such a deposit to an independent customer. The Trustee is not responsible for any loss occasioned by placing money on deposit and has no duty to obtain the best return. |
| (c) |
The Trustee may at its discretion accumulate such moneys until the accumulations, together with any other funds for the time being under the control of the Trustee and available for such purpose, amount to at least ten per cent. of the principal amount of the relevant Notes then outstanding and then such accumulations and funds (after deduction of, or provision for, any applicable taxes) shall be applied under clause 12.1 (Application of moneys). For the avoidance of doubt, the Trustee shall in no circumstances, have any discretion to invest any moneys referred to in this clause 12.2(b) in any investments or other assets. |
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| (d) |
The parties acknowledge and agree that in the event that any deposits in respect of the Notes are held by a bank or a financial institution in the name of the Trustee and the interest rate in respect of certain currencies is a negative value such that the application thereof would result in amounts being debited from funds held by such bank or financial institution, the Trustee shall not be liable to make up any shortfall or be liable for any loss. The Trustee may at its discretion accumulate such deposits and the resulting interest and other income derived thereon. The accumulated deposits shall be applied under Clause 12.1 (Application of moneys). |
12.3 Payment to Noteholders and Couponholders
The Trustee shall give notice to the Noteholders in accordance with Condition 18 (Notices) of the date fixed for any payment under Clause 12.1 (Application of Moneys). Any payment to be made in respect of the Notes or Coupons of any Series by the Relevant Issuer, any Relevant Guarantor or the Trustee may be made in the manner provided in Condition 10 (Payments), the Agency Agreement and this Trust Deed and any payment so made shall be a good discharge of such payment to the extent of such payment by the Relevant Issuer, the Relevant Guarantor or the Trustee (as the case may be).
12.4 Production of Notes, Coupons and Notes Certificates
Upon any payment under Clause 12.3 (Payment to Noteholders and Couponholders) of principal or interest, the Note, Coupon or Note Certificate in respect of which such payment is made shall, if the Trustee so requires, be produced to the Trustee or the Paying Agent by or through whom such payment is made and the Trustee shall:
| (a) |
in respect of a Bearer Note or Coupon (a) in the case of part payment, enface or cause such Paying Agent to enface a memorandum of the amount and date of payment thereon (or, in the case of part payment of an NGN Temporary Global Note or an NGN Permanent Global Note cause the Principal Paying Agent to procure that the ICSDs make appropriate entries in their records to reflect such payment) or (b) in the case of payment in full, cause such Bearer Note or Coupon to be surrendered or shall cancel or procure the same to be cancelled and shall certify or procure the certification of such cancellation; and |
| (b) |
in respect of a Registered Note, (a) in the case of part payment, require the Registrar to make a notation in the Register of the amount and date of payment (and in the case of a Registered Note held under the New Safekeeping Structure, to procure that the ICSDs make appropriate entries in their records to reflect such payment) or (b) in the case of payment in full, cause the relevant Note Certificate to be surrendered or shall cancel or procure the same to be cancelled and shall certify or procure the certification of such cancellation. |
12.5 Holders of Bearer Notes to be treated as holding all Coupons
Wherever in this Trust Deed the Trustee is required or entitled to exercise a power, trust, authority or discretion under this Trust Deed, the Trustee shall, notwithstanding that it may have express notice to the contrary assume that each holder of Bearer Notes is the holder of all Coupons and Talons appertaining to each Bearer Note of which they are the holder.
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12.6 Regulated Activities
Notwithstanding anything in this Trust Deed to the contrary, the Trustee shall not be required to do anything which might constitute a regulated activity for the purpose of the FSMA, unless it is authorised under the FSMA to do so.
The Trustee shall have the discretion at any time (i) to delegate any of the functions which fall to be performed by an authorised person under the FSMA to any agent or person which has the necessary authorisations and licences and (ii) to apply for authorisation under the FSMA and perform any or all such functions itself if, in its absolute discretion, it considers it necessary, desirable or appropriate to do so.
Nothing in this Trust Deed shall require the Trustee to assume an obligation of an Issuer arising under any provision of the listing, prospectus, disclosure or transparency rules (or equivalent rules of any other competent authority besides the Financial Conduct Authority).
12.7 Investment
Moneys held by the Trustee may at its election be placed on deposit into an account bearing a market rate interest (and for the avoidance of doubt, the Trustee shall not be required to obtain best rates, be responsible for any loss occasioned by such deposit or exercise any other form of investment discretion with respect to such deposits) in the name or under the control of the Trustee at such bank or other financial institution and in such currency as the Trustee may think fit in light of the cash needs of the transaction and not for purposes of generating income. If such moneys are placed on deposit with a bank or financial institution which is a subsidiary, holding company, affiliate or associated company of the Trustee, it need only account for an amount of interest equal to the standard amount of interest payable by it on a deposit to an independent customer.
13. TERMS OF APPOINTMENT
By way of supplement to the Trustee Acts, it is expressly declared as follows:
13.1 Reliance on Information
| (a) |
Advice: the Trustee may in relation to this Trust Deed act on the opinion or advice of or a certificate or any information (whether addressed to the Trustee or not) obtained from any lawyer, banker, valuer, surveyor, broker, auctioneer, accountant or other expert (whether obtained by the Trustee, the Relevant Issuer, any Relevant Guarantor, any Subsidiary or any Agent) and shall not be responsible for any Liability occasioned by so acting; any such opinion, advice, certificate or information may be sent or obtained by letter or email and the Trustee shall not be liable for acting on any opinion, advice, certificate or information purporting to be so conveyed although the same shall contain some error or shall not be authentic; |
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| (b) |
Certificate of Directors or Authorised Signatories: the Trustee may call for and shall be at liberty to accept a certificate signed by two Directors and/or two Authorised Signatories of the Relevant Issuer or any Relevant Guarantor, as the case may be, or other person duly authorised on its behalf as to any fact or matter prima facie within the knowledge of the Relevant Issuer or the Relevant Guarantor, as the case may be, as sufficient evidence thereof and a like certificate to the effect that any particular dealing, transaction or step or thing is, in the opinion of the person so certifying expedient, as sufficient evidence that it is expedient and the Trustee shall not be bound in any such case to call for further evidence or be responsible for any Liability that may be occasioned by its failing so to do; |
| (c) |
Certificate of Directors in respect of a Subsidiary: a certificate of any two Authorised Signatories of the Parent addressed to the Trustee that in their opinion a Subsidiary of the Parent is or is not or was or was not at any particular time throughout a specified period a Material Subsidiary may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence of manifest error, be conclusive and binding on all parties; |
| (d) |
Resolution or direction of Noteholders: the Trustee shall not be responsible for acting upon any resolution purporting to be a Written Resolution or to have been passed at any meeting of the Noteholders in respect whereof minutes have been made and signed or a direction of a specified percentage of Noteholders, even though it may subsequently be found that there was some defect in the constitution of the meeting or the passing of the resolution or the making of the directions or in the case of a Written Resolution in writing or a direction or a request it was not signed by the requisite number of Noteholders or that for any reason the resolution purporting to be a Written Resolution or to have been passed at any Meeting or the making of the directions was not valid or binding upon the Noteholders and the Couponholders; |
| (e) |
Reliance on certification of clearing system: the Trustee may call for any certificate or other document issued by Euroclear, Clearstream or any other relevant clearing system in relation to any matter. Any such certificate or other document shall, in the absence of manifest error, be conclusive and binding for all purposes. Any such certificate or other document may comprise any form of statement or print out of electronic records provided by the relevant clearing system (including Euroclear’s EasyWay system or Clearstream’s Xact Web Portal) in accordance with its usual procedures and in which the holder of a particular principal or nominal amount of the Notes is clearly identified together with the amount of such holding. The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any certificate or other document to such effect purporting to be issued by Euroclear or Clearstream or any other relevant clearing system and subsequently found to be forged or not authentic; |
| (f) |
Noteholders as a class: whenever in this Trust Deed the Trustee is required in connection with any exercise of its powers, trusts, authorities or discretions to have regard to the interests of the Noteholders, it shall have regard to the interests of the Noteholders as a class and in particular, but without prejudice to the generality of the foregoing, shall not be obliged to have regard to the |
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| consequences of such exercise for any individual Noteholder resulting from such Noteholder being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuers, the Guarantors, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders except to the extent already provided for in Condition 11 (Taxation) and/or any undertaking given in addition thereto or in substitution therefor under this Trust Deed; |
| (g) |
Trustee not responsible for investigations: the Trustee shall not be responsible for, or for investigating any matter which is the subject of, any recital, statement, representation, warranty or covenant of any person contained in this Trust Deed, the Notes or any other agreement or document relating to the transactions herein or therein contemplated or for the execution, legality, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence thereof; |
| (h) |
No obligation to monitor: the Trustee shall be under no obligation to monitor or supervise the functions of any other person under the Notes or any other agreement or document relating to the transactions herein or therein contemplated and shall be entitled, in the absence of actual knowledge of a breach of obligation, to assume that each such person is properly performing and complying with its obligations; |
| (i) |
Notes held by the Relevant Issuer or a Relevant Guarantor: in the absence of actual knowledge or express notice to the contrary, the Trustee may assume without enquiry (other than requesting a certificate of the Relevant Issuer or any Relevant Guarantor under sub-clause 8(f) (Notes held by the Relevant Issuer and the Relevant Guarantors), that no Notes are for the time being held by or for the benefit of the Relevant Issuer, any Relevant Guarantor or any relevant Subsidiary; |
| (j) |
Forged Notes: the Trustee shall not be liable to any Issuer, any Guarantor or any Noteholder or Couponholder by reason of having accepted as valid or not having rejected any Bearer Note or Coupon as such and subsequently found to be forged or not authentic; |
| (k) |
Entry on the Register: the Trustee shall not be liable to the Issuers, the Guarantors or any Noteholder by reason of having accepted as valid or not having rejected any entry on the Register later found to be forged or not authentic and can assume for all purposes in relation hereto that any entry on the Register is correct; |
| (l) |
Events of Default: the Trustee shall not be bound to give notice to any person of the execution of this Trust Deed or to take any steps to ascertain whether any Event of Default, Potential Event of Default, Change of Control or Change of Control Put Event has happened and, until it shall have actual knowledge or express notice to the contrary, the Trustee shall be entitled to assume that no such Event of Default, or Potential Event of Default, Change of Control or |
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| Change of Control Put Event has happened and that each of the Relevant Issuer and each Relevant Guarantor is observing and performing all the obligations on its part contained in the Notes and Coupons and under this Trust Deed and no event has happened as a consequence of which any of the Notes may become repayable; |
| (m) |
Legal Opinions: the Trustee shall not be responsible to any person for failing to request, require or receive any legal opinion relating to any Notes or for checking or commenting upon the content of any such legal opinion and shall not be responsible for any Liability incurred thereby; |
| (n) |
Authorised Amount: the Trustee shall not be concerned, and need not enquire, as to whether or not any Notes are issued in breach of the Authorised Amount; |
| (o) |
Trustee not Responsible: the Trustee shall not be responsible for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of this Trust Deed or any other document relating thereto and shall not be liable for any failure to obtain any rating of Notes (where required), any licence, consent or other authority for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility in evidence of this Trust Deed or any other document relating thereto. In addition the Trustee shall not be responsible for the effect of the exercise of any of its powers, duties and discretions hereunder; |
| (p) |
Freedom to Refrain: notwithstanding anything else herein contained, the Trustee may refrain from doing anything which would or might in its opinion be contrary to any law of any jurisdiction or any directive or regulation of any agency or any state of which would or might otherwise render it liable to any person and may do anything which is, in its opinion, necessary to comply with any such law, directive or regulation; |
| (q) |
Right to Deduct or Withhold: notwithstanding anything contained in this Trust Deed, to the extent required by any applicable law, if the Trustee is or will be required to make any deduction or withholding from any distribution or payment made by it hereunder or if the Trustee is or will be otherwise charged to, or is or may become liable to, tax as a consequence of performing its duties hereunder whether as principal, agent or otherwise, and whether by reason of any assessment, prospective assessment or other imposition of liability to taxation of whatsoever nature and whensoever made upon the Trustee, and whether in connection with or arising from any sums received or distributed by it or to which it may be entitled under this Trust Deed (other than in connection with its remuneration as provided for herein) or any investments or deposits from time to time representing the same, including any income or gains arising therefrom or any action of the Trustee in connection with the trusts of this Trust Deed (other than the remuneration herein specified) or otherwise, then the Trustee shall be entitled to make such deduction or withholding or, as the case may be, to retain out of sums received by it an amount sufficient to discharge any liability to tax which relates to sums so received or distributed or to discharge any such other liability of the Trustee to tax from the funds held by the Trustee upon the trusts of this Trust Deed; |
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| (r) |
FATCA Withholding: the Trustee shall be entitled to deduct FATCA Withholding and shall have no obligation to gross-up any payment hereunder or to pay any additional amount as a result of such FATCA Withholding; and |
| (s) |
Reliance by Trustee: any certificate or report of the Auditors or any other person called for by or provided to the Trustee (whether or not addressed to the Trustee) in accordance with or for the purposes of this Trust Deed may be relied upon by the Trustee as sufficient evidence of the facts stated therein notwithstanding that such certificate or report and/or any engagement letter or other document entered into by the Trustee in connection therewith contains a monetary or other limit on the liability of the Auditors or such other person in respect thereof and notwithstanding that the scope and/or basis of such certificate or report may be limited by any engagement or similar letter or by the terms of the certificate or report itself. |
13.2 Trustee’s powers and duties
| (a) |
Trustee’s determination: The Trustee may determine whether or not a default in the performance or observance by an Issuer or a Guarantor of any obligation under the provisions of this Trust Deed or contained in the Notes or Coupons is capable of remedy and if the Trustee shall certify that any such default is, in its opinion, not capable of remedy such certificate shall be conclusive and binding upon such Issuer, such Guarantor, the Noteholders and the Couponholders; |
| (b) |
Determination of questions: the Trustee as between itself and the Noteholders and the Couponholders shall have full power to determine all questions and doubts arising in relation to any of the provisions of this Trust Deed and every such determination, whether made upon a question actually raised or implied in the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee, the Noteholders and the Couponholders; |
| (c) |
Trustee’s discretion: the Trustee shall (save as expressly otherwise provided herein) as regards all the trusts, powers, authorities and discretions vested in it by this Trust Deed or by operation of law have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and the Trustee shall not be responsible for any Liability that may result from the exercise or non-exercise thereof but, whenever the Trustee is under the provisions of this Trust Deed bound to act at the request or direction of the Noteholders, the Trustee shall nevertheless not be so bound unless first indemnified and/or provided with security and/or prefunded to its satisfaction against all actions, proceedings, claims and demands to which it may render itself liable and all Liabilities which it may incur by so doing; |
| (d) |
Trustee’s consent: any consent or approval given by the Trustee for the purposes of this Trust Deed may be given on such terms and subject to such conditions (if any) as the Trustee may require. The Trustee may give any consent or approval, exercise any power, authority or discretion or take any similar action |
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| (whether or not such consent, approval, power, authority, discretion or action is specifically referred to in this Trust Deed) if it is satisfied that the interests of the Noteholders will not be materially prejudiced thereby. For any avoidance of doubt, the Trustee shall not have any duty to the Noteholders in relation to such matters other than that which is contained in the preceding sentence; |
| (e) |
Conversion of currency: where it is necessary or desirable for any purpose in connection with this Trust Deed to convert any sum from one currency to another it shall (unless otherwise provided by this Trust Deed or required by law) be converted at such rate(s) of exchange, in accordance with such method and as at such date for the determination of such rate(s) of exchange as may be specified by the Trustee in its absolute discretion as relevant and any rate of exchange, method and date so specified shall be binding on the Relevant Issuer, the Relevant Guarantors, the Noteholders and the Couponholders; |
| (f) |
Application of proceeds: the Trustee shall not be responsible for the receipt or application by the Relevant Issuer of the proceeds of the issue of the Notes, the exchange of any Temporary Global Note for any Permanent Global Note or Definitive Notes, the exchange of any Permanent Global Note for Definitive Notes, the exchange of any Global Registered Note Certificate for Individual Note Certificates or the delivery of any Note, Coupon or Note Certificate to the persons entitled to them; |
| (g) |
Error of judgment: the Trustee shall not be liable for any error of judgment made in good faith by any officer or employee of the Trustee assigned by the Trustee to administer its corporate trust matters; |
| (h) |
Agents: the Trustee may, in the conduct of the trusts of this Trust Deed instead of acting personally, employ and pay an agent on any terms, whether or not a lawyer or other professional person, to transact or conduct, or concur in transacting or conducting, any business and to do or concur in doing all acts required to be done by the Trustee (including the receipt and payment of money) and the Trustee shall not be responsible for any Liability incurred by reason of the misconduct, omission or default on the part of any person appointed by it hereunder or be bound to supervise the proceedings or acts of any such person; |
| (i) |
Delegation: the Trustee may, in the execution and exercise of all or any of the trusts, powers, authorities and discretions vested in it by this Trust Deed, act by responsible officer(s) for the time being of the Trustee and the Trustee may also whenever it thinks fit, whether by power of attorney or otherwise, delegate to any person(s) or fluctuating body of persons (whether being a joint trustee of this Trust Deed or not) all or any of the trusts, powers, authorities and discretions vested in it by this Trust Deed and any such delegation may be made upon such terms and conditions and subject to such regulations (including power to sub-delegate with the consent of the Trustee) as the Trustee may think fit in the interests of the Noteholders and the Trustee shall not be bound to supervise the proceedings or acts of and shall not in any way or to any extent be responsible for any Liability incurred by reason of the misconduct, omission or default on the part of such delegate or sub-delegate; |
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| (j) |
Custodians and nominees: the Trustee may appoint and pay any person to act as a custodian or nominee on any terms in relation to such assets of the trust as the Trustee may determine, including for the purpose of depositing with a custodian this Trust Deed or any document relating to the trust created hereunder and the Trustee shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it hereunder or be bound to supervise the proceedings or acts of any such person; the Trustee is not obliged to appoint a custodian if the Trustee invests in securities payable to bearer; |
| (k) |
Maintenance of ratings: the Trustee shall have no responsibility whatsoever to the Relevant Issuer, the Relevant Guarantors, any Noteholder or Couponholder or any other person for the maintenance of or failure to maintain any rating of any of the Notes by any rating agency; |
| (l) |
Confidential information: the Trustee shall not (unless required by law or ordered so to do by a court of competent jurisdiction) be required to disclose to any Noteholder or Couponholder confidential information or other information made available to the Trustee by the Relevant Issuer or any Relevant Guarantor in connection with this Trust Deed and no Noteholder or Couponholder shall be entitled to take any action to obtain from the Trustee any such information; and |
| (m) |
Responsibility for loss: the Trustee shall not be liable or responsible for any Liabilities or inconvenience which may result from anything properly done or properly omitted to be done by it in accordance with the provisions of this Trust Deed. |
13.3 Financial matters
| (a) |
Professional charges: Any trustee being a banker, lawyer, broker or other person engaged in any profession or business shall be entitled to charge and be paid all usual professional and other charges for business transacted and acts done by such person or such person’s firm on matters arising in connection with the trusts of this Trust Deed and also such person’s properly incurred charges in addition to disbursements for all other work and business done and all time spent by such person or such person’s partner or firm on matters arising in connection with this Trust Deed, including matters which might or should have been attended to in person by a trustee not being a banker, lawyer, broker or other professional person; |
| (b) |
Expenditure by the Trustee: nothing contained in this Trust Deed shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties or the exercise of any right, power, authority or discretion hereunder if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not assured to it; and |
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| (c) |
Trustee may enter into financial transactions with the Issuers and Guarantors: no Trustee and no director or officer of any corporation being a Trustee hereof shall by reason of the fiduciary position of such Trustee be in any way precluded from making any contracts or entering into any transactions in the ordinary course of business with any Issuer, any Guarantor or any Subsidiary, or any person or body corporate directly or indirectly associated with any Issuer, any Guarantor, or any Subsidiary, or from accepting the trusteeship of any other debenture stock, debentures or securities of any Issuer or any Subsidiary, any Guarantor or any person or body corporate directly or indirectly associated with any Issuer or any Subsidiary, and neither the Trustee nor any such director or officer shall be accountable to the Noteholders, the Couponholders, any Issuer, any Guarantor or any Subsidiary, or any person or body corporate directly or indirectly associated with any Issuer, any Guarantor or any Subsidiary, for any profit, fees, commissions, interest, discounts or share of brokerage earned, arising or resulting from any such contracts or transactions and the Trustee and any such director or officer shall also be at liberty to retain the same for their own benefit. |
13.4 Disapplication
Section 1 of the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by this Trust Deed. Where there are any inconsistencies between the Trustee Acts and the provisions of this Trust Deed, the provisions of this Trust Deed shall, to the extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of this Trust Deed shall constitute a restriction or exclusion for the purposes of that Act.
13.5 Trustee Liability
| (a) |
Subject to Section 750 of the Companies Act 2006, if applicable, nothing in this Trust Deed shall in any case in which the Trustee has failed to show the degree of care and diligence required of it as trustee having regard to the provisions of this Trust Deed conferring on it any trusts, powers, authorities or discretions exempt the Trustee from or indemnify it against any liability for its own gross negligence, wilful misconduct or fraud. |
| (b) |
Notwithstanding any provision of this Trust Deed to the contrary, the Trustee shall not in any event be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to lost profits, goodwill, reputation, business opportunity or anticipated saving), whether or not foreseeable, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of whether the claim for loss or damage is made in negligence, for breach of contract, breach of trust or otherwise; provided however, that this clause shall not be deemed to apply in the event of a determination of fraud on the part of the Trustee in a judgement by a court having jurisdiction. |
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14. COSTS AND EXPENSES
14.1 Remuneration
| (a) |
Normal remuneration: The Issuers (or Relevant Issuer, as the case may be) shall pay to the Trustee remuneration for its services as trustee as from the date of this Trust Deed, such remuneration to be at such rate as may from time to time be agreed between the Issuers and the Trustee. Such remuneration shall be payable in advance on the anniversary of the date hereof in each year and the first payment shall be made on the date hereof. Such remuneration shall accrue from day to day and be payable (in priority to payments to the Noteholders or Couponholders up to and including the date when, all the Notes having become due for redemption, the redemption moneys and interest thereon to the date of redemption have been paid to the Principal Paying Agent or the Trustee, provided that if upon due presentation (if required pursuant to the Conditions) of any Note, Note Certificate or Coupon or any cheque, payment of the moneys due in respect thereof is improperly withheld or refused, remuneration will be deemed not to have ceased to accrue and will commence again to accrue until payment to such Noteholder or Couponholder is made). |
| (b) |
Extra remuneration: In the event of the occurrence of an Event of Default, a Potential Event of Default, a Change of Control or a Change of Control Put Event or the Trustee considering it expedient or necessary or being requested by the Relevant Issuer or any Relevant Guarantor to undertake duties which the Trustee and the Relevant Issuer or such Relevant Guarantor agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under this Trust Deed, the Relevant Issuer shall pay to the Trustee such additional remuneration as shall be agreed between them. |
| (c) |
Value added tax: The Issuers (or Relevant Issuer, as the case may be) shall in addition pay to the Trustee an amount equal to the amount of any value added tax or similar tax chargeable in respect of its remuneration under this Trust Deed. |
| (d) |
Failure to agree: In the event of the Trustee and the Issuers (or Relevant Issuer, as the case may be) failing to agree: |
| (i) |
(in a case to which sub-clause 14.1(a) (Normal remuneration) applies) upon the amount of the remuneration; or |
| (ii) |
(in a case to which sub-clause 14.1(b) (Extra remuneration) applies) upon whether such duties shall be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under this Trust Deed, or upon such additional remuneration, |
such matters shall be determined by an investment bank or other appropriate person (acting as an expert and not as an arbitrator) selected by the Trustee and approved by the Issuers (or Relevant Issuer, as the case may be) or, failing such approval, nominated (on the application of the Trustee) by the President for the time being of The Law Society of England and Wales (the expenses involved in such nomination and the fees of such investment bank or other appropriate person being payable by the Issuers (or Relevant Issuer, as the case may be)) and the determination of any such investment bank or other appropriate person shall be final and binding upon the Trustee and the Relevant Issuer.
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| (e) |
Expenses: The Issuers (or Relevant Issuer, as the case may be) shall also pay or discharge all costs, charges and expenses properly incurred by the Trustee in relation to the preparation and execution of, the exercise of its powers and the performance of its duties under, and in any other manner in relation to, this Trust Deed, including but not limited to legal and travelling expenses and any stamp, issue, registration, documentary and other taxes or duties paid or payable by the Trustee in connection with any action taken or contemplated by or on behalf of the Trustee for enforcing, or resolving any doubt concerning, or for any other purpose in relation to, this Trust Deed. |
| (f) |
Indemnity: Without prejudice to the right of indemnity by law given to trustees, the Relevant Issuer shall indemnify the Trustee and every Appointee and keep it or them indemnified against all Liabilities to which it or he may be or become subject or which may be properly incurred by it or them in the preparation or execution or purported execution of any of its or his trusts, powers authorities and discretions under this Trust Deed or its or his functions under any such appointment or in respect of any other matter or thing done or omitted in any way relating to the Trust Deed or any such appointment (including all Liabilities incurred in disputing or defending the foregoing). The Trustee may use reasonable endeavours to provide to the Issuers written evidence of any Liabilities referred to in this Clause. |
| (g) |
Payment of amounts due: All amounts due and payable pursuant to sub-clauses 14.1(e) (Expenses) and 14.1(f) (Indemnity) shall be payable by the Issuers (or Relevant Issuer, as the case may be) on the date specified in a demand by the Trustee; the rate of interest applicable to such payments shall be one per cent. per annum above the base rate from time to time of The Bank of England and interest shall accrue: |
| (i) |
in the case of payments made by the Trustee prior to the date of the demand, from the date on which the payment was made or such later date as specified in such demand; |
| (ii) |
in the case of payments made by the Trustee on or after the date of the demand, from the date specified in such demand, which date shall not be a date earlier than the date such payments are made. |
All remuneration payable to the Trustee shall carry interest at the rate specified in this Clause 14.1(g) (Payment of amounts due) from the due date thereof.
| (h) |
Apportionment of expenses: The Trustee shall apportion the costs, charges, expenses and liabilities incurred by the Trustee in the preparation and execution of the trusts of this Trust Deed (including remuneration of the Trustee) between the several Series of Notes in such manner and in such amounts as it shall, in its absolute discretion, consider appropriate. |
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| (i) |
Discharges: Unless otherwise specifically stated in any discharge of this Trust Deed the provisions of this Clause 14 (Costs and Expenses) shall continue in full force and effect notwithstanding such discharge. |
| (j) |
Payments: All payments to be made by the Issuers (or Relevant Issuer, as the case may be) to the Trustee under this Trust Deed shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of any Relevant Jurisdiction, unless such withholding or deduction is required by law. In that event, the Issuers (or Relevant Issuer, as the case may be) shall pay such additional amount as will, after such deduction or withholding has been made, leave the Trustee with the full amount which would have been received by it had no such withholding or deduction been required. |
14.2 Stamp duties
The Issuers (or Relevant Issuer, as the case may be) will pay all stamp duties, registration taxes, capital duties and other similar fees, duties or taxes (if any), including interest and penalties, payable on or in connection with (a) the constitution and issue of the Notes and Coupons, (b) the initial delivery of the Notes, (c) any action taken by the Trustee (or any Noteholder or Couponholder where permitted or required under this Trust Deed so to do) to enforce the provisions of the Notes or this Trust Deed and (d) the execution and delivery of this Trust Deed. If the Trustee (or any Noteholder, or Couponholder where permitted under this Trust Deed so to do) shall take any proceedings against the Issuers (or Relevant Issuer, as the case may be) in any other jurisdiction and if for the purpose of any such proceedings this Trust Deed or any Note or any Note Certificate is taken into any such jurisdiction and any stamp duties or other duties or taxes become payable thereon in any such jurisdiction, the Issuers (or Relevant Issuer, as the case may be) will pay (or reimburse the person making payment of) such stamp duties or other duties or taxes (including penalties).
14.3 Exchange rate indemnity
| (a) |
Currency of Account and Payment: The Contractual Currency is the sole currency of account and payment for all sums payable by the Issuers and the Guarantors under or in connection with this Trust Deed, the Notes and the Coupons including damages; |
| (b) |
Extent of Discharge: an amount received or recovered in a currency other than the Contractual Currency (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding up or dissolution of the Relevant Issuer or any Relevant Guarantor or otherwise) by the Trustee or any Noteholder or Couponholder in respect of any sum expressed to be due to it from the Relevant Issuer or any Relevant Guarantor will only discharge the Relevant Issuer or such Relevant Guarantor to the extent of the Contractual Currency amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so); |
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| (c) |
Indemnity: if that Contractual Currency amount is less than the Contractual Currency amount expressed to be due to the recipient under this Trust Deed or the Notes or the Coupons, the Relevant Issuer and the Relevant Guarantor will indemnify the Trustee or any Noteholder or Couponholder against any Liability sustained by it as a result. In any event, the Relevant Issuer and the Relevant Guarantor will indemnify the recipient against the cost of making any such purchase; and |
| (d) |
Deficiency: any deficiency arising or resulting from any variation in rates of exchange between (i) the date as of which the local currency equivalent of the amounts due or contingently due under this Trust Deed (other than this Clause) is calculated for the purposes of any bankruptcy, insolvency or liquidation of the Relevant Issuer or, as the case may be, the Relevant Guarantor and (ii) the final date for ascertaining the amount of claims in such bankruptcy, insolvency or liquidation. The amount of such deficiency shall be deemed not to be reduced by any variation in rates of exchange occurring between the said final date and the date of any distribution of assets in connection with any such bankruptcy, insolvency or liquidation. |
14.4 Indemnities separate
The indemnities in this Clause 14 (Costs and Expenses) constitute separate and independent obligations from the other obligations in this Trust Deed, will give rise to separate and independent causes of action, will apply irrespective of any indulgence granted by the Trustee and/or any Noteholder or Couponholder and will continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due under this Trust Deed or the Notes or the Coupons or any other judgment or order. Any such Liability as referred to in sub-clause 14.3(c) (Indemnity) shall be deemed to constitute a Liability suffered by the Trustee, the Noteholders and the Couponholders and no proof or evidence of any actual Liability shall be required by the Issuers or any Guarantor or their liquidator or liquidators.
15. APPOINTMENT AND RETIREMENT
15.1 Appointment of Trustees
The power of appointing new trustees of this Trust Deed shall be vested in the Issuers but no person shall be appointed who shall not previously have been approved by an Extraordinary Resolution of the Noteholders. A trust corporation may be appointed sole trustee hereof but subject thereto there shall be at least two trustees hereof one at least of which shall be a trust corporation. Any appointment of a new trustee hereof shall as soon as practicable thereafter be notified by the Issuers to the Agents and the Noteholders. The Noteholders shall together have the power, exercisable by Extraordinary Resolution, to remove any trustee or trustees for the time being hereof. The removal of any trustee shall not become effective unless there remains a trustee hereof (being a trust corporation) in office after such removal. If, in such circumstances, no appointment of such a new trustee has become effective within 60 days of the date of such Extraordinary Resolution, the Trustee shall be entitled to appoint a Trust Corporation as trustee of this Trust Deed, but no such appointment shall take effect unless previously approved by an Extraordinary Resolution.
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15.2 Co-trustees
Notwithstanding the provisions of Clause 15.1 (Appointment of Trustees), the Trustee may, upon giving prior notice to the Issuers and the Guarantors but without the consent of the Issuers or the Guarantors or the Noteholders or the Couponholders, appoint any person established or resident in any jurisdiction (whether a trust corporation or not) to act either as a separate trustee or as a co-trustee jointly with the Trustee:
| (a) |
if the Trustee considers such appointment to be in the interests of the Noteholders or the Couponholders; |
| (b) |
for the purposes of conforming to any legal requirements, restrictions or conditions in any jurisdiction in which any particular act or acts are to be performed; or |
| (c) |
for the purposes of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction either of a judgment already obtained or of this Trust Deed. |
15.3 Attorneys
Each of the Issuers and the Guarantors hereby irrevocably appoints the Trustee to be its attorney in its name and on its behalf to execute any such instrument of appointment. Such a person shall (subject always to the provisions of this Trust Deed) have such trusts, powers, authorities and discretions (not exceeding those conferred on the Trustee by this Trust Deed) and such duties and obligations as shall be conferred on such person or imposed by the instrument of appointment. The Trustee shall have power in like manner to remove any such person. Such remuneration as the Trustee may pay to any such person, together with any attributable Liabilities incurred by it in performing its function as such separate trustee or co-trustee, shall for the purposes of this Trust Deed be treated as Liabilities incurred by the Trustee.
15.4 Retirement of Trustees
Any Trustee for the time being of this Trust Deed may retire at any time upon giving not less than 60 days’ notice in writing to the Issuers without assigning any reason thereof and without being responsible for any Liabilities occasioned by such retirement. The retirement of any Trustee shall not become effective unless there remains a trustee hereof (being a trust corporation) in office after such retirement. The Issuers hereby covenant that in the event of the only trustee hereof which is a trust corporation giving notice under this Clause they shall use their reasonable endeavours to procure a new trustee, being a trust corporation, to be appointed and if the Issuers have not procured the appointment of a new trustee within 30 days of the expiry of the Trustee notice referred to in this Clause 15.4, the Trustee shall be entitled to procure forthwith a new trustee.
15.5 Competence of a majority of Trustees
Whenever there shall be more than two trustees hereof the majority of such trustees shall (provided such majority includes a trust corporation) be competent to execute and exercise all the trusts, powers, authorities and discretions vested by this Trust Deed in the Trustee generally.
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15.6 Powers additional
The powers conferred by this Trust Deed upon the Trustee shall be in addition to any powers which may from time to time be vested in it by general law or as the holder of any of the Notes or the Coupons.
15.7 Merger
Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Clause, without the execution or filing of any paper or any further act on the part of any of the parties hereto.
16. NOTICES
16.1 Addresses for notices
All notices and other communications hereunder shall be made in writing and in English (by letter or email) and shall be sent as follows:
| (a) |
Issuers: if to the Parent, to it at: |
| Address: |
InterContinental Hotels Group PLC |
|
| 1 Windsor Dials |
||
| Arthur Road |
||
| Windsor |
||
| Berkshire |
||
| England |
||
| SL4 1RS |
||
| Email address: |
ihgtreasuryfo@ihg.com and ihgtreasurybo@ihg.com |
|
| Attention: |
The General Counsel and Company Secretary |
|
| (b) |
Issuers: if to IHG Finance LLC, to them c/o the Parent |
| (c) |
Guarantors: if to the Guarantors, to them c/o the Parent |
| (d) |
Trustee: if to the Trustee, to it at: |
| Address: |
U.S. Bank Trustees Limited |
|
| 125 Old Broad Street |
||
| Fifth Floor |
||
| London |
||
| EC2N 1AR |
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| Email address: |
CDRM@usbank.com |
|
| Attention: |
Relationship Management |
|
| Phone: |
+44 207 330 2369 |
|
16.2 Effectiveness
Every notice or other communication sent in accordance with Clause 16.1 (Addresses for Notices) shall be effective as follows:
| (a) |
Letter: if sent by letter, it shall be deemed to have been delivered 7 days after the time of despatch; and |
| (b) |
Email: if sent by email, it shall be deemed to have been delivered when received, |
provided that any such notice or other communication which would otherwise take effect after 4.00 p.m. on any particular day shall not take effect until 10.00 a.m. on the immediately succeeding business day in the place of the addressee.
16.3 No Notice to Couponholders
None of the Trustee, the Issuers or the Guarantors shall be required to give any notice to the Couponholders for any purpose under this Trust Deed and the Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Noteholders in accordance with Condition 18 (Notices).
17. LAW AND JURISDICTION
17.1 Governing law
This Trust Deed and the Notes, and any non-contractual obligations arising out of or in connection with this Trust Deed and the Notes, are governed by English law.
17.2 English courts
Subject to Condition 17.4 below, the courts of England have exclusive jurisdiction to settle any dispute (a Dispute), arising out of or in connection with this Trust Deed or the Notes (including a dispute regarding the existence, validity or termination of this Trust Deed or the Notes or any non-contractual obligation arising out of or in connection with them) or the consequences of their nullity and each party submits to the exclusive jurisdiction of the English courts.
17.3 Appropriate forum
The Issuers and the Guarantors each agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that they will not argue to the contrary.
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17.4 Rights of the Trustee to take proceedings outside England
Clause 17.4 is for the benefit of the Trustee, the Noteholders and the Couponholders only. To the extent allowed by law, the Trustee, the Noteholders and the Couponholders may in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction; and (ii) concurrent proceedings in any number of jurisdictions.
17.5 Process Agent
IHG Finance LLC irrevocably and unconditionally appoints the Parent at its registered office for the time being, which is 1 Windsor Dials, Arthur Road, Windsor, Berkshire, England, SL4 1RS at the date of this Trust Deed, as its agent for service of process in any proceedings before the English courts in relation to any Dispute and the Parent accepts such appointment. IHG Finance LLC undertakes that in the event of the Parent ceasing so to act it will immediately appoint such other person with a registered office in England as its agent for service of process in respect of any Dispute in England. IHG Finance LLC agrees that failure by a process agent to notify it of any process will not invalidate service. Nothing in this paragraph shall affect the right of any other party to serve process in any other manner permitted by law.
17.6 Waiver of Trial by Jury
WITHOUT PREJUDICE TO SUBCLAUSE 17.2, EACH OF THE ISSUERS AND THE GUARANTORS WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED BY THIS AGREEMENT. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A BENCH TRIAL.
18. SEVERABILITY
In case any provision in or obligation under this Trust Deed shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
19. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
No person shall have any right to enforce any provision of this Trust Deed under the Contracts (Rights of Third Parties) Act 1999, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
20. COUNTERPARTS
This Trust Deed may be executed in any number of counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF this Trust Deed has been executed as a deed by the parties hereto and is intended to be and is hereby delivered on the date first before written.
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SCHEDULE 1
TERMS AND CONDITIONS OF THE NOTES
The following is the text of the terms and conditions which, as completed by the relevant Final Terms, will be endorsed on each Note in definitive form issued under the Programme. The terms and conditions applicable to any Note in global form will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under “Summary of Provisions Relating to the Notes while in Global Form” below.
1. Introduction
| (a) |
Programme |
InterContinental Hotels Group PLC (the “Parent”) and IHG Finance LLC (together with the Parent in its capacity as issuer, the “Issuers” and each an “Issuer”) have established a Euro Medium Term Note Programme (the “Programme”) for the issuance of up to £4,000,000,000 in aggregate principal amount of notes (the “Notes”) unconditionally and irrevocably guaranteed by (i) Six Continents Limited (“Six Continents”); (ii) InterContinental Hotels Limited (“InterContinental”); (iii) in respect of Notes issued by IHG Finance LLC, the Parent; and (iv) from and including the Guarantor Accession Date (as defined below) in respect of Notes issued by the Parent, IHG Finance LLC (in its capacity as guarantor from (and including) the Guarantor Accession Date in respect of Notes issued by the Parent and together with Six Continents, InterContinental and the Parent in its capacity as guarantor of Notes issued by IHG Finance LLC, each a “Guarantor” and together, the “Guarantors”).
References herein to the relevant Issuer shall be references to whichever of the Parent and IHG Finance LLC is specified as the Issuer in the relevant Final Terms (as defined below).
| (b) |
Final Terms |
Notes issued under the Programme are issued in series (each a “Series”) and each Series may comprise one or more tranches (each a “Tranche”) of Notes. Each Tranche is the subject of final terms (the “Final Terms”) which completes these terms and conditions (the “Conditions”). The terms and conditions applicable to any particular Tranche of Notes are these Conditions as completed by the relevant Final Terms. In the event of any inconsistency between these Conditions and the relevant Final Terms, the relevant Final Terms shall prevail.
| (c) |
Trust Deed |
The Notes are constituted by, have the benefit of and are in all respects subject to an amended and restated trust deed dated 21 September 2023 (as amended, restated and/or supplemented from time to time, the “Trust Deed”) between the Issuers, the Guarantors and U.S. Bank Trustees Limited (the “Trustee”, which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for the Noteholders (as defined below).
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| (d) |
Agency Agreement |
The Notes are the subject of an amended and restated agency agreement dated 21 September 2023 (the “Agency Agreement”) between the Issuers, the Guarantors, Elavon Financial Services DAC (a Designated Activity Company registered in Ireland with the Companies Registration Office, registered number 418442, with its registered office at Block F1, Cherrywood Business Park, Cherrywood, Dublin 18, Ireland D18 W2X7, acting through its UK Branch from its establishment at 125 Old Broad Street, Fifth Floor, London EC2N 1AR (registered with the Registrar of Companies for England and Wales under Registration No. BR020005) under the trade name U.S. Bank Global Corporate Trust. Authorised and regulated by the Central Bank of Ireland. Authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority) as principal paying agent (the “Principal Paying Agent”, which expression shall include any successor to Elavon Financial Services DAC, acting through its UK Branch in its capacity as such, and includes any successor principal paying agent appointed from time to time in connection with the Notes) and Elavon Financial Services DAC as registrar (the “Registrar”, which expression includes any successor registrar appointed from time to time in connection with the Notes), the paying agent named therein (together with the Principal Paying Agent, the “Paying Agents”, which expression includes any successor or additional paying agents appointed from time to time in connection with the Notes), the transfer agent named therein (together with the Registrar, the “Transfer Agents”, which expression includes any successor or additional transfer agents appointed from time to time in connection with the Notes) and the Trustee. In these Conditions references to the “Agents” are to the Paying Agents and the Transfer Agents and any reference to an Agent is to any one of them.
| (e) |
Guarantees |
Each of the Guarantors has in the Trust Deed given an unconditional and irrevocable guarantee (in the case of the Parent, in respect of Notes issued by IHG Finance LLC and, in the case of IHG Finance LLC, from and including the Guarantor Accession Date in respect of Notes issued by the Parent) (each a “Guarantee” and together, the “Guarantees”) on a joint and several basis for the due payment of all sums expressed to be payable by the relevant Issuer under the Trust Deed, the Notes and the Coupons so that, (i) prior to (but excluding) the Guarantor Accession Date in respect of Notes issued by the Parent, Six Continents and InterContinental are the relevant Guarantors providing the Guarantee; (ii) from (and including) the Guarantor Accession Date in respect of Notes issued by the Parent, Six Continents, InterContinental and IHG Finance LLC are the relevant Guarantors providing the Guarantee; and (iii) in respect of issuances by IHG Finance LLC, the Parent, Six Continents and InterContinental are the relevant Guarantors providing the Guarantee. References herein to the relevant Guarantors and the Guarantees shall be construed accordingly.
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Prior to (a) the issuance of any Notes by IHG Finance LLC under the Programme or (b) the giving of the Guarantee by IHG Finance LLC in respect of any Notes issued by the Parent under the Programme, the Parent will (i) cause IHG Finance LLC, to provide a guarantee and execute and deliver such guarantee substantially in the form of the Guarantee for the due payment of all sums expressed to be payable by the Parent in respect of any outstanding notes issued by the Parent under the Programme prior to the date of the Trust Deed which guarantee shall be pari passu with the Guarantee of IHG Finance LLC (the “Outstanding Notes Guarantee”) and (ii) deliver a certificate signed by two Authorised Signatories of the Parent to the Trustee (and provide notice thereof to the Noteholders pursuant to Condition 18 (Notices)) certifying that the requirements set out in (i) have been satisfied (the “Guarantor Accession Certificate”), upon which such Guarantor Accession Certificate the Trustee shall be entitled to rely on absolutely without liability. The Trustee is deemed authorised and instructed to enter into any documentation in relation to the Outstanding Notes Guarantee without the need for the consent of Noteholders.
Following provision by IHG Finance LLC of the Outstanding Notes Guarantee, the Parent will, prior to any subsequent issue of Notes by the Parent, deliver the Guarantor Accession Certificate to the Trustee.
| (f) |
The Notes |
The Notes may be issued in bearer form (“Bearer Notes”), or in registered form (“Registered Notes”), as specified in the relevant Final Terms. All subsequent references in these Conditions to “Notes” are to the Notes which are the subject of the relevant Final Terms. Copies of the relevant Final Terms are available for viewing during normal business hours and copies may be obtained from the Specified Office(s) of the Paying Agent(s), the initial Specified Office of the Principal Paying Agent being set out at the end of these Conditions. If the Notes are to be admitted to trading on the main market of the London Stock Exchange, the relevant Final Terms will be published on the website of the London Stock Exchange through a regulatory information service.
| (g) |
Summaries |
Certain provisions of these Conditions are summaries of the Trust Deed and the Agency Agreement and are subject to their detailed provisions. The Noteholders (as defined below) and the holders of the related interest coupons, if any, (the “Coupon holders” and the “Coupons”, respectively) are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement applicable to them. Copies of the Trust Deed and the Agency Agreement are available to Noteholders upon request to the Trustee or the Principal Paying Agent therefor and provision of proof of holding and identity (in form satisfactory to the Trustee or the Principal Paying Agent, as the case may be).
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2. Interpretation
| (a) |
Definitions |
In these Conditions the following expressions have the following meanings:
“Accrual Yield” has the meaning given in the relevant Final Terms;
“Additional Business Centre(s)” means the city or cities specified as such in the relevant Final Terms;
“Additional Financial Centre(s)” means the city or cities specified as such in the relevant Final Terms;
“Additional Rating Agency” means Fitch;
“Authorised Signatory” has the meaning given to it in the Trust Deed;
“Broken Amount” has the meaning given in the relevant Final Terms;
“Business Day” means:
| (a) |
in relation to any sum payable in euro, a TARGET Settlement Day and a day on which commercial banks and foreign exchange markets settle payments generally in each (if any) Additional Business Centre; and |
| (b) |
in relation to any sum payable in a currency other than euro, a day on which commercial banks and foreign exchange markets settle payments generally in London, in the Principal Financial Centre of the relevant currency and in each (if any) Additional Business Centre; |
“Business Day Convention”, in relation to any particular date, has the meaning given in the relevant Final Terms and, if so specified in the relevant Final Terms, may have different meanings in relation to different dates and, in this context, the following expressions shall have the following meanings:
| (a) |
“Following Business Day Convention” means that the relevant date shall be postponed to the first following day that is a Business Day; |
| (b) |
“Modified Following Business Day Convention” or “Modified Business Day Convention” means that the relevant date shall be postponed to the first following day that is a Business Day unless that day falls in the next calendar month in which case that date will be the first preceding day that is a Business Day, save in respect of Notes for which the Reference Rate is SOFR, for which the final Interest Payment Date will not be postponed and interest on that payment will not accrue during the period from and after the scheduled final Interest Payment Date; |
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| (c) |
“Preceding Business Day Convention” means that the relevant date shall be brought forward to the first preceding day that is a Business Day; |
| (d) |
“FRN Convention”, “Floating Rate Convention” or “Eurodollar Convention” means that each relevant date shall be the date which numerically corresponds to the preceding such date in the calendar month which is the number of months specified in the relevant Final Terms as the Specified Period after the calendar month in which the preceding such date occurred, provided, however, that: |
| (i) |
if there is no such numerically corresponding day in the calendar month in which any such date should occur, then such date will be the last day which is a Business Day in that calendar month; |
| (ii) |
if any such date would otherwise fall on a day which is not a Business Day, then such date will be the first following day which is a Business Day unless that day falls in the next calendar month, in which case it will be the first preceding day which is a Business Day; and |
| (iii) |
if the preceding such date occurred on the last day in a calendar month which was a Business Day, then all subsequent such dates will be the last day which is a Business Day in the calendar month which is the specified number of months after the calendar month in which the preceding such date occurred; and |
| (e) |
“No Adjustment” means that the relevant date shall not be adjusted in accordance with any Business Day Convention; |
“Calculation Agent” means the Principal Paying Agent or such other Person specified in the relevant Final Terms as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s) and/or such other amount(s) as may be specified in the relevant Final Terms;
“Calculation Amount” has the meaning given in the relevant Final Terms;
a “Change of Control” will be deemed to have occurred if:
| (a) |
any person or any persons acting in concert (as defined in the City Code on Takeovers and Mergers), other than a holding company (as defined in Section 1159 of the Companies Act 2006) whose shareholders are or are to be substantially similar to the pre-existing shareholders of the Parent, shall become interested (within the meaning of Part 22 of the Companies Act 2006) in (A) more than 50 per cent. of the issued or allotted ordinary share capital of the Parent or (B) shares in the capital of the Parent carrying more than 50 per cent. of the voting rights normally exercisable at a general meeting of the Parent; or |
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| (b) |
any person or any persons acting in concert (as defined in the City Code on Takeovers and Mergers), other than a holding company (as defined in Section 1159 of the Companies Act 2006) whose shareholders are or are to be substantially similar to the pre-existing shareholders of any direct or indirect holding company of the Parent, shall become interested (within the meaning of Part 22 of the Companies Act 2006) in (A) more than 50 per cent. of the issued or allotted ordinary share capital of any direct or indirect holding company of the Parent or (B) shares in the capital of any direct or indirect holding company of the Parent carrying more than 50 per cent. of the voting rights normally exercisable at a general meeting of any such direct or indirect holding company of the Parent; |
“Change of Control Optional Redemption Amount” means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms;
“Change of Control Optional Redemption Date” has the meaning given in the relevant Final Terms;
“Change of Control Period” means the period commencing on the Relevant Announcement Date and ending 90 days after the Change of Control (or such longer period for which the Notes are under consideration (such consideration having been announced publicly within the period ending 90 days after the Change of Control) for rating review or, as the case may be, rating by a Rating Agency, such period not to exceed 60 days after the public announcement of such consideration);
a “Change of Control Put Event” will be deemed to occur if a Change of Control has occurred and:
| (a) |
on the Relevant Announcement Date, the Notes carry from any Rating Agency: |
| (i) |
an investment grade credit rating (Baa3/BBB-, or equivalent, or better), and such rating from any Rating Agency is, within the Change of Control Period, either downgraded to a Non-Investment Grade Rating or withdrawn and is not, within the Change of Control Period, subsequently (in the case of a downgrade) upgraded or (in the case of a withdrawal) reinstated to an investment grade credit rating by such Rating Agency; or |
| (ii) |
a Non-Investment Grade Rating and such rating from any Rating Agency is, within the Change of Control Period, either downgraded by one or more notches (by way of example, Ba1 to Ba2 being one notch) or withdrawn and is not, within the Change of Control Period, subsequently (in the case of a downgrade) upgraded or (in the case of a withdrawal) reinstated to its earlier credit rating or better by such Rating Agency; or |
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| (iii) |
no credit rating and a Negative Rating Event also occurs within the Change of Control Period, provided that if, at the time of the occurrence of the Change of Control, the Notes carry a credit rating from more than one Rating Agency, at least one of which is investment grade, then subparagraph (i) will apply; and |
| (b) |
in making any decision to downgrade or withdraw a credit rating pursuant to paragraphs (i) and (ii) above or not to award a credit rating of at least investment grade as described in paragraph (ii) of the definition of “Negative Rating Event”, the relevant Rating Agency announces publicly or confirms in writing to the Parent or the Trustee that such decision(s) resulted, in whole or in part, from the occurrence of the Change of Control or the Relevant Potential Change of Control Announcement; |
“Change of Control Put Event Notice” means the notice to be given pursuant to Condition 9(g) (Change of Control redemption) by the Parent or, as the case may be, the Trustee to the Noteholders in accordance with Condition 18 (Notices) specifying the nature of the Change of Control Put Event and the procedure for exercising the Change of Control Put Option;
“Change of Control Put Option” means the option of the Noteholders exercisable pursuant to Condition 9(g) (Change of Control redemption);
“Change of Control Put Period” means the period of 45 days after a Change of Control Put Event Notice is given;
“Consolidated Gross Assets” means the consolidated current assets plus consolidated non-current assets of the Group, as set out in the most recent audited consolidated financial statements of the Group;
“Consolidated Revenue” means total revenue less system fund revenue and reimbursement of costs, as set out in the most recent audited consolidated financial statements of the Group;
“Coupon Sheet” means, in respect of a Note, a coupon sheet relating to the Note;
“Day Count Fraction” means, in respect of the calculation of an amount for any period of time (whether or not constituting an Interest Period or an Interest Accrual Period) (the “Calculation Period”) such day count fraction as may be specified in these Conditions or the relevant Final Terms and:
| (a) |
if “Actual/Actual (ICMA)” is so specified, means: |
| (i) |
where the Calculation Period is equal to or shorter than the Regular Period during which the Calculation Period ends, the actual number of days in such Calculation Period divided by the product of (A) the number of days in such Regular Period and (B) the number of Regular Periods in any calendar year; or |
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| (ii) |
where the Calculation Period is longer than one Regular Period, the sum of: |
| I. |
the actual number of days in such Calculation Period falling in the Regular Period in which the Calculation Period begins divided by the product of (I) the actual number of days in such Regular Period and (II) the number of Regular Periods in any calendar year; and |
| II. |
the actual number of days in such Calculation Period falling in the next Regular Period divided by the product of (I) the actual number of days in such Regular Period and (II) the number of Regular Periods in any calendar year; |
| (b) |
if “Actual/Actual (ISDA)” or “Actual/Actual” is so specified, means the actual number of days in the Calculation Period divided by 365 (or, if any portion of the Calculation Period falls in a leap year, the sum of (I) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (II) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365); |
| (c) |
if “Actual/365 (Fixed)” is so specified, means the actual number of days in the Calculation Period divided by 365; |
| (d) |
if “Actual/365 (Sterling)” is so specified, means the actual number of days in the Calculation Period divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366; |
| (e) |
if “Actual/360” is so specified, means the actual number of days in the Calculation Period divided by 360; |
| (f) |
if “30/360, 360/360” or “Bond Basis” is so specified, means the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows: |
| Day Count Fraction = |
[360 x (Y2 - Y1 )] + [30 x (M2 - M 1)] + (D2 - D1) |
|||
| 360 |
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where:
“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day of the Calculation Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Calculation Period falls;
“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless such number is 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30;
| (g) |
if “30E/360” or “Eurobond Basis” is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows: |
| Day Count Fraction = |
[360 x (Y2 - Y1)] + [30 x (M 2 - M1)] + (D2 - D1) |
|||
| 360 |
where:
“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day of the Calculation Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Calculation Period falls;
“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and “D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31, in which case D2 will be 30; and
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| (h) |
if “30E/360 (ISDA)” is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows: |
| Day Count Fraction= |
[360 x (Y2 - Y1)] + [30 x (M2 - M1)] + (D2 - D1) |
|||
| 360 |
where:
“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day of the Calculation Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Calculation Period falls;
“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30,
provided, however, that in each such case the number of days in the Calculation Period is calculated from and including the first day of the Calculation Period to but excluding the last day of the Calculation Period;
“Early Redemption Amount (Tax)” means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms;
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“Early Termination Amount” means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms; “EURIBOR” means, in respect of any specified currency and any specified period, the interest rate benchmark known as the Euro zone interbank offered rate which is calculated and published by a designated distributor (currently Thomson Reuters) in accordance with the requirements from time to time of the European Money Markets Institute (or any other person which takes over the administration of that rate) based on estimated interbank borrowing rates for a number of designated currencies and maturities which are provided, in respect of each such currency, by a panel of contributor banks (details of historic EURIBOR rates can be obtained from the designated distributor);
“Extraordinary Resolution” has the meaning given in the Trust Deed;
“Final Redemption Amount” means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms;
“First Interest Payment Date” means the date specified in the relevant Final Terms;
“Fitch” means Fitch Ratings Ltd. or any successor;
“Fixed Coupon Amount” has the meaning given in the relevant Final Terms;
“Floating Rate Note” means a Note bearing interest on a floating rate basis;
“Group” means the Parent and its Subsidiaries for the time being;
“Gross Redemption Yield” on the Notes and on the Reference Stock will be expressed as a percentage and will be calculated by the Calculation Agent on the basis as published by the Treasury Publisher on an annual compounding basis rounded up (if necessary) to three decimal places, 0.0005 being rounded up, or on such other basis as the Trustee may in its sole discretion approve;
“Guarantee” and “Guarantees” have the meaning stated in Condition 1(e);
“Guarantor” and “Guarantors” have the meaning stated in Condition 1(a);
“Guarantor Accession Certificate” has the meaning given to it in Condition 1(e) (Guarantees);
“Guarantor Accession Date” means the date of the Guarantor Accession Certificate;
“Holder”, in the case of Bearer Notes, has the meaning given in Condition 3(b) (Form, Denomination, Title and Transfer – Title to Bearer Notes) and, in the case of Registered Notes, has the meaning given in Condition 3(d) (Form, Denomination, Title and Transfer – Title to Registered Notes);
“Indebtedness” means any indebtedness (whether being principal, premium, interest or other amounts) for or in respect of any notes, bonds, debentures, debenture stock, loan stock or other securities or any borrowed money or any liability under or in respect of any acceptance or acceptance credit; “Interest Amount” means, in relation to a Note and an Interest Period, the amount of interest payable in respect of that Note for that Interest Period;
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“Interest Commencement Date” means the Issue Date of the Notes or such other date as may be specified as the Interest Commencement Date in the relevant Final Terms;
“Interest Determination Date” has the meaning given in the relevant Final Terms;
“Interest Payment Date” means the First Interest Payment Date and any other date or dates specified as such in, or determined in accordance with the provisions of, the relevant Final Terms and, if a Business Day Convention is specified in the relevant Final Terms:
| (a) |
as the same may be adjusted in accordance with the relevant Business Day Convention; or |
| (b) |
if the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention and an interval of a number of calendar months or other period is specified in the relevant Final Terms as being the Specified Period, each of such dates as may occur in accordance with the FRN Convention, Floating Rate Convention or Eurodollar Convention at such Specified Period of calendar months following the Interest Commencement Date (in the case of the first Interest Payment Date) or the previous Interest Payment Date (in any other case); |
“Interest Period” means each period beginning on (and including) the Interest Commencement Date or any Interest Payment Date and ending on (but excluding) the next Interest Payment Date (or, if the Notes are redeemed on any earlier date, the relevant redemption date);“Issue Date” has the meaning given in the relevant Final Terms;
“Investment Grade” means, in the case of a credit rating assigned by Moody’s, Baa3 or higher and, in the case of a credit rating assigned by S&P, BBB- or higher or the equivalent credit rating assigned by Substitute Rating Agency, if applicable;
“Make Whole Amount” means, in respect of any Note, the higher of:
| (a) |
its principal amount; or |
| (b) |
an amount equal to the product of the Calculation Amount and the price, expressed as a percentage (rounded to three decimal places, 0.0005 being rounded up), at which the Gross Redemption Yield on the Note, if it were to be purchased at such price on the third dealing day prior to the date of publication of the notice of redemption, would be equal to the sum of the Make Whole Premium (expressed as a percentage) and the Gross Redemption Yield on such dealing day of the Reference |
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| Treasury or, if such stock is no longer in issue, of such other government stock issued by the central government of such sovereign country that issued the Reference Treasury as the Calculation Agent, with the advice of three leading brokers operating in the Reference Treasury market and/or the Reference Treasury market makers or such other three persons operating in the Reference Treasury market as the Calculation Agent may approve, shall determine to be appropriate (the “Reference Stock”) on the basis of the middle market price of the Reference Stock prevailing at 11.00 a.m. on such dealing day as determined by the Calculation Agent; |
“Make Whole Premium” has the meaning given in the relevant Final Terms;
“Margin” has the meaning given in the relevant Final Terms;
“Material Subsidiary” means, at any time, any Subsidiary of the Parent:
| (a) |
whose gross assets represent ten per cent. or more of Consolidated Gross Assets or whose revenue represents five per cent. or more of Consolidated Revenue, in each case, as calculated by reference to the latest financial statements of such Subsidiary and the latest audited consolidated financial statements of the Group adjusted in such manner as the Parent may determine (which determination shall be conclusive in the absence of manifest error) (i) to reflect the gross assets and Revenue of any person which has become or ceased to be a member of the Group since the end of the financial year to which the latest audited consolidated financial statements of the Group relate and (ii) so that for the purposes of this definition, the gross assets of the relevant Subsidiary shall be calculated on the same basis as Consolidated Gross Assets are calculated and/or, as the case may be, revenue of the relevant Subsidiary shall be calculated on the same basis as Consolidated Revenue is calculated (but, in each case, relating only to the relevant Subsidiary) and making such adjustments and eliminations as are required to show the same as the contribution of the relevant Subsidiary to Consolidated Gross Assets and/or, as the case may be, Consolidated Revenue, including all fee revenue arising from contracts held by that subsidiary before taking account of any fees passed through to other Group companies under intercompany agreements; or |
| (b) |
to which is transferred all or substantially all of the business, undertaking or assets of a Subsidiary which immediately prior to such transfer is a Material Subsidiary, whereupon the transferor Subsidiary shall cease to be a Material Subsidiary and the transferee Subsidiary shall become a Material Subsidiary under this sub-paragraph (b) upon the completion of such transfer. |
A certificate of any two Authorised Signatories of the Parent addressed to the Trustee that in their opinion a Subsidiary of the Parent is or is not or was or was not at any particular time throughout a specified period a Material Subsidiary may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence of manifest error, be conclusive and binding on all parties; “Maturity Date” has the meaning given in the relevant Final Terms;
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“Maximum Redemption Amount” has the meaning given in the relevant Final Terms;
“Minimum Redemption Amount” has the meaning given in the relevant Final Terms;
“Moody’s” means Moody’s Investors Service Limited or any successor;
a “Negative Rating Event” shall be deemed to have occurred if at such time as there is no rating assigned to the Notes by a Rating Agency (i) the Parent does not, either prior to, or not later than 21 days after, the occurrence of the Change of Control seek, and thereafter throughout the Change of Control Period use all reasonable endeavours to obtain, a rating of the Notes, or any other unsecured and unsubordinated debt of the Parent or (ii) if the Parent does so seek and use such endeavours, it is unable to obtain such a rating of at least investment grade by the end of the Change of Control Period;
“Non-Investment Grade Rating” means a non-investment grade credit rating (Ba1/BB+, or equivalent, or worse);
“Noteholder”, in the case of Bearer Notes, has the meaning given in Condition 3(b) (Form, Denomination, Title and Transfer – Title to Bearer Notes) and, in the case of Registered Notes, has the meaning given in Condition 3(d) (Form, Denomination, Title and Transfer – Title to Registered Notes);
“Official List” means the official list of the United Kingdom Financial Conduct Authority;
“Optional Redemption Amount (Call)” means, in respect of any Note, its principal amount or, if specified in the relevant Final Terms, the Make Whole Amount;
“Optional Redemption Amount (Put)” means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms;
“Optional Redemption Date (Call)” has the meaning given in the relevant Final Terms;
“Optional Redemption Date (Put)” has the meaning given in the relevant Final Terms;
“Outstanding Notes Guarantee” has the meaning given to it in Condition 1(e) (Guarantees); “Participating Member State” means a Member State of the European Communities which adopts the euro as its lawful currency in accordance with the Treaty;
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“Paying Agents” means the Principal Paying Agent and any substitute or additional paying agents appointed in accordance with the Agency Agreement and a “Paying Agent” means any of them;
“Payment Business Day” means:
| (a) |
if the currency of payment is euro, any day which is: |
| (i) |
a day on which banks in the relevant place of presentation are open for presentation and payment of bearer debt securities and for dealings in foreign currencies; and |
| (ii) |
in the case of payment by transfer to an account, a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre(s); or |
| (b) |
if the currency of payment is not euro, any day which is: |
| (i) |
a day on which banks in the relevant place of presentation are open for presentation and payment of bearer debt securities and for dealings in foreign currencies; and |
| (ii) |
in the case of payment by transfer to an account, a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre(s); |
“Person” means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality;
“Principal Financial Centre” means, in relation to any currency, the principal financial centre for that currency, PROVIDED, HOWEVER, THAT:
| (a) |
in relation to euro, it means the principal financial centre of such Participating Member State of the European Communities as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent; and |
| (b) |
in relation to Australian dollars, it means either Sydney or Melbourne and, in relation to New Zealand dollars, it means either Wellington or Auckland; in each case as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent; |
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“Put Option Notice” means a notice which must be delivered to a Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder pursuant to Condition 9(f) (Redemption at the option of Noteholders);
“Put Option Receipt” means a receipt issued by a Paying Agent to a depositing Noteholder upon deposit of a Note with such Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;
“Rate of Interest” means the rate or rates (expressed as a percentage per annum) of interest payable in respect of the Notes specified in the relevant Final Terms or calculated or determined in accordance with the provisions of these Conditions and/or the relevant Final Terms;
“Rating Agency” means Moody’s and S&P or any of their respective successors or any Substitute Rating Agency and, for the purposes of Condition 9(g) (Change of Control redemption), includes the Additional Rating Agency;
“Redemption Amount” means, as appropriate, the Final Redemption Amount, the Early Redemption Amount (Tax), the Optional Redemption Amount (Call), the Residual Call Early Redemption Amount, the Optional Redemption Amount (Put), the Change of Control Optional Redemption Amount, the Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in the relevant Final Terms;
“Reference Price” has the meaning given in the relevant Final Terms;
“Reference Rate” has the meaning given in the relevant Final Terms;
“Reference Treasury” has the meaning given in the relevant Final Terms;
“Regular Period” means:
| (a) |
in the case of Notes where interest is scheduled to be paid only by means of regular payments, each period from and including the Interest Commencement Date to but excluding the first Interest Payment Date and each successive period from and including one Interest Payment Date to but excluding the next Interest Payment Date; |
| (b) |
in the case of Notes where, apart from the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where “Regular Date” means the day and month (but not the year) on which any Interest Payment Date falls; and |
| (c) |
in the case of Notes where, apart from one Interest Period other than the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where “Regular Date” means the day and month (but not the year) on which any Interest Payment Date falls other than the Interest Payment Date falling at the end of the irregular Interest Period; |
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“Relevant Announcement Date” means the date that is the earlier of (a) the date of the first public announcement of the relevant Change of Control and (b) the date of the earliest Relevant Potential Change of Control Announcement (if any);
“Relevant Date” means, in relation to any payment, whichever is the later of (a) the date on which the payment in question first becomes due and (b) if the full amount payable has not been received in the Principal Financial Centre of the currency of payment by the Principal Paying Agent or the Trustee on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders;
“Relevant Indebtedness” means (a) any present or future indebtedness (whether being principal, premium, interest or other amounts) for or in respect of any notes, bonds, debentures, debenture stock, loan stock or other securities which have an initial stated maturity of not less than one year and which are or are of a type which is customarily quoted, listed or ordinarily dealt in on any stock exchange, over-the-counter or other securities market, and (b) any guarantee or indemnity in respect of any such indebtedness;
“Relevant Jurisdiction” means the United Kingdom and the United States except prior to the Guarantor Accession Date in respect of Notes issued by the Parent, in which case the Relevant Jurisdiction shall mean the United Kingdom;
“Relevant Period” means:
| (a) |
each financial year of the Parent; and |
| (b) |
each period beginning on the first day of the second half of a financial year of the Parent and ending on the last day of the first half of its next financial year; |
“Relevant Potential Change of Control Announcement” means any public announcement or statement by or on behalf of the Parent, any actual or potential bidder or any adviser acting on behalf of any actual or potential bidder relating to any potential Change of Control where within 180 days following the date of such announcement or statement, a Change of Control occurs;
“Relevant Screen Page” means the page, section or other part of a particular information service (including, without limitation, Reuters) specified as the Relevant Screen Page in the relevant Final Terms, or such other page, section or other part as may replace it on that information service or such other information service, in each case, as may be nominated by the Person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate; “Reserved Matter” means any proposal:
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| (a) |
to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes or to alter the method of calculating the amount of any payment in respect of the Notes on redemption or maturity or the date for any such payment; |
| (b) |
to effect the exchange, conversion or substitution of the Notes for, or the conversion of the Notes into, shares, bonds or other obligations or securities of the relevant Issuer or any other person or body corporate formed or to be formed (other than as permitted under Clause 7.3 of the Trust Deed); |
| (c) |
to change the currency in which amounts due in respect of the Notes are payable; |
| (d) |
to change the quorum required at any meeting of Noteholders or the majority required to pass an Extraordinary Resolution; or |
| (e) |
to amend this definition; |
“Residual Call Early Redemption Amount” has the meaning given in the relevant Final Terms;
“S&P” means S&P Global Ratings UK Limited or any successor;
“Security” means a mortgage, pledge, lien, hypothecation, security interest or other charge or encumbrance entered into for the purpose of securing any obligation of any person;
“Security Interest” means any mortgage, charge, pledge, lien or other security interest including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction;
“Specified Currency” has the meaning given in the relevant Final Terms;
“Specified Denomination(s)” has the meaning given in the relevant Final Terms;
“Specified Office” has the meaning given in the Agency Agreement;
“Specified Period” has the meaning given in the relevant Final Terms;
“Step Down Rating Change” means the first public announcement after a Step Up Rating Change by both Rating Agencies of an increase in, or as the case may be the reinstatement of, the credit rating of the Parent’s senior unsecured long-term debt with the result that, following such public announcement(s), both Rating Agencies rate the Parent’s senior unsecured long-term debt as Investment Grade, provided that, for the purposes of this definition, where:
| (i) |
both Rating Agencies do not make the public announcements on the same date, the Step Down Rating Change shall be deemed to occur on the date of the later public announcement; and |
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| (ii) |
a Rating Agency had not downgraded the Notes below Investment Grade, then written confirmation from such Rating Agency that the then current rating assigned to the Notes is Investment Grade shall be deemed to be a public announcement, made on the date of such confirmation, that the credit rating assigned to the Notes by such Rating Agency is Investment Grade. |
For the avoidance of doubt, any further increases in the credit rating of the Parent’s senior unsecured long-term debt by the Rating Agencies above Investment Grade shall not constitute a Step Down Rating Change;
“Step Up Rating Change” means the first public announcement by any Rating Agency of a decrease in the credit rating of the Parent’s senior unsecured long-term debt to below Investment Grade. For the avoidance of doubt, any further decrease in the credit rating of the Parent’s senior unsecured long-term debt by the relevant Rating Agency or both Rating Agencies, as the case may be, below Investment Grade shall not constitute a Step Up Rating Change;
“Step Up/Step Down Margin” has the meaning given in the relevant Final Terms;
“Subsidiary” means any company where the Parent:
| (a) |
holds a majority of the voting rights in the company; or |
| (b) |
is a member of the company and has the right to appoint or remove a majority of its board of directors; or |
| (c) |
is a member of the company and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it, |
or if the company is a subsidiary of a company that is itself a subsidiary of the Parent;
“Substitute Rating Agency” means any rating agency of international standing substituted for the Rating Agency by the Parent from time to time with the prior written approval of the Trustee, such approval not to be unreasonably withheld or delayed, or any successor of such rating agency;
“T2” means the Trans-European Automated Real-Time Gross Settlement Express Transfer System or any successor or replacement for that system;
“Talon” means a talon for further Coupons;
“TARGET Settlement Day” means any day on which T2 is open for the settlement of payments in euro; “Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure by the relevant Issuer to pay or any delay in paying by the relevant Issuer any of the same);
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“Treasury Publisher” has the meaning given in the relevant Final Terms;
“Treaty” means the Treaty on the functioning of the European Union, as amended;
“Wholly-Owned Subsidiary” means any Person in which the Parent, and/or one or more of its Wholly-Owned Subsidiaries, controls, directly or indirectly, all of the stock with ordinary voting power to elect the board of directors of that Person; and
“Zero Coupon Note” means a Note specified as such in the relevant Final Terms.
| (b) |
Interpretation |
In these Conditions:
| (i) |
if the Notes are Zero Coupon Notes or are Registered Notes, references to Coupons and Couponholders are not applicable; |
| (ii) |
if Talons are specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Coupons shall be deemed to include references to Talons; |
| (iii) |
if Talons are not specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Talons are not applicable; |
| (iv) |
any reference to principal shall be deemed to include the Redemption Amount, any additional amounts in respect of principal which may be payable under Condition 11 (Taxation), any premium payable in respect of a Note and any other amount in the nature of principal payable pursuant to these Conditions; |
| (v) |
any reference to interest shall be deemed to include any additional amounts in respect of interest which may be payable under Condition 11 (Taxation) and any other amount in the nature of interest payable pursuant to these Conditions; |
| (vi) |
references to Notes being “outstanding” shall be construed in accordance with the Trust Deed; |
| (vii) |
if an expression is stated in Condition 2(a) (Definitions) to have the meaning given in the relevant Final Terms, but the relevant Final Terms gives no such meaning or specifies that such expression is “not applicable” then such expression is not applicable to the Notes; |
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| (viii) |
any reference to the Agency Agreement or the Trust Deed shall be construed as a reference to the Agency Agreement or the Trust Deed, as the case may be, as amended and/or supplemented up to and including the Issue Date of the Notes; and |
| (ix) |
any reference in these Conditions to any legislation or provision of any legislation (whether primary legislation or regulations or other subsidiary legislation made pursuant to primary legislation) shall be construed as a reference to such legislation or provision as the same may have been, or may from time to time be, amended or re-enacted. |
3. Form, Denomination, Title and Transfer
| (a) |
Bearer Notes: Bearer Notes are in bearer form in the Specified Denomination(s) with Coupons and, if specified in the relevant Final Terms, Talons attached at the time of issue. In the case of a Series of Bearer Notes with more than one Specified Denomination, Bearer Notes of one Specified Denomination will not be exchangeable for Bearer Notes of another Specified Denomination and Bearer Notes may not be exchanged for Registered Notes and vice versa. |
| (b) |
Title to Bearer Notes: Title to the Bearer Notes and the Coupons will pass by delivery. In the case of Bearer Notes, “Holder” means the holder of such Bearer Note and “Noteholder” and “Couponholder” shall be construed accordingly). |
| (c) |
Registered Notes: Registered Notes are in the Specified Denomination(s), which may include a minimum denomination specified in the relevant Final Terms and higher integral multiples of a smaller amount specified in the relevant Final Terms. |
| (d) |
Title to Registered Notes: The Registrar will maintain the register in accordance with the provisions of the Agency Agreement. A certificate (each, a “Note Certificate”) will be issued to each Holder of Registered Notes in respect of its registered holding. Each Note Certificate will be numbered serially with an identifying number which will be recorded in the Register. In the case of Registered Notes, “Holder” means the person in whose name such Registered Note is for the time being registered in the Register (or, in the case of a joint holding, the first named thereof) and “Noteholder” shall be construed accordingly. |
| (e) |
Ownership: The Holder of any Note or Coupon shall (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing thereon or, in the case of Registered Notes, on the Note Certificate relating thereto (other than the endorsed form of transfer) or any notice of any previous loss or theft thereof) and no Person shall be liable for so treating such Holder accordingly. No person shall have any right to enforce any term or condition of any Note under the Contracts (Rights of Third Parties) Act 1999. |
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| (f) |
Transfers of Registered Notes: Subject to paragraphs 3(i) (Closed periods), 3(j) (Regulations concerning transfers and registration) and 3(j) (Registration of transfer upon partial redemption) below, a Registered Note may be transferred upon surrender of the relevant Note Certificate, with the endorsed form of transfer duly completed, at the Specified Office of the Registrar or any Transfer Agent, together with such evidence as the Registrar or (as the case may be) such Transfer Agent may reasonably require to prove the title of the transferor and the authority of the individuals who have executed the form of transfer; provided, however, that a Registered Note may not be transferred unless the principal amount of Registered Notes transferred and (where not all of the Registered Notes held by a Holder are being transferred) the principal amount of the balance of Registered Notes not transferred are Specified Denominations. Where not all the Registered Notes represented by the surrendered Note Certificate are the subject of the transfer, a new Note Certificate in respect of the balance of the Registered Notes will be issued to the transferor. |
| (g) |
Registration and delivery of Note Certificates: Within five business days of the surrender of a Note Certificate in accordance with paragraph (f) (Transfers of Registered Notes) above (or such longer period as may be required to comply with any applicable fiscal or other laws or regulations), the Registrar will register the transfer in question and deliver a new Note Certificate of a like principal amount to the Registered Notes transferred to each relevant Holder at its Specified Office or (as the case may be) the Specified Office of any Transfer Agent or (at the request and risk of any such relevant Holder) by uninsured first class mail (airmail if overseas) to the address specified for the purpose by such relevant Holder. In this paragraph, “business day” means a day on which commercial banks are open for general business (including dealings in foreign currencies) in the city where the Registrar or (as the case may be) the relevant Transfer Agent has its Specified Office. |
| (h) |
No charge: The transfer of a Registered Note will be effected without charge by or on behalf of the relevant Issuer or the Registrar or any Transfer Agent but against such indemnity as the Registrar or (as the case may be) such Transfer Agent may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such transfer. |
| (i) |
Closed periods: Noteholders may not require transfers to be registered during the period of 15 days ending on the due date for any payment of principal or interest in respect of the Registered Notes. |
| (j) |
Regulations concerning transfers and registration: All transfers of Registered Notes and entries on the Register are subject to the detailed regulations concerning the transfer of Registered Notes scheduled to the Agency Agreement. The regulations may be changed by the relevant Issuer with the prior written approval of the Registrar. A copy of the current regulations will be mailed (free of charge) by the Registrar to any Noteholder who requests in writing a copy of such regulations. |
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| (k) |
Registration of transfer upon partial redemption: In the event of a partial redemption of Registered Notes under Condition 9 (Redemption and Purchase), the relevant Issuer shall not be required to register the transfer of any Registered Note, or part of a Registered Note, called for partial redemption. |
4. Status of the Notes and Guarantees
The Notes and Coupons constitute direct, general, unsubordinated and unconditional obligations of the relevant Issuer which will at all times rank pari passu among themselves and at least pari passu with all other present and future unsecured obligations of the relevant Issuer, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.
The obligations of the relevant Guarantors under the relevant Guarantees constitute direct, general, unsubordinated and unconditional obligations of the relevant Guarantors which will at all times rank pari passu with all other present and future unsecured obligations of the relevant Guarantors, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.
5. Negative Pledge
So long as any of the Notes remains outstanding neither the relevant Issuer nor any relevant Guarantor nor any Material Subsidiary will create or have outstanding any Security Interest upon, or with respect to, any of the present or future business, undertaking, assets or revenues (including any uncalled capital) of such Issuer or any such Guarantor or any Material Subsidiary to secure any Relevant Indebtedness, unless the relevant Issuer or, as the case may be, such Guarantor or such Material Subsidiary, in the case of the creation of a Security Interest, before or at the same time and, in any other case, promptly, takes any and all action necessary to ensure that:
| (a) |
all amounts payable by it under the Notes, the Coupons and the Trust Deed are secured by the Security Interest equally and rateably with the Relevant Indebtedness to the satisfaction of the Trustee; or |
| (b) |
such other Security Interest or other arrangement (whether or not it includes the giving of a Security Interest) is provided either (i) as the Trustee in its absolute discretion deems not materially less beneficial to the interest of the Noteholders or (ii) as is approved by an Extraordinary Resolution (which is defined in the Trust Deed as a resolution duly passed by a majority of not less than three-quarters of the votes cast thereon at a meeting of the Noteholders or by a resolution in writing signed by or on behalf of the holders of not less than three quarters of the nominal amount of the Notes) of the Noteholders. |
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6. Fixed Rate Note Provisions
| (a) |
Application |
This Condition 6 is applicable to the Notes only if the Fixed Rate Note provisions are specified in the relevant Final Terms as being applicable.
| (b) |
Accrual of interest |
The Notes bear interest from (and including) the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 10(1) (Payments – Bearer Notes) or Condition 10(2) (Payments – Registered Notes). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 6 (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Principal Paying Agent or the Registrar, as the case may be, has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).
| (c) |
Fixed Coupon Amount |
Except as provided in the relevant Final Terms, the amount of interest payable in respect of each Note for any Interest Period shall be the relevant Fixed Coupon Amount and, if the Notes are in more than one Specified Denomination, shall be the relevant Fixed Coupon Amount in respect of the relevant Specified Denomination. Payments of interest on any Interest Payment Date will, if so specified in the relevant Final Terms, amount to the Broken Amount so specified.
| (d) |
Calculation of interest amount |
The amount of interest payable in respect of each Note for any period for which a Fixed Coupon Amount or Broken Amount is not specified shall be calculated by applying the Rate of Interest to:
| (i) |
in the case of Notes which are Registered Notes, the aggregate outstanding nominal amount of such Registered Notes; or |
| (ii) |
in the case of Notes which are Bearer Notes, the Calculation Amount, |
and, in each case, multiplying the product by the relevant Day Count Fraction, rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards or otherwise in accordance with applicable market convention). For this purpose a “sub-unit” means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent.
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Where the Specified Denomination of a Note which is a Bearer Note is a multiple of the Calculation Amount, the amount of interest payable in respect of such Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding.
| (e) |
Step Up/Step Down provisions |
| (i) |
If the Step Up/Step Down provisions are specified in the relevant Final Terms as being applicable, the Rate of Interest payable on the Notes will be subject to adjustment from time to time in the event of a Step Up Rating Change or a Step Down Rating Change, as the case may be, in accordance with the provisions of this Condition 6(e). |
| (ii) |
From and including the first Interest Payment Date following the date of a Step Up Rating Change, if any, the Rate of Interest payable on the Notes shall, subject to any adjustment pursuant to a Step Down Rating Change, be increased by the Step Up/Step Down Margin. |
| (iii) |
Furthermore, in the event of a Step Down Rating Change following a Step Up Rating Change, with effect from and including the first Interest Payment Date following the date of such Step Down Rating Change, the Rate of Interest payable on the Notes shall be decreased by the Step Up/Step Down Margin. |
| (iv) |
The Parent shall use all reasonable efforts to maintain a credit rating for its senior unsecured long-term debt from both Rating Agencies (and if an additional rating agency is appointed to rate the Parent’s senior unsecured long-term debt, such additional rating agency). If, notwithstanding such reasonable efforts, any Rating Agency fails to or ceases to assign a credit rating to the Parent’s senior unsecured long-term debt, the Parent shall use all reasonable efforts to obtain a credit rating of its senior unsecured long-term debt from a Substitute Rating Agency, and references in this Condition 6(e) to the Rating Agencies, or the credit ratings thereof, shall be to such Substitute Rating Agency and, as the case may be, the equivalent credit ratings thereof. Notwithstanding anything else in this Condition 6(e), if there is at any time no current rating by a Rating Agency for a period of 90 consecutive days, the Rate of Interest accruing to the Notes, with effect from and including the first Interest Payment Date immediately following such period of 90 consecutive days shall be as though a Step Up Rating Change had occurred unless such a rating is obtained on or prior to such Interest Payment Date. For the avoidance of doubt, the provisions of this sub-paragraph (iv) remain subject in all cases to the provisions relating to the Step Down Rating Change set out in sub-paragraphs (ii) and (iii) above. |
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| (v) |
The Parent will cause the occurrence of a Step Up Rating Change or a Step Down Rating Change to be notified to the Trustee and the Principal Paying Agent and notice thereof to be published in accordance with Condition 18 (Notices) as soon as possible after the occurrence of the Step Up Rating Change or the Step Down Rating Change (whichever the case may be) but in no event later than the fifth Business Day thereafter. |
| (vi) |
The Step Up Rating Change may occur only once during the term of the Notes. |
| (vii) |
The Trustee is under no obligation to ascertain whether a change in the rating assigned to the Notes by a Rating Agency or any Substitute Rating Agency has occurred or whether there has been a failure or a ceasing by a Rating Agency or any Substitute Rating Agency to assign a credit rating to the Parent’s senior unsecured long-term debt and until it shall have actual knowledge or express notice pursuant to the Trust Deed to the contrary, the Trustee may assume that no such change to the credit rating assigned to the Notes has occurred or no such failure or ceasing by a Rating Agency or any Substitute Rating Agency has occurred. |
| (viii) |
If the rating designations employed by either Rating Agency are changed from those which are described in the definition of “Investment Grade” or if a rating is procured from a Substitute Rating Agency, the Parent shall determine, with the agreement of the Trustee (not to be unreasonably withheld or delayed), the rating designations of the relevant Rating Agency or such Substitute Rating Agency (as appropriate) as are most equivalent to the prior rating designations of the relevant Rating Agency or the Rating Agencies, as the case may be, and this Condition 6(e) shall be construed accordingly. |
7. Floating Rate Note Provisions
| (a) |
Application |
This Condition 7 is applicable to the Notes only if the Floating Rate Note provisions are specified in the relevant Final Terms as being applicable.
| (b) |
Accrual of Interest |
The Notes bear interest from (and including) the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 10(1) (Payments – Bearer Notes) or Condition 10(2) (Payments – Registered Notes). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 7 (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Principal Paying Agent or the Registrar, as the case may be, has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).
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| (c) |
Rate of Interest |
The Rate of Interest payable from time to time in respect of the Notes will be determined in the manner specified in the relevant Final Terms.
(i) Screen Rate Determination – Term Rate
This Condition 7(c)(i) applies where the relevant Final Terms specifies “Term Rate” to be ‘Applicable’.
| (A) |
The Rate of Interest for each Interest Period will, subject to Condition 7(i) and as provided below, be either: |
| I. |
the offered quotation (if there is only one quotation on the Relevant Screen Page); or |
| II. |
the arithmetic mean (rounded upwards if necessary to the nearest 0.0001 per cent.) of the offered quotations, |
(expressed as a percentage rate per annum) for the Reference Rate (being EURIBOR) which appears or appear, as the case may be, on the Relevant Screen Page (or such replacement page on that service which displays the information) at 11.00 a.m. (Brussels time (the “Specified Time”) on the Interest Determination Date in question plus or minus (as indicated in the relevant Final Terms) the Margin (if any), all as determined by the Calculation Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Calculation Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.
| (B) |
If the Relevant Screen Page is not available or if sub-paragraph (A)(I) above applies and no such offered quotation appears on the Relevant Screen Page or if sub-paragraph (A)(II) above applies and fewer than three such offered quotations appear on the Relevant Screen Page, in each case as at the time specified above, the relevant Issuer, or an agent appointed by it, shall, if applicable, request each of the Reference Banks to provide the Calculation Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate as at approximately the Specified Time on the Interest Determination Date in question. If two or more of the Reference Banks provide the Calculation Agent with such offered quotations, the Rate of Interest for such Interest Period shall be the arithmetic mean (rounded as provided above) of such |
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offered quotations (excluding, if four or more of the Reference Banks provide the Calculation Agent with such quotations and the offered quotations of all such Reference Banks are not the same, the highest and lowest quotations and, if the highest quotation and/or the lowest quotation applies in respect of more than one such Reference Bank, excluding such highest and/or lowest quotation in respect of one such Reference Bank) plus or minus (as indicated in the relevant Final Terms) the Margin (if any), all as determined by the Calculation Agent.
| (C) |
If on any Interest Determination Date only one or none of the Reference Banks provides the Calculation Agent with such an offered quotation as provided in the preceding paragraph, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Calculation Agent determines as being either: |
| (i) |
the arithmetic mean (rounded as provided above) of the rates, as communicated to (and at the request of) the Calculation Agent by the Reference Banks or any two or more of them, which such banks were offered, at approximately the Specified Time on the relevant Interest Determination Date (or if such date is not a Business Day, on the immediately preceding Business Day), deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in the Euro-zone inter-bank market plus or minus (as indicated in the relevant Final Terms) the Margin (if any); or |
| (ii) |
in the event that the Calculation Agent can determine no such arithmetic mean, the lowest lending rate for lending amounts in the Specified Currency for a period equal to that which would have been used for the Reference Rate at which at approximately the Specified Time on the relevant Interest Determination Date, any one or more banks (which bank or banks is or are in the opinion of the relevant Issuer suitable for such purpose) informs the Calculation Agent it is quoting to leading banks in the Euro-zone inter-bank market, plus or minus (as indicated in the relevant Final Terms) the Margin (if any), |
provided that, if the Rate of Interest cannot be determined in accordance with the foregoing provisions, the Rate of Interest shall be:
| I. |
that determined as at the last preceding Interest Determination Date on which the Rate of Interest was so determined (though substituting, where a different Margin, Maximum Rate of Interest and/or Minimum Rate of Interest is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin, Maximum Rate of Interest and/or Minimum Rate of Interest (as the case may be) relating to the relevant Interest Period in place of the Margin, Maximum Rate of Interest and/or Minimum Rate of Interest (as applicable) relating to that last preceding Interest Period) or; |
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| II. |
if there is no such preceding Interest Determination Date, the initial Rate of Interest (but substituting, where a different Margin, Maximum Rate of Interest and/or Minimum Rate of Interest is/are to be applied to the relevant Interest Period from that which applied to the initial Interest Period, the Margin, Maximum Rate of Interest and/or Minimum Rate of Interest (as the case may be) relating to the relevant Interest Period in place of the Margin, Maximum Rate of Interest and/or Minimum Rate of Interest (as applicable) relating to that initial Interest Period) or, in the case of Notes with an Interest Basis that converts from a Fixed Rate to a Floating Rate, the Fixed Rate of Interest applicable to such Notes immediately prior to conversion of the Interest Basis. |
“Reference Banks” means, in the context of Condition 7(c)(i)(A)(II), those banks whose offered rates were used to determine the offered quotation referred to in such Condition when such offered quotation last appeared on the Relevant Screen Page and, in the context of Condition 7(c)(i)(A)(II), those banks whose offered quotations last appeared on the Relevant Screen Page when no fewer than three such offered quotations appeared.
| (ii) |
Screen Rate Determination – Overnight Rate – Compounded Daily SONIA - Non-Index Determination |
This Condition 7(c)(ii) applies where the relevant Final Terms specifies: (1) “Overnight Rate” to be ‘Applicable’; (2) “Compounded Daily SONIA” as the Reference Rate; and (3) “Index Determination” to be ‘Not Applicable’.
| (A) |
The Rate of Interest for an Interest Accrual Period will, subject to Condition 7(i) and as provided below, be Compounded Daily SONIA with respect to such Interest Accrual Period plus or minus (as indicated in the relevant Final Terms) the applicable Margin (if any), all as determined by the Calculation Agent. |
“Compounded Daily SONIA” means, with respect to an Interest Accrual Period, the rate of return of a daily compound interest investment (with the daily Sterling overnight reference rate as reference rate for the calculation of interest) as calculated by the Calculation Agent as at the relevant Interest Determination Date in accordance with the following formula (and the resulting percentage will be rounded if necessary to the nearest fifth decimal place, with 0.000005 being rounded upwards):
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where:
| d |
is the number of calendar days in: |
| (i) |
where “Lag” is specified as the Observation Method in the relevant Final Terms, the relevant Interest Accrual Period; or |
| (ii) |
where “Observation Shift” is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period; |
| D |
is the number specified as such in the relevant Final Terms (or, if no such number is specified, 365); |
| do |
means: |
| (i) |
where “Lag” is specified as the Observation Method in the relevant Final Terms, the number of London Banking Days in the relevant Interest Accrual Period; or |
| (ii) |
where “Observation Shift” is specified as the Observation Method in the relevant Final Terms, the number of London Banking Days in the relevant Observation Period; |
| i |
is a series of whole numbers from one to “do”, each representing the relevant London Banking Day in chronological order from, and including, the first London Banking Day to, and including, the last London Banking Day, in: |
| (i) |
where “Lag” is specified as the Observation Method in the relevant Final Terms, the relevant Interest Accrual Period; or |
| (ii) |
where “Observation Shift” is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period; |
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“London Banking Day means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London;
| ni |
for any London Banking Day “i”, means the number of calendar days from (and including) such London Banking Day “i” up to (but excluding) the following London Banking Day; |
Observation Period means the period from (and including) the date falling “p” London Banking Days prior to the first day of the relevant Interest Accrual Period to (but excluding) the date falling “p” London Banking Days prior to (A) (in the case of an Interest Period) the Interest Payment Date for such Interest Period or (B) (in the case of any other Interest Accrual Period) the date on which the relevant payment of interest falls due;
| p |
means: |
| (i) |
where “Lag” is specified as the Observation Method in the relevant Final Terms, the number of London Banking Days specified as the “Lag Period” in the relevant Final Terms (or, if no such number is so specified, five London Banking Days); or |
| (ii) |
where “Observation Shift” is specified as the Observation Method in the relevant Final Terms, the number of London Banking Days specified as the “Observation Shift Period” in the relevant Final Terms (or, if no such number is specified, five London Banking Days); |
the SONIA reference rate, in respect of any London Banking Day (LBDx), is a reference rate equal to the daily Sterling Overnight Index Average (SONIA) rate for such LBDx as provided by the administrator of SONIA to authorised distributors and as then published on the Relevant Screen Page (or, if the Relevant Screen Page is unavailable, as otherwise published by such authorised distributors) on the London Banking Day immediately following LBDx; and
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SONIAi means the SONIA reference rate for:
| (i) |
where “Lag” is specified as the Observation Method in the relevant Final Terms, the London Banking Day falling “p” London Banking Days prior to the relevant London Banking Day “i”; or |
| (ii) |
where “Observation Shift” is specified as the Observation Method in the relevant Final Terms, the relevant London Banking Day “i”. |
| (B) |
Subject to Condition 7(i), if, where any Rate of Interest is to be calculated pursuant to Condition 7(c)(ii)(A) above, in respect of any London Banking Day on which an applicable SONIA reference rate is required to be determined, such SONIA reference rate is not made available on the Relevant Screen Page or has not otherwise been published by the relevant authorised distributors, then the SONIA reference rate in respect of such London Banking Day shall be the rate determined by the Calculation Agent as: |
| I. |
the sum of (i) the Bank of England’s Bank Rate (the “Bank Rate”) prevailing at 5.00 p.m. (London time) (or, if earlier, close of business) on such London Banking Day; and (ii) the mean of the spread of the SONIA reference rate to the Bank Rate over the previous five London Banking Days in respect of which a SONIA reference rate has been published, excluding the highest spread (or, if there is more than one highest spread, one only of those highest spreads) and lowest spread (or, if there is more than one lowest spread, one only of those lowest spreads); or |
| II. |
if the Bank Rate under (I)(i) above is not available at the relevant time, either (A) the SONIA reference rate published on the Relevant Screen Page (or otherwise published by the relevant authorised distributors) for the first preceding London Banking Day in respect of which the SONIA reference rate was published on the Relevant Screen Page (or otherwise published by the relevant authorised distributors) or (B) if this is more recent, the latest rate determined under (I) above, |
and, in each case, references to “SONIA reference rate” in Condition 7(c)(ii)(A) above shall be construed accordingly.
| (C) |
In the event that the Rate of Interest cannot be determined in accordance with the foregoing provisions of this Condition 7(c)(ii), and without prejudice to Condition 7(i), the Rate of Interest shall be: |
| (i) |
that determined as at the last preceding Interest Determination Date on which the Rate of Interest was so determined (though substituting, where a different Margin, Maximum Rate of Interest and/or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period, the Margin, Maximum Rate of Interest and/or Minimum Rate of Interest (as the case may be) relating to the relevant Interest Accrual Period, in place of the Margin, Maximum Rate of Interest and/or Minimum Rate of Interest (as applicable) relating to that last preceding Interest Accrual Period); or |
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| (ii) |
if there is no such preceding Interest Determination Date, the initial Rate of Interest which would have been applicable to such Series of Notes for the first scheduled Interest Period had the Notes been in issue for a period equal in duration to the first scheduled Interest Period but ending on (and excluding) the Interest Commencement Date (applying the Margin and, if applicable, any Maximum Rate of Interest and/or Minimum Rate of Interest, applicable to the first scheduled Interest Period), |
in each case as determined by the Calculation Agent.
| (iii) |
Screen Rate Determination – Overnight Rate - Compounded Daily SONIA - Index Determination |
This Condition 7(c)(iii) applies where the relevant Final Terms specifies: (1) “Overnight Rate” to be ‘Applicable’; (2) “Compounded Daily SONIA” as the Reference Rate; and (3) “Index Determination” to be ‘Applicable’.
| (A) |
The Rate of Interest for an Interest Accrual Period will, subject to Condition 7(i) and as provided below, be the Compounded Daily SONIA Rate with respect to such Interest Accrual Period plus or minus (as indicated in the relevant Final Terms) the applicable Margin (if any), all as determined by the Calculation Agent. |
“Compounded Daily SONIA Rate” means, with respect to an Interest Accrual Period, the rate of return of a daily compound interest investment (with the daily Sterling overnight reference rate as reference rate for the calculation of interest) (expressed as a percentage and rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) determined by the Calculation Agent by reference to the screen rate or index for compounded daily SONIA rates administered by the administrator of the SONIA reference rate that is published or displayed on the Relevant Screen Page specified in the relevant Final Terms or, if no such page is so specified or if such page is unavailable at the relevant time, as otherwise published or displayed by such administrator or other information service from time to time on the relevant Interest Determination Date (the “SONIA Compounded Index”), and in accordance with the following formula:
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| Compounded Daily SONIA Rate = |
|
where:
| d |
is the number of calendar days from (and including) the day in relation to which SONIA Compounded IndexStart is determined to (but excluding) the day in relation to which SONIA Compounded IndexEnd is determined; |
London Banking Day means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London;
Relevant Number is the number specified as such in the relevant Final Terms (or, if no such number is specified, five);
SONIA Compounded IndexStart means, with respect to an Interest Accrual Period, the SONIA Compounded Index determined in relation to the day falling the Relevant Number of London Banking Days prior to the first day of such Interest Accrual Period; and
SONIA Compounded IndexEnd means, with respect to an Interest Accrual Period, the SONIA Compounded Index determined in relation to the day falling the Relevant Number of London Banking Days prior to (A) the Interest Payment Date for such Interest Accrual Period, or (B) such other date on which the relevant payment of interest falls due (but which by its definition or the operation of the relevant provisions is excluded from such Interest Accrual Period).
| (B) |
If the relevant SONIA Compounded Index is not published or displayed by the administrator of the SONIA reference rate or other information service by 5.00 p.m. (London time) (or, if later, by the time falling one hour after the customary or scheduled time for publication thereof in accordance with the then-prevailing operational procedures of the administrator of the SONIA reference rate or of such other information service, as the case may be) on the relevant Interest Determination Date, the Compounded Daily SONIA Rate for the applicable Interest Accrual Period for which the SONIA Compounded Index is not available shall be “Compounded Daily SONIA” determined in accordance with Condition 7(c)(ii) above as if “Index Determination” were specified in the relevant Final Terms as being ‘Not Applicable’, and for these purposes: (i) the “Observation Method” shall be deemed to be “Observation Shift” and (ii) the “Observation Shift Period” shall be deemed to be equal to the Relevant Number of London Banking Days, as if those alternative elections had been made in the relevant Final Terms. |
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| (iv) |
Screen Rate Determination – Overnight Rate – SOFR – Non-Index Determination |
This Condition 7(c)(iv) applies where the relevant Final Terms specifies: (1) “Overnight Rate” to be ‘Applicable’; (2) “Compounded Daily SOFR” as the Reference Rate; and (3) “Index Determination” to be ‘Not Applicable’.
Where the relevant Final Terms specifies the Reference Rate to be “Compounded Daily SOFR”, the provisions of paragraph (A) below of this Condition 7(c)(iv) apply.
| (A) |
Compounded Daily SOFR |
The Rate of Interest for an Interest Accrual Period will, subject to Condition 7(i) and as provided below, be Compounded Daily SOFR with respect to such Interest Accrual Period plus or minus (as indicated in the relevant Final Terms) the applicable Margin (if any), all as determined by the Calculation Agent.
“Compounded Daily SOFR” means, with respect to an Interest Accrual Period, the rate of return of a daily compound interest investment (with the daily U.S. dollars secured overnight financing rate as reference rate for the calculation of interest) as calculated by the Calculation Agent as at the relevant Interest Determination Date in accordance with the following formula (and the resulting percentage will be rounded if necessary to the nearest fifth decimal place, with 0.000005 being rounded upwards):
where:
| d |
is the number of calendar days in: |
| (i) |
where “Lag” is specified as the Observation Method in the relevant Final Terms, the relevant Interest Accrual Period; or |
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| (ii) |
where “Observation Shift” is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period; |
| D |
is the number specified as such in the relevant Final Terms (or, if no such number is specified, 360); |
| do |
means: |
| (i) |
where “Lag” is specified as the Observation Method in the relevant Final Terms, the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period; or |
| (ii) |
where “Observation Shift” is specified as the Observation Method in the relevant Final Terms, the number of U.S. Government Securities Business Days in the relevant Observation Period; |
| i |
is a series of whole numbers from one to “do”, each representing the relevant U.S. Government Securities Business Day in chronological order from, and including, the first U.S. Government Securities Business Day in: |
| (i) |
where “Lag” is specified as the Observation Method in the relevant Final Terms, the relevant Interest Accrual Period; or |
| (ii) |
where “Observation Shift” is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period; |
New York Fed’s Website means the website of the Federal Reserve Bank of New York (or a successor administrator of SOFR) or any successor source;
| ni |
for any U.S. Government Securities Business Day “i”, means the number of calendar days from (and including) such U.S. Government Securities Business Day “i” up to (but excluding) the following U.S. Government Securities Business Day; |
Observation Period means the period from (and including) the date falling “p” U.S. Government Securities Business Days prior to the first day of the relevant Interest Accrual Period to (but excluding) the date falling “p” U.S. Government Securities Business Days prior to (A) (in the case of an Interest Period) the Interest Payment Date for such Interest Period or (B) (in the case of any other Interest Accrual Period) the date on which the relevant payment of interest falls due;
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| p |
means: |
| (i) |
where “Lag” is specified as the Observation Method in the relevant Final Terms, the number of U.S. Government Securities Business Days specified as the “Lag Period” in the relevant Final Terms (or, if no such number is so specified, five U.S. Government Securities Business Days); or |
| (ii) |
where “Observation Shift” is specified as the Observation Method in the relevant Final Terms, the number of U.S. Government Securities Business Days specified as the “Observation Shift Period” in the relevant Final Terms (or, if no such number is specified, five U.S. Government Securities Business Days); |
Reference Day means each U.S. Government Securities Business Day in the relevant Interest Accrual Period;
SOFR in respect of any U.S. Government Securities Business Day (USBDx), is a reference rate equal to the daily secured overnight financing rate as provided by the Federal Reserve Bank of New York, as the administrator of such rate (or any successor administrator of such rate) on the New York Fed’s Website, in each case at or around 3.00 p.m. (New York City time) on the U.S. Government Securities Business Day immediately following such USBDx;
SOFRi means the SOFR for:
| (i) |
where “Lag” is specified as the Observation Method in the relevant Final Terms, the U.S. Government Securities Business Day falling “p” U.S. Government Securities Business Days prior to the relevant U.S. Government Securities Business Day “i”; or |
| (ii) |
where “Observation Shift” is specified as the Observation Method in the relevant Final Terms, the relevant U.S. Government Securities Business Day “i”; and |
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U.S. Government Securities Business Day means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.
| (B) |
SOFR Unavailable |
Subject to Condition 7(i), if, where any Rate of Interest is to be calculated pursuant to this Condition 7(c)(iv), in respect of any U.S. Government Securities Business Day in respect of which an applicable SOFR is required to be determined, such SOFR is not available, such SOFR shall be the SOFR for the first preceding U.S. Government Securities Business Day in respect of which the SOFR was published on the New York Fed’s Website.
In the event that the Rate of Interest cannot be determined in accordance with the foregoing provisions of this Condition 7(c)(iv) but without prejudice to Condition 7(i), the Rate of Interest shall be calculated in accordance, mutatis mutandis, with the provisions of Condition 7(c)(ii).
| (v) |
Screen Rate Determination – Overnight Rate - SOFR - Index Determination |
This Condition 7(c)(v) applies where the relevant Final Terms specifies: (1) “Overnight Rate” to be ‘Applicable’; (2) “Compounded Daily SOFR” as the Reference Rate; and (2) “Index Determination” to be ‘Applicable’.
| (A) |
The Rate of Interest for an Interest Accrual Period will, subject to Condition 7(i) and as provided below, be the Compounded SOFR with respect to such Interest Accrual Period plus or minus (as indicated in the relevant Final Terms) the applicable Margin (if any), all as determined by the Calculation Agent. |
“Compounded SOFR” means, with respect to an Interest Accrual Period, the rate (expressed as a percentage and rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) determined by the Calculation Agent in accordance with the following formula:
where:
| dc |
is the number of calendar days from (and including) the day in relation to which SOFR IndexStart is determined to (but excluding) the day in relation to which SOFR IndexEnd is determined; |
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Relevant Number is the number specified as such in the relevant Final Terms (or, if no such number is specified, five);
SOFR means the daily secured overnight financing rate as provided by the SOFR Administrator on the SOFR Administrator’s Website;
SOFR Administrator means the Federal Reserve Bank of New York (or a successor administrator of SOFR);
SOFR Administrator’s Website means the website of the SOFR Administrator, or any successor source;
SOFR Index, with respect to any U.S. Government Securities Business Day, means the SOFR index value as published by the SOFR Administrator as such index appears on the SOFR Administrator’s Website at or around 3.00 p.m. (New York time) on such U.S. Government Securities Business Day (the SOFR Determination Time);
SOFR IndexStart, with respect to an Interest Accrual Period, is the SOFR Index value for the day which is the Relevant Number of U.S. Government Securities Business Days preceding the first day of such Interest Accrual Period;
SOFR IndexEnd, with respect to an Interest Accrual Period, is the SOFR Index value for the day which is the Relevant Number of U.S. Government Securities Business Days preceding (A) the Interest Payment Date for such Interest Accrual Period, or (B) such other date on which the relevant payment of interest falls due (but which by its definition or the operation of the relevant provisions is excluded from such Interest Accrual Period); and
U.S. Government Securities Business Day means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.
| (B) |
If, as at any relevant SOFR Determination Time, the relevant SOFR Index is not published or displayed on the SOFR Administrator’s Website by the SOFR Administrator, the Compounded SOFR for the applicable Interest Accrual Period for which the relevant SOFR Index is not available shall be “Compounded Daily SOFR” determined in accordance with Condition 7(c)(iv) above as if “Index Determination” were specified in the relevant Final Terms as being ‘Not Applicable’, |
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| and for these purposes: (i) the “Observation Method” shall be deemed to be “Observation Shift” and (ii) the “Observation Shift Period” shall be deemed to be equal to the Relevant Number of U.S. Government Securities Business Days, as if such alternative elections had been made in the relevant Final Terms. |
| (vi) |
Interest Accrual Period |
As used herein, an “Interest Accrual Period” means (i) each Interest Period and (ii) any other period (if any) in respect of which interest is to be calculated, being the period from (and including) the first day of such period to (but excluding) the day on which the relevant payment of interest falls due (which, if the Notes become due and payable in accordance with Condition 12 (Events of Default), shall be the date on which the Notes become due and payable).
| (vii) |
Determination of Rate of Interest following acceleration |
If the Notes become due and payable in accordance with Condition 12 (Events of Default), then:
| (A) |
if the relevant Final Terms specifies “Overnight Rate” to be ‘Applicable’, the final Rate of Interest shall be calculated for the Interest Accrual Period to (but excluding) the date on which the Notes become so due and payable; and |
| (B) |
in all other cases, the Rate of Interest applicable to the Notes from time to time shall continue to be calculated in accordance with Clause 2.1 of the Trust Deed, |
and (in either case) such Rate of Interest shall continue to apply to the Notes for so long as interest continues to accrue thereon as provided in Condition 7(j) and the Trust Deed.
| (d) |
Minimum and/or Maximum Rate of Interest |
If the relevant Final Terms specifies a Minimum Rate of Interest for any Interest Period and if, but for this Condition 7(d), the Rate of Interest determined for such Interest Period (or any Interest Accrual Period falling within such Interest Period) would be less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period (or such Interest Accrual Period falling within such Interest Period) shall be equal to such Minimum Rate of Interest.
If the relevant Final Terms specifies a Maximum Rate of Interest for any Interest Period and if, but for this Condition 7(d), the Rate of Interest for such Interest Period (or any Interest Accrual Period falling within such Interest Period) would be greater than such Maximum Rate of Interest, the Rate of Interest for such Interest Period (or such Interest Accrual Period falling within such Interest Period) shall be equal to such Maximum Rate of Interest.
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| (e) |
Determination of Rate of Interest and calculation of Interest Amount |
The Calculation Agent will, at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period (or other Interest Accrual Period).
The Calculation Agent will calculate the Interest Amount for the relevant Interest Period (or other Interest Accrual Period). Each Interest Amount shall be calculated by applying the Rate of Interest for such Interest Period (or other Interest Accrual Period) to:
| (A) |
in the case of Registered Notes, the aggregate outstanding nominal amount of such Registered Notes; or |
| (B) |
in the case of Bearer Notes, the Calculation Amount; |
and, in each case, multiplying such sum by the Day Count Fraction, rounding resultant figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards or otherwise in accordance with applicable market convention).
Where the Specified Denomination of a Note which is a Bearer Note is a multiple of the Calculation Amount, the amount of interest payable in respect of such Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding.
| (f) |
Linear Interpolation |
Where Linear Interpolation is specified as “Applicable” in respect of an Interest Period in the relevant Final Terms, the Rate of Interest for such Interest Period shall be calculated by the Calculation Agent by straight line linear interpolation by reference to two rates based on the relevant Reference Rate, which shall be determined as if the Designated Maturity were the period of time for which rates are available next shorter than the length of the relevant Interest Period and the other of which rates are available next longer than the length of the relevant Interest Period; provided however that if there is no rate available for the period of time next shorter or, as the case may be, next longer, then the Calculation Agent shall determine such rate at such time and by reference to such sources as it determines appropriate for the purposes of the calculation of the Rate of Interest.
“Designated Maturity” means the period of time designated in the Reference Rate.
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| (g) |
Notification of Rate of Interest and Interest Amounts |
| (A) |
Except where the relevant Final Terms specifies “Overnight Rate” to be ‘Applicable’, the Calculation Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Trustee and to any listing authority, stock exchange and/or quotation system to which the Notes have then been admitted to listing, trading and/or quotation (by no later than the first day of each Interest Period) and notice thereof to be published in accordance with Condition 18 (Notices) as soon as possible after their determination but in no event later than the fourth Business Day (as defined in Condition 7(b) above) thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. Any such amendment or alternative arrangements will promptly be notified to each listing authority, stock exchange and/or quotation system to which the Notes have then been admitted to listing, trading and/or quotation and to the Noteholders in accordance with Condition 18 (Notices). |
| (B) |
Where the relevant Final Terms specifies “Overnight Rate” to be ‘Applicable’, the Calculation Agent will cause the Rate of Interest and each Interest Amount for each Interest Accrual Period and the relevant Interest Payment Date to be notified to the Trustee and to any listing authority, stock exchange and/or quotation system to which the Notes have then been admitted to listing, trading and/or quotation (by no later than the first day of each Interest Period) and notice thereof to be published in accordance with Condition 18 (Notices) as soon as possible after their determination but in no event later than the second Business Day thereafter. Each Rate of Interest, Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of an extension or shortening of the relevant Interest Accrual Period. Any such amendment or alternative arrangements will promptly be notified to each listing authority, stock exchange and/or quotation system to which the Notes have then been admitted to listing, trading and/or quotation and to the Noteholders in accordance with Condition 18 (Notices). |
| (h) |
Certificates to be final |
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 7, by the Calculation Agent, shall (in the absence of manifest error) be binding on the relevant Issuer, the relevant Guarantors, the Agent, the Calculation Agent, the Trustee, the other Paying Agents and all Noteholders and Couponholders and (in the absence of wilful default or bad faith) no liability to the relevant Issuer, the Noteholders or the Couponholders shall attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.
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| (i) |
Benchmark Discontinuation |
| (a) |
Benchmark Replacement |
This Condition 7(i)(a) applies to Notes other than where the relevant Final Terms specifies “Compounded Daily SOFR” as the Reference Rate.
If the relevant Issuer, in consultation with the Calculation Agent, determines that a Benchmark Event has occurred in relation to an Original Reference Rate at any time when the Conditions provide for any Rate of Interest (or any component part thereof) to be determined by reference to such Original Reference Rate, then the following provisions shall apply.
| (i) |
Independent Adviser |
The relevant Issuer shall use reasonable endeavours to appoint an Independent Adviser to determine a Successor Rate, failing which an Alternative Rate (in accordance with Condition 7(i)(a)(ii)) and, in either case, the applicable Adjustment Spread (in accordance with Condition 7(i)(a)(iii)) and any Benchmark Amendments (in accordance with Condition 7(i)(a)(iv)) no later than 5 Business Days prior to the Interest Determination Date relating to the next succeeding Interest Period (the “IA Determination Cut-off Date”) for purposes of determining the Rate of Interest (or a relevant component part thereof) applicable to the Notes for all future Interest Periods (subject to the subsequent operation of this Condition 7(i)(a)).
If, the Issuer is unable to appoint an Independent Adviser, or the Independent Adviser appointed by it fails to determine a Successor Rate or, failing which, an Alternative Rate or, in either case, an applicable Adjustment Spread, prior to the IA Determination Cut-off Date, the provisions of Condition 7(i)(f) below shall apply.
| (ii) |
Successor Rate or Alternative Rate |
If the Independent Adviser determines in good faith that:
| (A) |
there is a Successor Rate, then such Successor Rate shall (as adjusted by the applicable Adjustment Spread determined as provided in Condition 7(i)(a)(iii)) subsequently be used in place of the Original Reference Rate to determine the relevant Rate(s) of Interest (or the relevant component part(s) thereof) for all relevant future payments of interest on the Notes (subject to the further operation of this Condition 7(i)); or |
| (B) |
there is no Successor Rate but that there is an Alternative Rate, then such Alternative Rate shall (as adjusted by the applicable Adjustment Spread determined as provided in Condition 7(i)(a)(iii)) subsequently be used in place of the Original Reference Rate to determine the relevant Rate(s) of Interest (or the relevant component part(s) thereof) for all relevant future payments of interest on the Notes (subject to the further operation of this Condition 7(i)). |
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| (iii) |
Adjustment Spread |
If a Successor Rate or Alternative Rate is determined in accordance with the foregoing provisions, the Independent Adviser will determine in good faith the Adjustment Spread (which may be expressed as a specified quantum of, or a formula or methodology for determining, such Adjustment Spread) to be applied to the Successor Rate or the Alternative Rate (as the case may be) for each subsequent determination of a relevant Rate of Interest (or a relevant component part thereof) by reference to such Successor Rate or Alternative Rate (as applicable).
| (iv) |
Benchmark Amendments |
If any Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread is determined in accordance with this Condition 7(i) and the Independent Adviser determines in good faith (A) that amendments to the Terms and Conditions of the Notes, the Trust Deed and/or the Agency Agreement (including, without limitation, amendments to the definitions of Day Count Fraction, Business Days or Relevant Screen Page) are necessary to ensure the proper operation (having regard to prevailing market practice, if any) of such Successor Rate, Alternative Rate and (in either case) the applicable Adjustment Spread (such amendments, the “Benchmark Amendments”) and (B) the terms of the Benchmark Amendments, then the relevant Issuer shall, subject to giving notice thereof in accordance with Condition 7(i)(a)(c), without any requirement for the consent or approval of Noteholders or Couponholders, vary the Terms and Conditions of the Notes, the Trust Deed and/or the Agency Agreement to give effect to such Benchmark Amendments with effect from the date specified in such notice.
At the request of the relevant Issuer, but subject to receipt by the Trustee of a certificate signed by two Authorised Signatories of the relevant Issuer pursuant to Condition 7(i)(c), the Trustee shall (at the relevant Issuer’s expense), without any requirement for the consent or approval of the Noteholders or Couponholders, be obliged to concur with the relevant Issuer in effecting any Benchmark Amendments (including, inter alia, by the execution of a deed or agreement supplemental to or amending the Trust Deed and/or the Agency Agreement (as applicable)) and the Trustee shall not be liable to any party for any consequences thereof, provided that the Trustee shall not be obliged so to concur if in the sole opinion of the Trustee doing so would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce or amend rights and/or the protective provisions afforded to the Trustee in the Terms and Conditions of the Notes, the Trust Deed and/or the Agency Agreement (including, for the avoidance of doubt, any supplemental trust deed and/or agency agreement) in any way.
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In connection with any such variation in accordance with this Condition 7(i), the relevant Issuer shall comply with the rules of any stock exchange on which the Notes are for the time being listed or admitted to trading.
| (v) |
Definitions |
As used in this Condition 7(i)(a):
“Adjustment Spread” means either a spread (which may be positive, negative or zero), or the formula or methodology for calculating a spread, in either case, which the Independent Adviser acting in good faith determines is required to be applied to the Successor Rate or the Alternative Rate (as the case may be)and is the spread, formula or methodology which:
| (A) |
in the case of a Successor Rate, is formally recommended, or formally provided as an option for parties to adopt, in relation to the replacement of the Original Reference Rate with the Successor Rate by any Relevant Nominating Body; or |
| (B) |
(if no such recommendation has been made or option provided, or in the case of an Alternative Rate, the Independent Adviser acting in good faith, determines is recognised or acknowledged as being in customary market usage (or reflects an industry-accepted rate, formula or methodology) in the international debt capital market transactions which reference the Original Reference Rate, where such rate has been replaced by the Sucessor Rate or the Alternative Rate (as the case may be); or |
| (C) |
(if no such customary market usage is recognised or acknowledged) the Independent Adviser acting in good faith determines is recognised or acknowledged as being the industry standard for over-the-counter derivative transactions which reference the Original Reference Rate, where such rate has been replaced by the Successor Rate or the Alternative Rate (as the case may be); or |
| (D) |
(if no such industry standard is recognised or acknowledged) the Independent Adviser acting in good faith determines to be appropriate to reduce or eliminate, to the extent reasonably practicable in the circumstances, any economic prejudice or benefit (as the case may be) to Noteholders and Couponholders as a result of the replacement of the Original Reference Rate with the Successor Rate or the Alternative Rate (as the case may be); |
“Alternative Rate” means an alternative benchmark or screen rate which the Independent Adviser acting in good faith determines in accordance with this Condition 7(i)(a) has replaced the Original Reference Rate in customary market usage, or is an industry-accepted rate, in the international debt capital markets for the purposes of determining rates of interest (or the relevant component part thereof) for a commensurate interest period and in the same Specified Currency as the Notes or, if the Independent Adviser determines there is no such rate, such other rate as the Independent Adviser acting in good faith determines is most comparable to the Original Reference Rate; “Benchmark Event” means, with respect to an Original Reference Rate, any one or more of the following:
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| (A) |
the Original Reference Rate ceasing to exist, be permanently administered or be published (in the latter case, for a period of at least 5 Business Days); |
| (B) |
the later of (i) the making of a public statement by the administrator or an insolvency official with jurisdiction over the administrator of the Original Reference Rate that it will, on or before a specified date, cease publishing the Original Reference Rate permanently or indefinitely (in circumstances where no successor administrator has been appointed that will continue publication of the Original Reference Rate) and (ii) the date falling six months prior to the date specified in (B)(i); |
| (C) |
the making of a public statement by the supervisor of the administrator of the Original Reference Rate that the Original Reference Rate has been permanently or indefinitely discontinued; |
| (D) |
the later of (i) the making of a public statement by the supervisor of the administrator of the Original Reference Rate that the Original Reference Rate will, on or before a specified date, be permanently or indefinitely discontinued and (ii) the date falling six months prior to the date specified in (D)(i) above; |
| (E) |
the later of (i) the making of a public statement by the supervisor of the administrator of the Original Reference Rate that means the Original Reference Rate will be prohibited from being used or that its use will be subject to restrictions or adverse consequences, in each case on or before a specified date and (ii) the date falling six months prior to the date specified in (E)(i); |
| (F) |
it has or will prior to the next Interest Determination Date become unlawful for the relevant Issuer, the Calculation Agent, any Paying Agent or other party to calculate any payments due to be made to any Noteholder or Couponholder using the Original Reference Rate (including, without limitation, under the Regulation (EU) 2016/1011 as that Regulation applies in the European Union and/or as it applies in the United Kingdom in the form retained as domestic law in the United Kingdom under the European Union (Withdrawal) Act 2018, as amended, if applicable); or |
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| (G) |
the making of a public statement by the supervisor of the administrator of such Original Reference Rate announcing that such Original Reference Rate is no longer representative or may no longer be used; or |
| (H) |
the later of (i) the making of a public statement by the supervisor of the administrator of the Original Reference Rate announcing that such Original Reference Rate will, on or before a specified date, no longer be representative or may no longer be used and (ii) the date falling six months prior to the date specified in (H)(i) above, |
“Independent Adviser” means an independent financial institution of international repute or an independent financial adviser of recognised standing with the appropriate expertise appointed by the relevant Issuer at its own expense with prior notification to the Trustee. For the avoidance of doubt, an Independent Adviser appointed pursuant to this Condition 7(i)(a) shall act in good faith as an expert and (in the absence of bad faith or fraud) shall have no liability whatsoever to the Issuer, the Paying Agents, the Noteholders or the Couponholders for any determination made by it pursuant to this Condition 7(i)(a);
“Original Reference Rate” means the originally-specified Reference Rate or, where a Successor Rate or an Alternative Rate has been determined pursuant to Condition 7(i)(a), such Successor Rate or Alternative Rate, as applicable, used to determine the Rate of Interest (or any component part thereof) on the Notes;
“Relevant Nominating Body” means, in respect of a Reference Rate:
| (A) |
the central bank for the currency to which the Reference Rate relates, or any central bank or other supervisory authority which is responsible for supervising the administrator of the Reference Rate; or |
| (B) |
any working group or committee sponsored by, chaired or co-chaired by or constituted at the request of (i) the central bank for the currency to which the Reference Rate relates, (ii) any central bank or other supervisory authority which is responsible for supervising the administrator of the Reference Rate, (iii) a group of the aforementioned central banks or other supervisory authorities or (iv) the Financial Stability Board or any part thereof; and |
“Successor Rate” means a successor to or replacement of the Original Reference Rate which is formally recommended, or formally provided as an option for the parties to adopt by any Relevant Nominating Body.
| (b) |
Benchmark Transition |
This Condition 7(i)(b) applies to Notes where the relevant Final Terms specifies “Compounded Daily SOFR” as the Reference Rate.
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If the relevant Issuer, in consultation with the Calculation Agent determines that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred in relation to an Original Reference Rate at any time when the Conditions provide for any Rate of Interest (or any component part thereof) to be determined by reference to such Original Reference Rate, then the following provisions shall apply.
| (i) |
Independent Adviser |
The relevant Issuer shall use reasonable endeavours to appoint and consult with an Independent Adviser, as soon as reasonably practicable, with a view to the relevant Issuer determining the Benchmark Replacement which will replace such Original Reference Rate for all purposes relating to the Notes in respect of all determinations on such date and for all determinations on all subsequent dates (subject to any subsequent application of this Condition 7(i)(b) with respect to such Benchmark Replacement) and any Benchmark Replacement Conforming Changes.
Any Benchmark Replacement so determined by the relevant Issuer shall have effect for any subsequent determination of any relevant Rate of Interest (subject to any further application of this Condition 7(i)(b) with respect to such Benchmark Replacement), subject, if any associated Benchmark Replacement Conforming Changes are required in connection therewith, to such Benchmark Replacement Conforming Changes becoming effective in accordance with the following provisions.
If, notwithstanding the relevant Issuer’s reasonable endeavours, the relevant Issuer is unable to appoint and consult with an Independent Adviser in accordance with the foregoing paragraph, the provisions of Condition 7(i)(f) below shall apply.
| (ii) |
Benchmark Replacement Conforming Changes |
If the relevant Issuer, following consultation with the Independent Adviser (if appointed), considers it is necessary to make Benchmark Replacement Conforming Changes, the relevant Issuer shall, in consultation with the Independent Adviser (if appointed), determine the terms of such Benchmark Replacement Conforming Changes, and shall, subject to giving notice in accordance with Condition 7(i)(c) below (but without any requirement for the consent or approval of Noteholders), vary these Conditions, the Trust Deed and/or the Agency Agreement to give effect to such Benchmark Replacement Conforming Changes with effect from the date specified in such notice.
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At the request of the relevant Issuer, but subject to receipt by the Trustee of a certificate signed by two Authorised Signatories of the relevant Issuer pursuant to Condition 7(i)(c), the Trustee shall (at the expense of the relevant Issuer), without any requirement for the consent or approval of the Noteholders, be obliged to concur with the relevant Issuer in effecting any Benchmark Replacement Conforming Changes (including, inter alia, by the execution of a deed or an agreement supplemental to or amending the Trust Deed and/or the Agency Agreement (as applicable)) and the Trustee shall not be liable to any party for any consequences thereof, provided that the Trustee shall not be obliged so to concur if in the sole opinion of the Trustee doing so would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce or amend rights and/or the protective provisions afforded to the Trustee in these Conditions, the Trust Deed or the Agency Agreement (including, for the avoidance of doubt, any supplemental trust deed and/or agency agreement) in any way.
In connection with any such variation in accordance with this Condition 7(i)(b), the relevant Issuer shall comply with the rules of any stock exchange on which the Notes are for the time being listed or admitted to trading.
| (iii) |
Definitions |
As used in this Condition 7(i)(b):
“Benchmark Replacement” means the first alternative set forth in the order below that can be determined by the relevant Issuer as of the Benchmark Replacement Date:
| (i) |
the sum of: (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the Original Reference Rate for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment; |
| (ii) |
the sum of: (a) the ISDA Fallback Rate and (b) the Benchmark Replacement Adjustment; or |
| (iii) |
the sum of: (a) the alternate rate of interest that has been selected by the relevant Issuer as the replacement for the Original Reference Rate for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement for the then-current benchmark for U.S. dollar-denominated floating rate notes at such time and (b) the Benchmark Replacement Adjustment; |
“Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by the relevant Issuer as of the Benchmark Replacement Date:
| (i) |
the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement; |
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| (ii) |
if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, the ISDA Fallback Adjustment; or |
| (iii) |
the spread adjustment (which may be a positive or negative value or zero) that has been selected by the relevant Issuer giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated floating rate notes at such time; |
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to any Interest Period, Interest Accrual Period, the timing and frequency of determining rates and making payments of interest, rounding of amounts or tenors, and other administrative matters) that the relevant Issuer (in consultation with the Independent Adviser, if appointed) decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or, if the relevant Issuer decides that adoption of any portion of such market practice is not administratively feasible or if the relevant Issuer determines that no market practice for use of the Benchmark Replacement exists, in such other manner as the relevant Issuer (in consultation with the Independent Adviser, if appointed) determines is reasonably necessary);
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the Original Reference Rate (including the daily published component used in the calculation thereof):
| (i) |
in the case of clause (i) or (ii) of the definition of “Benchmark Transition Event”, the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the Original Reference Rate permanently or indefinitely ceases to provide the Original Reference Rate (or such component); or |
| (ii) |
in the case of clause (iii) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein. |
For the avoidance of doubt, if the event that gives rise to the Benchmark Replacement Date occurs on the same day as, but earlier than (where the Rate of Interest is to be determined pursuant to Condition 7(i)(b)) the Specified Time or (in any other case) the customary or scheduled time for publication of the relevant reference rate in accordance with the then-prevailing operational procedures of the administrator of such reference rate or, as the case may be, of the other relevant information service publishing such reference rate, on, the relevant Interest Determination Date, the Benchmark Replacement Date will be deemed to have occurred prior to such time for such determination; “Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the Original Reference Rate (including the daily published component used in the calculation thereof):
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| (i) |
a public statement or publication of information by or on behalf of the administrator of the Original Reference Rate (or such component) announcing that such administrator has ceased or will cease to provide the Original Reference Rate (or such component), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Original Reference Rate (or such component); or |
| (ii) |
a public statement or publication of information by the regulatory supervisor for the administrator of the Original Reference Rate (or such component), the central bank for the currency of the Original Reference Rate (or such component), an insolvency official with jurisdiction over the administrator for the Original Reference Rate (or such component), a resolution authority with jurisdiction over the administrator for the Original Reference Rate (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the Original Reference Rate, which states that the administrator of the Original Reference Rate (or such component) has ceased or will cease to provide the Original Reference Rate (or such component) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Original Reference Rate (or such component); or |
| (iii) |
a public statement or publication of information by the regulatory supervisor for the administrator of the Original Reference Rate announcing that the Original Reference Rate is no longer representative; |
“Corresponding Tenor” means, with respect to a Benchmark Replacement, a tenor (including overnight) having approximately the same length (disregarding business day adjustment) as the applicable tenor for the Original Reference Rate;
“Independent Adviser” means an independent financial institution of international repute or an independent adviser of recognised standing with appropriate expertise appointed by the relevant Issuer at its own expense with prior notice to the Trustee;
“ISDA Definitions” means the latest version of the 2021 ISDA Interest Rate Derivatives Definitions as amended and updated as at the date of issue of the first Tranche of the Notes of the relevant Series as published by the International Swaps and Derivatives Association, Inc.;
“ISDA Fallback Adjustment” means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Original Reference Rate; “ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Original Reference Rate for the applicable tenor excluding the applicable ISDA Fallback Adjustment;
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“Original Reference Rate” means the benchmark or screen rate (as applicable) originally specified for the purpose of determining the relevant Rate of Interest (or any relevant component part(s) thereof) on the Notes (provided that if, following one or more Benchmark Transition Events, such originally specified benchmark or screen rate (or any benchmark used in any Benchmark Replacement which has replaced it (the “Replacement Benchmark”)) has been replaced by a (or a further) Replacement Benchmark and a Benchmark Transition Event subsequently occurs in respect of such Replacement Benchmark, the term “Original Reference Rate” shall be deemed to include any such Replacement Benchmark);
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto; and
“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.
| (c) |
Notices, etc. |
The relevant Issuer shall notify the Trustee, the Principal Paying Agent, the Calculation Agent (if different from the Principal Paying Agent), the Paying Agents and, in accordance with Condition 18 (Notices), the Noteholders, promptly of any Successor Rate, Alternative Rate, Adjustment Spread and/or Benchmark Replacement, and the specific terms of any Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable), determined under this Condition 7(i). Such notice shall be irrevocable and shall specify the effective date of the Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable), if any.
No later than notifying the Trustee of the same, the relevant Issuer shall deliver to the Trustee a certificate signed by two Authorised Signatories:
| (i) |
confirming (x) that a Benchmark Event or a Benchmark Transition Event (as applicable) has occurred, (y) the Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread or, as the case may be, the Benchmark Replacement and (z) the specific terms of the Benchmark Amendments or Benchmark Replacement Conforming Changes (if any), as applicable, in each case as determined in accordance with the provisions of this Condition 7(i); |
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| (ii) |
certifying that the Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable) are necessary to ensure the proper operation of (as applicable) (A) such Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread or (B) such Benchmark Replacement; and |
| (iii) |
certifying that (i) the relevant Issuer has duly consulted with an Independent Adviser with respect to each of the matters above or, if that is not the case, (ii) explaining, in reasonable detail, why the relevant Issuer has not done so. |
The Trustee shall be entitled to rely on such certificate (without inquiry and without liability to any person) as sufficient evidence thereof. The Successor Rate, Alternative Rate, Benchmark Replacement, Adjustment Spread, Benchmark Amendments and/or Benchmark Replacement Conforming Changes (if any), as applicable, specified in such certificate will (in the absence of manifest error in the determination thereof and without prejudice to the Trustee’s ability to rely on such certificate as aforesaid) be binding on the relevant Issuer, the Trustee, the Agent, the Calculation Agent, the Paying Agents and the Noteholders and Couponholders.
| (d) |
Survival of Original Reference Rate |
Without prejudice to the relevant Issuer’s obligations under the provisions of this Condition 7(i), the Original Reference Rate and the fallback provisions provided for in Condition 7 will continue to apply unless and until the Calculation Agent has been notified, in accordance with Condition 7(i)(c), of (as the case may be):
| (i) |
the Successor Rate or the Alternative Rate (as the case may be), and (in either case) the Adjustment Spread and Benchmark Amendments (if any) determined in accordance with Condition 7(i)(a); or |
| (ii) |
the Benchmark Replacement and Benchmark Replacement Conforming Changes (if any) determined in accordance with Condition 7(i)(b). |
| (e) |
Restriction on Independent Adviser and Issuer liability |
An Independent Adviser appointed pursuant to this Condition 7(i) shall act in good faith.
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In the absence of bad faith or fraud, neither the relevant Issuer nor any Independent Adviser shall have any liability whatsoever to the Trustee, the Paying Agents, the Agent, the Calculation Agent or the Noteholders or Couponholders for any determination made by the relevant Issuer or the Independent Adviser or (in the case of the Independent Adviser) for any advice given to the relevant Issuer in connection with any determination made by the relevant Issuer pursuant to this Condition 7(i).
| (f) |
Fallbacks |
If, following the occurrence of:
| (i) |
a Benchmark Event; or |
| (ii) |
a Benchmark Transition Event (and its related Benchmark Replacement Date), |
in respect of the Original Reference Rate, on the immediately following Interest Determination Date:
| (A) |
(in the case of (i) above) no Successor Rate or Alternative Rate (as applicable) is determined pursuant to Condition 7(i)(a) or (as the case may be) a Successor Rate or Alternative Rate (as applicable) is determined, but no Adjustment Spread is determined pursuant to Condition 7(i)(a); or |
| (B) |
(in the case of (ii) above) no Benchmark Replacement is determined in accordance with Condition 7(i)(b), |
then the original benchmark or screen rate (as applicable) will continue to apply for the purposes of determining such Rate of Interest on such Interest Determination Date, with the effect that the fallback provisions provided in Condition 7(c) will continue to apply to such determination.
In such circumstances, the relevant Issuer will be entitled (but not obliged), at any time thereafter, to elect to re-apply the provisions of this Condition 7(i), mutatis mutandis, on one or more occasions until:
| (x) |
(in the case of (i) above) a Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread and any Benchmark Amendments; or |
| (y) |
(in the case of (ii) above) the Benchmark Replacement and any Benchmark Replacement Conforming Changes, |
have been determined and notified in accordance with this Condition (i) (and, until such determination and notification (if any), the fallback provisions provided in Condition 7(c) will continue to apply).
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The relevant Issuer’s intention is that, in circumstances where the relevant Issuer has been unable to determine (as applicable) (i) a Successor Rate or Alternative Rate (as applicable) and (in either case) the Adjustment Spread or (ii) the Benchmark Replacement pursuant this Condition 7(i), it will elect to re-apply such provisions if and when, in its sole determination, there have been such subsequent developments (whether in applicable law, market practice or otherwise) as would enable the relevant Issuer successfully to apply such provisions and determine (as applicable) (a) a Successor Rate or Alternative Rate (as applicable) and (in either case) the applicable Adjustment Spread and the applicable Benchmark Amendments (if any) or (b) the Benchmark Replacement and the applicable Benchmark Replacement Conforming Changes (if any).
| (ii) |
Preparation in anticipation of a Benchmark Event or a Benchmark Transition Event |
If the relevant Issuer anticipates that a Benchmark Event or a Benchmark Transition Event, as applicable, will or may occur, nothing in these Conditions shall prevent the relevant Issuer (in its sole discretion) from taking, prior to the occurrence of such Benchmark Event or a Benchmark Transition Event, such actions as it considers expedient in order to prepare for applying the provisions of this Condition 7(i) (including, without limitation, appointing and consulting with an Independent Adviser, and seeking to identify any Successor Rate, Alternative Rate, Adjustment Spread, Benchmark Amendments, Benchmark Replacement and/or Benchmark Replacement Conforming Changes, as applicable), provided that no Successor Rate, Alternative Rate, Adjustment Spread, Benchmark Amendments, Benchmark Replacement and/or Benchmark Replacement Conforming Changes will take effect until the relevant Benchmark Event, or the relevant Benchmark Transition Event and its related Benchmark Replacement Date, as applicable, has occurred.
8. Zero Coupon Note Provisions
| (a) |
Application |
This Condition 8 is applicable to the Notes only if the Zero Coupon Note provisions are specified in the relevant Final Terms as being applicable.
| (b) |
Late payment on Zero Coupon Notes |
If the Redemption Amount payable in respect of any Zero Coupon Note is improperly withheld or refused, the Redemption Amount shall thereafter be an amount equal to the sum of:
| (i) |
the Reference Price; and |
| (ii) |
the product of the Accrual Yield (compounded annually) being applied to the Reference Price on the basis of the relevant Day Count Fraction from (and including) the Issue Date to (but excluding) whichever is the earlier of (A) the day on which all sums due in respect of such Note up |
Page 108
| to that day are received by or on behalf of the relevant Noteholder and (B) the day which is seven days after the Principal Paying Agent or, as the case may be, the Trustee has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment). |
9. Redemption and Purchase
| (a) |
Scheduled redemption |
Unless previously redeemed or purchased and cancelled in accordance with Condition 9(k) (Cancellation), the Notes will be redeemed at their Final Redemption Amount on the Maturity Date, subject as provided in Condition 10(1) (Payments – Bearer Notes) or Condition 10(2) (Payments – Registered Notes).
| (b) |
Redemption for tax reasons |
The Notes may be redeemed at the option of the relevant Issuer in whole, but not in part:
| (i) |
at any time (if the Floating Rate Note provisions are not specified in the relevant Final Terms as being applicable); or |
| (ii) |
on any Interest Payment Date (if the Floating Rate Note provisions are specified in the relevant Final Terms as being applicable), |
on giving not less than 30 nor more than 60 days’ notice to the Noteholders in accordance with Condition 18 (Notices) (which notice shall be irrevocable), at their Early Redemption Amount (Tax), together with interest accrued (if any) to the date fixed for redemption, if:
| (A) |
as a result of any change in, or amendment to, the tax laws or regulations of the Relevant Jurisdiction(s) or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after the date of issue of the first Tranche of the Notes on the next Interest Payment Date either (i) the relevant Issuer would be obliged to pay additional amounts as provided or referred to in Condition 11 (Taxation) or (ii) each relevant Guarantor would be unable for reasons outside its control to procure payment by the relevant Issuer and in making payment itself would be required to pay such additional amounts; and |
| (B) |
such obligation cannot be avoided by the relevant Issuer or, as the case may be, each of the relevant Guarantors taking reasonable measures available to it, |
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PROVIDED, HOWEVER, THAT no such notice of redemption shall be given earlier than:
| (I) |
where the Notes may be redeemed at any time, 90 days prior to the earliest date on which the relevant Issuer or, as the case may be, the relevant Guarantor would be obliged to pay such additional amounts if a payment in respect of the Notes were then due; or |
| (II) |
where the Notes may be redeemed only on an Interest Payment Date, 60 days prior to the Interest Payment Date occurring immediately before the earliest date on which the relevant Issuer or, as the case may be, the relevant Guarantor would be obliged to pay such additional amounts if a payment in respect of the Notes were then due. |
Prior to the publication of any notice of redemption pursuant to this paragraph, the relevant Issuer shall deliver to the Trustee (i), if the Trustee so requests, an opinion of independent legal advisers of recognised standing to the effect that the relevant Issuer or, as the case may be, a relevant Guarantor has or will become obliged to pay such additional amounts as a result of such change or amendment and (ii) a certificate signed by two Authorised Signatories of the relevant Issuer or, as the case may be, each of the relevant Guarantors, as the case may be, stating that the obligation referred to in (A) above cannot be avoided by the relevant Issuer or, as the case may be, each of the relevant Guarantors taking reasonable measures available to it and the Trustee shall be entitled to accept such certificate as sufficient evidence of the satisfaction of the condition precedent set out in (B) above in which event it shall be conclusive and binding on the Noteholders and Couponholders. Upon the expiry of any such notice as is referred to in this Condition 9(b), the relevant Issuer shall be bound to redeem the Notes in accordance with this Condition 9(b).
| (c) |
Redemption at the option of the relevant Issuer (Issuer Call Option) |
If Issuer Call Option is specified in the relevant Final Terms as being applicable, the Notes may be redeemed at the option of the relevant Issuer in whole or, if so specified in the relevant Final Terms, in part on any Optional Redemption Date (Call) at the relevant Optional Redemption Amount (Call) on the relevant Issuer giving not less than 30 nor more than 60 days’ notice (or such other period of notice as is specified in the relevant Final Terms as being applicable) to the Noteholders and the Trustee (which notice shall be irrevocable and shall oblige the relevant Issuer to redeem the Notes or, as the case may be, the Notes specified in such notice on the relevant Optional Redemption Date (Call) at the Optional Redemption Amount (Call) plus accrued interest (if any) to such date).
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| (d) |
Redemption at the option of the relevant Issuer where Issuer Maturity Par Call Option or Issuer Residual Call Option is specified |
The Notes may be redeemed at the option of the relevant Issuer in whole, but not in part:
| i) |
if Issuer Maturity Par Call Option is specified in the relevant Final Terms as being applicable, at any time during the period commencing on (and including) the day that is 90 days (or such other number of days as is specified in the relevant Final Terms) prior to the Maturity Date to (but excluding) the Maturity Date, at the Final Redemption Amount specified in the relevant Final Terms, plus accrued interest (if any) to the date fixed for redemption, upon the relevant Issuer having given not less than 30 nor more than 60 days’ notice (or such other period of notice as is specified in the relevant Final Terms as being applicable) to the Noteholders and the Trustee (which notice shall be irrevocable and shall specify the date fixed for redemption); or |
| ii) |
if Issuer Residual Call Option is specified in the relevant Final Terms as being applicable and, at any time, the outstanding aggregate nominal amount of the Notes is 20 per cent. or less of the aggregate nominal amount of the Series issued, at any time (if the Floating Rate Note provisions are not specified in the relevant Final Terms as being applicable)) or on any Interest Payment Date (if the Floating Rate Note provisions are specified in the relevant Final Terms as being applicable), at the Residual Call Early Redemption Amount, plus accrued interest (if any) to the date fixed for redemption, upon the relevant Issuer having given not less than 30 nor more than 60 days’ notice (or such other period of notice as is specified in the relevant Final Terms as being applicable) to the Noteholders and the Trustee (which notice shall be irrevocable and shall specify the date fixed for redemption). |
| (e) |
Partial redemption |
If the Notes are to be redeemed in part only on any date in accordance with Condition 9(c) (Redemption at the option of the relevant Issuer (Issuer Call Option)), in the case of Bearer Notes, the Notes to be redeemed shall be selected by the drawing of lots in such place and in such manner as the Trustee approves, subject to compliance with applicable law, the rules of each competent authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation and the notice to Noteholders referred to in Condition 9(c) (Redemption at the option of the relevant Issuer (Issuer Call Option)) shall specify the serial numbers of the Notes so to be redeemed (which will be published by the relevant Issuer in accordance with Condition 18 (Notices) not less than 15 days prior to the date fixed for redemption), and, in the case of Registered Notes, each Note shall be redeemed in part in the proportion which the aggregate principal amount of the outstanding Notes to be redeemed on the relevant Optional Redemption Date (Call) bears to the aggregate principal amount of outstanding Notes on such date. If any Maximum Redemption Amount or Minimum Redemption Amount is specified in the relevant Final Terms, then the Optional Redemption Amount (Call) shall in no event be greater than the maximum or be less than the minimum so specified.
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| (f) |
Redemption at the option of Noteholders |
If Put Option is specified in the relevant Final Terms as being applicable, the relevant Issuer shall, at the option of the Holder of any Note redeem such Note on the Optional Redemption Date (Put) specified in the relevant Put Option Notice at the relevant Optional Redemption Amount (Put) together with interest (if any) accrued to such date. In order to exercise the option contained in this Condition 9(f), the Holder of a Note must, not less than 30 nor more than 60 days before the relevant Optional Redemption Date (Put) (or such other period(s) as may be specified in the relevant Final Terms), deposit with any Paying Agent (in the case of Bearer Notes) or the Registrar or any Transfer Agent (in the case of Registered Notes) (i) a duly completed Put Option Notice in the form obtainable from any Paying Agent, the Registrar or any Transfer Agent, as the case may and (ii) such Note together with, in the case of Bearer Notes, all unmatured Coupons relating thereto. The Paying Agent, the Registrar or any Transfer Agent, as the case may be, with which such Note and/or Put Option Notice is so deposited shall deliver a duly completed Put Option Receipt to the depositing Noteholder. In the case of Registered Notes, the Holder must specify in the Put Option Notice the nominal amount of Notes to be redeemed and, if less than the full nominal amount of the Registered Notes so surrendered is to be redeemed, an address to which a new Note Certificate in respect of the balance of such Registered Notes is to be sent subject to and in accordance with the provisions of Condition 3(f) (Form, Denomination, Title and Transfer – Transfers of Registered Notes).
If the Note is in definitive form and held through Euroclear or Clearstream, to exercise the right to require redemption or, as the case may be, purchase of a Note under this Condition 9(f) the holder of the Note must, not less than 30 nor more than 60 days before the relevant Optional Redemption Date (Put), give notice to the Principal Paying Agent of such exercise in accordance with the standard procedures of Euroclear and Clearstream (which may include notice being given on their instruction by Euroclear or Clearstream or any common depositary for them to the Principal Paying Agent by electronic means) in a form acceptable to Euroclear and Clearstream from time to time.
Any Put Option Notice or other notice given by a Holder of any Note pursuant to this Condition 7.5 (Redemption at the option of the Noteholders (Investor Put)) shall be irrevocable except where, prior to the due date of redemption, an Event of Default has occurred and the Trustee has declared the Notes to be due and payable pursuant to Condition 12 (Events of Default), in which event such Holder, at its option, may elect by notice to the relevant Issuer to withdraw the notice given pursuant to this Condition 9(f) (Redemption at the option of Noteholders) and instead to declare such Note forthwith due and payable pursuant to Condition 12 (Events of Default).
Page 112
| (g) |
Change of Control redemption |
If Change of Control Put Option is specified in the relevant Final Terms as being applicable and a Change of Control Put Event occurs, the Holder of any Note will have the option (unless prior to the giving of the relevant Change of Control Put Event Notice the relevant Issuer has given notice of redemption under Condition 9(b) (Redemption for tax reasons) or 9(c) (Redemption at the option of the relevant Issuer), if applicable) to require the relevant Issuer to redeem or, at the relevant Issuer’s option, purchase (or procure the purchase of) that Note on the Change of Control Optional Redemption Date at its Change of Control Optional Redemption Amount together with interest accrued to (but excluding) the Change of Control Optional Redemption Date.
Promptly upon, and in any event within 14 days after, the relevant Issuer becoming aware that a Change of Control Put Event has occurred the relevant Issuer shall, and at any time upon the Trustee becoming similarly so aware the Trustee may, and if so requested by the holders of at least one-quarter in principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of the Noteholders, shall, (subject in each case to the Trustee being indemnified, secured and/or prefunded to its satisfaction) give the Change of Control Put Event Notice to the Noteholders.
To exercise the Change of Control Put Option, the Holder of the Note must deposit with any Paying Agent (in the case of a Bearer Note) or the Registrar or any Transfer Agent (in the case of Registered Notes) within the Change of Control Put Period (i) a duly signed and completed notice of exercise in the form obtainable from any Paying Agent, the Registrar or any Transfer Agent, as the case may be (a “Change of Control Put Exercise Notice”) and (ii) such Note together with, in the case of Bearer Notes, all unmatured Coupons relating thereto. The Paying Agent the Registrar, as the case may be, with which such Note and/or Change of Control Put Exercise Notice is so deposited shall deliver a duly completed Change of Control Put Event Receipt to the depositing Noteholder. No Note, Coupon or Certificate so deposited and option so exercised may be withdrawn (except as provided in the Agency Agreement) without the prior consent of the relevant Issuer.
Any Change of Control Put Exercise Notice, once given, shall be irrevocable except where prior to the Change of Control Optional Redemption Date an Event of Default shall have occurred and the Trustee shall have accelerated the Notes, in which event such holder, at its option, may elect by notice to the Parent to withdraw the Change of Control Put Exercise Notice and instead to treat its Notes as being forthwith due and payable pursuant to Condition 12 (Events of Default).
If 80 per cent. or more in principal amount of the Notes then outstanding on the date on which the Change of Control Put Exercise Notice is given have been redeemed or purchased pursuant to this Condition 9(g), the relevant Issuer may, on giving not less than 30 nor more than 60 days’ notice to the Noteholders (such notice being given within 30 days after the Change of Control Optional Redemption Date), redeem or purchase (or procure the purchase of), at its option, all but not some only of the remaining outstanding Notes at their principal amount, together with interest accrued to (but excluding) the date fixed for such redemption or purchase.
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If the rating designations employed by any Rating Agency are changed from those which are described in paragraph (ii) of the definition of “Change of Control Put Event”, or if a rating is procured from a Substitute Rating Agency, the relevant Issuer shall determine, with the agreement of the Trustee, the rating designations of such Rating Agency or such Substitute Rating Agency (as appropriate) as are most equivalent to the prior rating designations of the relevant Rating Agency and this Condition 9(g) shall be construed accordingly.
The Trustee is under no obligation to ascertain whether a Change of Control Put Event or Change of Control or any event which could lead to the occurrence of or could constitute a Change of Control Put Event or Change of Control has occurred, or to seek any confirmation from any Rating Agency pursuant to the definition of Negative Rating Event below, and, until it shall have actual knowledge or notice pursuant to the Trust Deed to the contrary, the Trustee may assume that no Change of Control Put Event or Change of Control or other such event has occurred.
| (h) |
No other redemption |
The relevant Issuer shall not be entitled to redeem the Notes otherwise than as provided in Conditions 9(a) (Scheduled redemption) to 9(g) (Change of control redemption) above.
| (i) |
Early redemption of Zero Coupon Notes |
Unless otherwise specified in the relevant Final Terms, the Redemption Amount payable on redemption of a Zero Coupon Note at any time before the Maturity Date shall be an amount equal to the sum of:
| (i) |
the Reference Price; and |
| (ii) |
the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which the Note becomes due and payable. |
Where such calculation is to be made for a period which is not a whole number of years, the calculation in respect of the period of less than a full year shall be made on the basis of such Day Count Fraction as may be specified in the Final Terms for the purposes of this Condition 9(i) or, if none is so specified, a Day Count Fraction of 30E/360.
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| (j) |
Purchase |
The relevant Issuer, each relevant Guarantor, the Parent or any Subsidiary may at any time purchase Notes in the open market or otherwise and at any price, PROVIDED THAT all unmatured Coupons are purchased therewith.
| (k) |
Cancellation |
All Notes so redeemed or purchased by the relevant Issuer, each relevant Guarantor, the Parent or any Subsidiary and any unmatured Coupons attached to or surrendered with them shall be cancelled and may not be reissued or resold.
| 10. |
Payments – |
| (1) |
Bearer Notes |
This Condition 10(1) is only applicable to Bearer Notes.
| (a) |
Principal |
Payments of principal shall be made only against presentation and (PROVIDED THAT payment is made in full) surrender of Bearer Notes at the Specified Office of any Paying Agent outside the United States by cheque drawn in the currency in which the payment is due on, or by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the City of London).
| (b) |
Interest |
Payments of interest shall, subject to Condition 10(1)(h) (Payments other than in respect of matured Coupons), be made only against presentation and (PROVIDED THAT payment is made in full) surrender of the appropriate Coupons at the Specified Office of any Paying Agent outside the United States in the manner described in Condition 10(1)(a) (Principal).
| (c) |
Payments in New York City |
Payments of principal or interest may be made at the Specified Office of a Paying Agent in New York City if (i) the relevant Issuer has appointed Paying Agents outside the United States with the reasonable expectation that such Paying Agents will be able to make payment of the full amount of the interest on the Notes in the currency in which the payment is due when due, (ii) payment of the full amount of such interest at the offices of all such Paying Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law.
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| (d) |
Payments subject to fiscal laws |
All payments in respect of the Bearer Notes are subject in all cases to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 11 (Taxation) and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or any law implementing an intergovernmental approach thereto.
No commissions or expenses shall be charged to the Noteholders or Couponholders in respect of such payments.
| (e) |
Deductions for unmatured Coupons |
If the relevant Final Terms specify that the Fixed Rate Note provisions are applicable and a Bearer Note is presented without all unmatured Coupons relating thereto:
| (i) |
if the aggregate amount of the missing Coupons is less than or equal to the amount of principal due for payment, a sum equal to the aggregate amount of the missing Coupons will be deducted from the amount of principal due for payment; PROVIDED HOWEVER, THAT if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of such missing Coupons which the gross amount actually available for payment bears to the amount of principal due for payment; |
| (ii) |
if the aggregate amount of the missing Coupons is greater than the amount of principal due for payment: |
| (A) |
so many of such missing Coupons shall become void (in inverse order of maturity) as will result in the aggregate amount of the remainder of such missing Coupons (the “Relevant Coupons”) being equal to the amount of principal due for payment; PROVIDED HOWEVER, THAT where this sub-paragraph would otherwise require a fraction of a missing Coupon to become void, such missing Coupon shall become void in its entirety; and |
| (B) |
a sum equal to the aggregate amount of the Relevant Coupons (or, if less, the amount of principal due for payment) will be deducted from the amount of principal due for payment; PROVIDED, HOWEVER, THAT, if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of the Relevant Coupons (or, as the case may be, the amount of principal due for payment) which the gross amount actually available for payment bears to the amount of principal due for payment. |
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Each sum of principal so deducted shall be paid in the manner provided in Condition 10(a) (Principal) against presentation and (PROVIDED THAT payment is made in full) surrender of the relevant missing Coupons.
| (f) |
Unmatured Coupons void |
If the relevant Final Terms specifies that this Condition 10(f) is applicable or that the Floating Rate Note provisions are applicable, on the due date for final redemption of any Note or early redemption in whole of such Note pursuant to Condition 9(b) (Redemption for tax reasons), Condition 9(f) (Redemption at the option of Noteholders), Condition 9(c) (Redemption at the option of the relevant Issuer (Issuer Call Option)) or Condition 12 (Events of Default), all unmatured Coupons relating thereto (whether or not still attached) shall become void and no payment will be made in respect thereof.
| (g) |
Payments on business days |
If the due date for payment of any amount in respect of any Bearer Note or Coupon is not a Payment Business Day in the place of presentation, the Holder shall not be entitled to payment in such place of the amount due until the next succeeding Payment Business Day in such place and shall not be entitled to any further interest or other payment in respect of any such delay.
| (h) |
Payments other than in respect of matured Coupons |
Payments of interest other than in respect of matured Coupons shall be made only against presentation of the relevant Bearer Notes at the Specified Office of any Paying Agent outside the United States (or in New York City if permitted by Condition 10(1)(c) (Payments in New York City) above).
| (i) |
Partial payments |
If a Paying Agent makes a partial payment in respect of any Bearer Note or Coupon presented to it for payment, such Paying Agent will endorse thereon a statement indicating the amount and date of such payment.
| (j) |
Exchange of Talons |
On or after the maturity date of the final Coupon which is (or was at the time of issue) part of a Coupon Sheet relating to the Bearer Notes, the Talon forming part of such Coupon Sheet may be exchanged at the Specified Office of the Principal Paying Agent for a further Coupon Sheet (including, if appropriate, a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to Condition 13 (Prescription)). Upon the due date for redemption of any Bearer Note, any unexchanged Talon relating to such Note shall become void and no Coupon will be delivered in respect of such Talon.
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| (2) |
Registered Notes |
This Condition 10(2) is only applicable to Registered Notes.
| (a) |
Principal |
Payments of principal shall be made by cheque drawn in the currency in which the payment is due drawn on, or, upon application by a Holder of a Registered Note to the Specified Office of the Principal Paying Agent not later than the fifteenth day before the due date for any such payment, by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the City of London) and (in the case of redemption) upon surrender (or, in the case of part payment only, endorsement) of the relevant Note Certificates at the Specified Office of any Paying Agent.
| (b) |
Interest |
Payments of interest shall be made by cheque drawn in the currency in which the payment is due drawn on, or, upon application by a Holder of a Registered Note to the Specified Office of the Principal Paying Agent not later than the fifteenth day before the due date for any such payment, by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the City of London) and (in the case of interest payable on redemption) upon surrender (or, in the case of part payment only, endorsement) of the relevant Note Certificates at the Specified Office of any Paying Agent.
| (c) |
Payments subject to fiscal laws |
All payments in respect of the Registered Notes are subject in all cases to (i) any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 11 (Taxation) and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or any law implementing an intergovernmental approach thereto. No commissions or expenses shall be charged to the Noteholders in respect of such payments.
| (d) |
Payments on business days |
Where payment is to be made by transfer to an account, payment instructions (for value the due date, or, if the due date is not a Payment Business Day, for value the next succeeding Payment Business Day) will be initiated and, where payment is to be made by cheque, the cheque will be mailed (i) (in the case of payments of principal and interest payable on redemption) on the later of the due date for payment and the day on which the relevant Note Certificate is surrendered (or, in the case of part payment only, endorsed) at the Specified Office of a Paying Agent and (ii) (in the case of payments of interest payable other than on redemption) on the Payment Business Day immediately preceding the due date for payment.
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A Holder of a Registered Note shall not be entitled to any interest or other payment in respect of any delay in payment resulting from (A) the due date for a payment not being a Payment Business Day or (B) a cheque mailed in accordance with this Condition 10(2)(d) arriving after the due date for payment or being lost in the mail.
| (e) |
Partial payments |
If a Paying Agent makes a partial payment in respect of any Registered Note, the relevant Issuer shall procure that the amount and date of such payment are noted on the Register and, in the case of partial payment upon presentation of a Note Certificate, that a statement indicating the amount and the date of such payment is endorsed on the relevant Note Certificate.
| (f) |
Record date |
Each payment in respect of a Registered Note will be made to the person shown as the Holder in the Register at the opening of business in the place of the Registrar’s Specified Office on the fifteenth day before the due date for such payment (the “Record Date”). Where payment in respect of a Registered Note is to be made by cheque, the cheque will be mailed to the address shown as the address of the Holder in the Register at the opening of business on the relevant Record Date.
11. Taxation
| (a) |
Gross up |
All payments of principal and interest in respect of the Notes and the Coupons by or on behalf of the relevant Issuer or any relevant Guarantor shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of any Relevant Jurisdiction or any political subdivision therein or any authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments, or governmental charges is required by law. In that event, the relevant Issuer or, as the case may be, such relevant Guarantor, shall pay such additional amounts as will result in receipt by the Noteholders and the Couponholders after such withholding or deduction of such amounts as would have been received by them had no such withholding or deduction been required, except that no such additional amounts shall be payable in respect of any Note or Coupon:
| (i) |
presented for payment by or on behalf of a Holder which is liable to such taxes, duties, assessments or governmental charges in respect of such Note or Coupon by reason of its having some connection with the jurisdiction by which such taxes, duties, assessments or charges have been imposed, levied, collected, withheld or assessed other than the mere holding of the Note or Coupon; |
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| (ii) |
presented for payment more than 30 days after the Relevant Date except to the extent that the Holder of such Note or Coupon would have been entitled to such additional amounts on presenting such Note or Coupon for payment on the last day of such period of 30 days; or |
| (iii) |
where such withholding or deduction is required pursuant to an agreement described in section 1471(b) of the Code, or is otherwise imposed pursuant to sections 1471 through 1474 of the Code and any regulations, agreements or undertakings thereunder or official interpretations thereof or other law implementing an intergovernmental approach thereto; or |
| (iv) |
in the case of Notes issued by IHG Finance LLC, presented for payment by or on behalf of (i) any 10 per cent shareholder of IHG Finance LLC within the meaning of Section 871(h)(3)(B) of the Code, (ii) any controlled foreign corporation related to IHG Finance LLC within the meaning of Section 864(d)(4) of the Code or (iii) any bank whose acquisition of Notes constitutes an extension of credit pursuant to a loan agreement entered into in the ordinary course of its business, or (iv) any tax, assessment or governmental charge that would not have been imposed or withheld but for the failure of the holder, if required, to comply with certification, identification or information reporting or any other requirements under United States income tax laws and regulations, without regard to any tax treaty, with respect to the payment, concerning the nationality, residence, identity or connection with the United States of the holder or a beneficial owner of such Note or Coupon, if such compliance is required by United States income tax laws and regulations, without regard to any tax treaty, as a precondition to relief or exemption from such tax, assessment or governmental charge, including, failure of the holder or of the beneficial owner of such Note or Coupon, to provide a valid U.S. IRS Form W-8 (or successor form) or other documentation as permitted by official IRS guidance. |
| (b) |
Taxing jurisdiction |
If the relevant Issuer or any relevant Guarantor becomes subject at any time to any taxing jurisdiction other than the Relevant Jurisdiction(s), references in these Conditions to the Relevant Jurisdiction(s) shall be construed as references to the Relevant Jurisdiction(s) and/or such other jurisdiction.
12. Events of Default
If any of the following events occurs and is continuing then the Trustee may at its discretion and shall, if so requested in writing by the holders of at least one fifth of the aggregate principal amount of the outstanding Notes, or if so directed by an Extraordinary Resolution (subject to the Trustee having been indemnified and/or provided with security and/or prefunded by the Noteholders to its satisfaction) by written notice to the relevant Issuer, declare the Notes to be immediately due and payable, whereupon they shall become immediately due and payable at their Early Termination Amount together with accrued interest (if any) without further action or formality:
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| (a) |
Non-payment |
the relevant Issuer or any relevant Guarantor fails to pay any amount of principal in respect of the Notes within ten days of the due date for payment thereof or any amount of interest in respect of the Notes within ten days of the due date for payment thereof; or
| (b) |
Breach of other obligations |
the relevant Issuer or any relevant Guarantor does not comply with any of their other obligations under or in respect of the Notes or the Trust Deed and (except in any case where, in the opinion of the Trustee, such failure is incapable of remedy in which case no continuation or notice as is hereinafter provided will be required) such failure to comply continues unremedied for 30 days (or such longer period as the Trustee may permit) after written notice thereof has been delivered by the Trustee to the relevant Issuer or such relevant Guarantor, as the case may be; or
| (c) |
Cross Default |
| (i) |
any Indebtedness of the relevant Issuer or any relevant Guarantor or any Material Subsidiary becomes due and repayable prematurely by reason of an event of default (however described); |
| (ii) |
the relevant Issuer or any relevant Guarantor or any Material Subsidiary fails to make any payment in respect of any Indebtedness on the due date for payment or, as the case may be, within any applicable grace period as originally provided; |
| (iii) |
any security given by the relevant Issuer or any relevant Guarantor or any Material Subsidiary for any Indebtedness is enforced; or |
| (iv) |
default is made by the relevant Issuer or any relevant Guarantor or any Material Subsidiary in making any payment due under any guarantee and/or indemnity given by it in relation to any Indebtedness of any other person, |
provided that (i) no event described in this Condition 12(c) shall constitute an Event of Default where the relevant Issuer or the relevant Guarantor or the relevant Material Subsidiary, as the case may be, satisfies the Trustee that it is contesting such Event of Default in good faith and by appropriate action and (ii) no event described in this Condition 12(c) shall constitute an Event of Default unless the Indebtedness or other relative liability, either alone or when aggregated with other Indebtedness and/or other liabilities relative to all (if any) other events described in this Condition 12(c) which have occurred and are continuing (excluding where the relevant Issuer and/or the relevant Guarantor and/or the relevant Material Subsidiary, as the case may be, has satisfied the Trustee that it is contesting such event in good faith and by appropriate action), amounts to at least U.S.$50,000,000 (or its equivalent in any other currency); or
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| (d) |
Security enforced |
a secured party takes possession, or a receiver, manager or other similar officer is appointed, of all or substantially all of the undertaking, assets and revenues of the relevant Issuer, a relevant Guarantor or any Material Subsidiary; or
| (e) |
Creditor’s process |
any expropriation, attachment, sequestration, distress or execution affects any asset or assets of the relevant Issuer, any relevant Guarantor or a Material Subsidiary having an aggregate value of and in respect of indebtedness aggregating at least U.S.$50,000,000 (or its equivalent in any other currency or currencies) and is not discharged within 30 days; or
| (f) |
Insolvency etc. |
(i) the relevant Issuer, any relevant Guarantor or any Material Subsidiary becomes insolvent or is unable to pay its debts as they fall due; (ii) an administrator or liquidator of the relevant Issuer, any relevant Guarantor or any Material Subsidiary of all or substantially all of the undertaking, assets and revenues of the relevant Issuer, such relevant Guarantor or such Material Subsidiary is appointed (otherwise than for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent on terms previously approved in writing by the Trustee or by an Extraordinary Resolution); or (iii) the relevant Issuer, any relevant Guarantor or any Material Subsidiary makes a general assignment or an arrangement or composition with or for the benefit of its creditors generally or declares a moratorium in respect of any of its Indebtedness given by it; or (iv) a person presents a petition for the winding up, liquidation, dissolution, administration or suspension of payments of the relevant Issuer, any relevant Guarantor or any Material Subsidiary (excluding where the relevant Issuer, such relevant Guarantor or such Material Subsidiary has satisfied the Trustee that it is contesting such petition in good faith and by appropriate action); or
| (g) |
Winding up etc. |
an order is made or an effective resolution is passed for the winding up, liquidation or dissolution of the relevant Issuer, any relevant Guarantor or any Material Subsidiary (otherwise than for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent on terms previously approved in writing by the Trustee or by an Extraordinary Resolution); or any action, condition or thing at any time required to be taken, fulfilled or done in order (i) to enable the relevant Issuer or the relevant Guarantors lawfully to enter into, exercise their respective rights and perform and comply with their respective obligations under and in respect of the Notes, the Coupons and the Trust Deed, (ii) to ensure that those obligations are legal, valid, binding and enforceable and (iii) to make the Notes, the Coupons and the Trust Deed admissible in evidence in the courts of England is not taken, fulfilled or done; or
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| (h) |
Failure to take action etc. |
| (i) |
Cessation of business etc. |
the relevant Issuer, any relevant Guarantor or any Material Subsidiary ceases or threatens to cease to carry on all or substantially all of its business, save for (i) the purposes of or pursuant to an amalgamation, reorganisation or restructuring neither involving nor arising out of the insolvency of the relevant Issuer or, as the case may be, such relevant Guarantor or Material Subsidiary, (ii) any transfer of assets by the relevant Issuer, any relevant Guarantor or any Material Subsidiary to any other member of the Group, (iii) any transfer of assets by the relevant Issuer, any relevant Guarantor or any Material Subsidiary to a third party or parties (whether associated or not) on an arm’s length basis, (iv) any transfer of assets by the relevant Issuer, any relevant Guarantor or any Material Subsidiary whereby the transferee is or immediately upon such transfer becomes a Material Subsidiary, or (v) any transfer of assets by the relevant Issuer, any relevant Guarantor or any Material Subsidiary the terms of which have been previously approved by the Trustee or by an Extraordinary Resolution of the Noteholders; or
| (j) |
Guarantee etc. |
any relevant Guarantee ceases to be, or is claimed by a relevant Guarantor not to be, in full force and effect; or
| (k) |
Guarantors etc. |
any relevant Guarantor or, where the relevant Issuer is IHG Finance LLC, the relevant Issuer ceases to be a Subsidiary controlled, directly or indirectly, by the Parent,
provided that, in the case of Conditions 12(b), (d) and (f) to (i) inclusive, the Trustee shall have certified in writing that such event is in its opinion materially prejudicial to the interests of the Noteholders.
13. Prescription
Claims for principal in respect of Bearer Notes shall become void unless the relevant Bearer Notes are presented for payment within ten years of the appropriate Relevant Date. Claims for interest in respect of Bearer Notes shall become void unless the relevant coupons are presented for payment within five years of the appropriate Relevant Date. Claims for principal and interest on redemption in respect of Registered Notes shall become void unless the relevant Note Certificates are surrendered for payment within ten years of the appropriate Relevant Date.
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14. Replacement of Notes, Coupons and Talons
If any Note, Note Certificate Coupon or Talon is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Principal Paying Agent, in the case of Bearer Notes, or the Registrar, in the case of Registered Notes, (and, if the Notes are then admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent or Transfer Agent in any particular place, the Paying Agent or Transfer Agent having its Specified Office in the place required by such competent authority, stock exchange and/or quotation system), subject to all applicable laws and competent authority, stock exchange and/or quotation system requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the relevant Issuer and the relevant Guarantors may reasonably require. Mutilated or defaced Notes, Note Certificates, Coupons or Talons must be surrendered before replacements will be issued.
15. Trustee and Agents
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from any obligation to take proceedings to enforce repayment or take any other action under the Trust Deed unless indemnified and/or secured and/or prefunded to its satisfaction and to be paid its costs and expenses in priority to the claims of Noteholders. The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (i) to enter into business transactions with the relevant Issuer, the relevant Guarantors and/or any other Subsidiary of the Parent and/or any related entity thereof and to act as trustee for the holders of any other securities issued or guaranteed by or relating to the relevant Issuer, the relevant Guarantors or any other Subsidiary of the Parent, (ii) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders or Couponholders, and (iii) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.
In the exercise of its powers and discretions under these Conditions and/or the Trust Deed, the Trustee will have regard to the interests of the Noteholders as a class and will not be responsible for any consequences for individual Holders of Notes, Coupons or Talons as a result of such Holders being connected in any way with a particular territory or taxing jurisdiction.
In acting under the Agency Agreement and in connection with the Notes and the Coupons, the Paying Agents and the Calculation Agent (if any) act solely as agents of the relevant Issuer or, following the occurrence of an Event of Default, the Trustee and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders or Couponholders.
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The Principal Paying Agent and its initial Specified Office is set out below. If any additional Paying Agent is appointed in connection with any Series, the name of such Paying Agent will be specified in Part B of the relevant Final Terms. The initial Calculation Agent (if any) is specified in the relevant Final Terms. The relevant Issuer reserves the right at any time, with the prior written consent of the Trustee, to vary or terminate the appointment of any Agent, Registrar or Calculation Agent and to appoint a successor registrar, principal paying agent, transfer agent or calculation agent and additional or successor paying agents; PROVIDED HOWEVER, THAT:
| (a) |
the relevant Issuer shall at all times maintain a Principal Paying Agent and a Registrar; and |
| (b) |
if a Calculation Agent is specified in the relevant Final Terms, the relevant Issuer shall at all times maintain a Calculation Agent; and |
| (c) |
if and for so long as the Notes are admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent (in the case of Bearer Notes) and/or a Transfer Agent (in the case of Registered Notes) in any particular place, the relevant Issuer shall maintain a Paying Agent and/or Transfer Agent, as applicable, having its Specified Office in the place required by such competent authority, stock exchange and/or quotation system. |
Notice of any appointment of, or change in, any of the Calculation Agent, Registrar, Agents or in their Specified Offices shall promptly be given to the Noteholders in accordance with Condition 18 (Notices).
16. Meetings of Noteholders; Modification and Waiver
| (a) |
Meetings of Noteholders |
The Trust Deed contains provisions for convening meetings (which may be physical or virtual) of Noteholders to consider matters relating to the Notes, including the modification of any provision of these Conditions or the Trust Deed. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the relevant Issuer and, if applicable, the relevant Guarantors (acting together) or the Trustee and shall be convened by the Trustee upon the request in writing of Noteholders holding not less than one-tenth of the aggregate principal amount of the outstanding Notes. The quorum at any meeting convened to vote on an Extraordinary Resolution will be one or more Persons holding or representing more than half of the aggregate principal amount of the outstanding Notes or, at any adjourned meeting, one or more Persons being or representing Noteholders whatever the principal amount of the Notes held or represented; PROVIDED HOWEVER, THAT Reserved Matters may only be sanctioned by an Extraordinary Resolution passed at a meeting of Noteholders at which one or more Persons holding or representing not less than three-quarters or, at any adjourned meeting, not less than one quarter of the aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders and Couponholders, whether present or not. Noteholders may attend and vote at such meetings or vote by way of electronic consents through the relevant clearing system(s) (in a form satisfactory to the Trustee).
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Any such meeting of the Noteholders may be convened at a physical location, or such other method (which may include, without limitation, a conference call or video conference) as the Trustee may determine in accordance with the provisions of the Trust Deed.
In addition, a resolution in writing signed by or on behalf of at least 75 per cent. of the Noteholders who for the time being are entitled to receive notice of a meeting of Noteholders under the Trust Deed will take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.
| (b) |
Modification and waiver |
The Trustee may agree, without the consent of the Noteholders or Couponholders, to (i) any modification to or of these Conditions, the Notes or the Trust Deed (other than in respect of a Reserved Matter) which is, in the opinion of the Trustee, proper to make if, in the opinion of the Trustee, such modification will not be materially prejudicial to the interests of Noteholders, (ii) any modification of these Conditions, the Notes or the Trust Deed that is of a formal, minor or technical nature or is made to correct a manifest error, and (iii) any waiver or authorisation of any breach or proposed breach, of any of the provisions of these Conditions, the Notes or the Trust Deed (other than a proposed breach or breach relating to the subject of a Reserved Matter) that is in the opinion of the Trustee not materially prejudicial to the interests of the Noteholders. Any such modification, authorisation or waiver shall be binding on the Noteholders and the Couponholders and, if the Trustee so requires, such modification, authorisation or waiver shall be notified to the Noteholders as soon as practicable in accordance with Condition 18 (Notices).
| (c) |
Substitution |
The Trust Deed contains provisions permitting the Trustee to agree, without the consent of the Noteholders or the Couponholders, to the substitution of certain other entities in place of the relevant Issuer or any relevant Guarantor (or in either case any previously substituted company) as principal debtor or, as the case may be, guarantor under the Trust Deed in relation to the Notes and Coupons of any Series of Notes, subject to (i) the Notes being unconditionally and irrevocably guaranteed by such Issuer or, as the case may be, such relevant Guarantor, (ii) the Trustee being satisfied that such substitution is not materially prejudicial to the interests of Noteholders; and (iii) certain other conditions set out in the Trust Deed being complied with.
No Noteholder or Couponholder shall, in connection with any substitution, be entitled to claim any indemnification or payment in respect of any tax consequence thereof for such Noteholder or (as the case may be) Couponholder except to the extent provided for in Condition 11 (Taxation) (or any undertaking given in addition to or substitution for it pursuant to the provisions of the Trust Deed).
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17. Enforcement
The Trustee may, at any time, at its discretion and without further notice, institute such proceedings or take any other action against the relevant Issuer and/or any relevant Guarantor as it thinks fit to enforce any obligation, condition or provision binding on the relevant Issuer and/or the relevant Guarantors under these Conditions, the Notes or the Trust Deed, but shall not be bound to do so or to take any further action under or pursuant to the Trust Deed unless:
| (a) |
it has been so directed by an Extraordinary Resolution or it has been so requested in writing by the holders of at least one fifth of the nominal amount of the Notes outstanding; and |
| (b) |
it has been indemnified and/or secured and/or prefunded to its satisfaction. |
No Noteholder or Couponholder shall be entitled to institute proceedings directly against the relevant Issuer or a relevant Guarantor unless the Trustee, having become bound to proceed as aforesaid (i) fails to do so within 60 days of being bound so to proceed, or (ii) is unable for any reason to do so, and such failure or inability is continuing.
18. Notices
| (a) |
Valid Notices – Bearer Notes |
Notices to the Holders of Bearer Notes shall be valid if published in a leading English language daily newspaper published in London (which is expected to be the Financial Times) or, if such publication is not practicable, in a leading English language daily newspaper having general circulation in Europe. Any such notice shall be deemed to have been given on the date of first publication (or if required to be published in more than one newspaper, on the first date on which publication shall have been made in all the required newspapers).
| (b) |
Valid Notices – Registered Notes |
Notices to the Holders of Registered Notes will be sent to them by first class mail (or its equivalent) or (if posted to an overseas address) by airmail at their respective addresses on the Register. Any such notice shall be deemed to have been given on the fourth day after the date of mailing. In addition, notices to Noteholders will be published on the date of such mailing in a leading English language daily newspaper published in London (which is expected to be the Financial Times) or, if such publication is not practicable, in a leading English language daily newspaper having general circulation in Europe.
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| (c) |
Other Methods |
Notwithstanding Condition 18(a) (Valid Notices – Bearer Notes) and Condition 18(b) (Valid Notices – Registered Notes), the Trustee may approve some other method of giving notice to the Noteholders if, in its opinion, that other method is reasonable having regard to market practice then prevailing and to the requirements of any stock exchange on which Notes are then listed and PROVIDED THAT notice of that other method is given to the Noteholders in the manner required by the Trustee.
| (d) |
Couponholders |
Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Noteholders.
19. Rounding
For the purposes of any calculations referred to in these Conditions (unless otherwise specified in these Conditions or the relevant Final Terms), (a) all percentages resulting from such calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005 per cent., being rounded up to 0.00001 per cent.), (b) all United States dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one half cent being rounded up), (c) all Japanese Yen amounts used in or resulting from such calculations will be rounded downwards to the next lower whole Japanese Yen amount, and (d) all amounts denominated in any other currency used in or resulting from such calculations will be rounded to the nearest two decimal places in such currency, with 0.005 being rounded upwards.
20. Further Issues
The relevant Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue further securities either having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest on them) and so that such further issue shall be consolidated and form a single series with the outstanding securities of any series (including the Notes) or upon such terms as the relevant Issuer may determine at the time of their issue. References in these Conditions to the Notes include (unless the context requires otherwise) any other securities issued pursuant to this Condition and forming a single series with the Notes. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of securities of other series where the Trustee so decides.
21. Governing Law and Jurisdiction
| (a) |
Governing law |
The Notes and the Trust Deed, and any non-contractual obligations arising out of or in connection with the Notes and the Trust Deed, are governed by, and construed in accordance with, English law.
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| (b) |
English courts |
Subject to Condition 21(d) below, the courts of England have exclusive jurisdiction to settle any dispute (a “Dispute”) arising out of or in connection with the Notes and the Trust Deed (including a dispute relating to the existence, validity or cancellation of the Notes or any non-contractual obligation arising out of or in connection with the Notes or the Trust Deed) or the consequences of their nullity and accordingly each of the relevant Issuer, each of the relevant Guarantors and the Trustee and any Noteholders or Couponholders in relation to any Dispute submits to the exclusive jurisdiction of the English courts.
| (c) |
Appropriate forum |
The relevant Issuer and each of the relevant Guarantors agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that they will not argue to the contrary.
| (d) |
Rights of the Trustee and Noteholders to take proceedings outside England |
Condition 21(d) is for the benefit of the Trustee, the Noteholders and the Couponholders only. To the extent allowed by law, the Trustee, the Noteholders and the Couponholders may in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction; and (ii) concurrent proceedings in any number of jurisdictions.
| (e) |
Process agent |
IHG Finance LLC, to the extent it is the relevant Issuer or a relevant Guarantor, irrevocably appoints the Parent which is presently at 1 Windsor Dials, Arthur Road, Windsor, Berkshire, England, SL4 1RS as its agent for service of process in any proceedings before the English courts in relation to any Dispute and the Parent accepts such appointment. IHG Finance LLC undertakes that, in the event of the Parent ceasing so to act or ceasing to be registered in England, it will immediately appoint another person as its agent for service of process in England in respect of any Dispute in England. IHG Finance LLC agrees that failure by a process agent to notify it of any process will not invalidate service. Nothing in this paragraph shall affect the right of the Trustee or, failing the Trustee, any Noteholder, to serve process in any other manner permitted by law.
| (f) |
Waiver of Trial by Jury |
WITHOUT PREJUDICE TO CONDITION 21(B), EACH OF THE RELEVANT ISSUER AND THE RELEVANT GUARANTORS WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED BY THIS AGREEMENT. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A BENCH TRIAL.
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SCHEDULE 2
FORM OF GLOBAL NOTES
PART A
FORM OF TEMPORARY GLOBAL NOTE FOR INTERCONTINENTAL
HOTELS GROUP PLC
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]1
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
[Aggregate principal amount of Series]
[Title of Notes]
unconditionally and irrevocably guaranteed by
IHG FINANCE LLC
(formed in the State of Delaware with company number 7546892)
and
SIX CONTINENTS LIMITED
(incorporated in England and Wales with company number 913450)
and
INTERCONTINENTAL HOTELS LIMITED
(incorporated in England and Wales with company number 4551528)
TEMPORARY GLOBAL NOTE
1. INTRODUCTION
1.1 The Notes
This Temporary Global Note is issued in respect of the notes (the Notes) of InterContinental Hotels Group PLC (the Issuer) and guaranteed by (i) Six Continents Limited, (ii) InterContinental Hotels Limited, and (iii) from (and including) the Guarantor Accession Date (as defined in the Conditions), IHG Finance LLC (in each case and, in respect of IHG Finance LLC, from (and including) the Guarantor Accession Date, each a Guarantor and together, the Guarantors) described in the final terms (the
| 1 |
Legend to appear on every Note with a maturity of more than one year. |
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Final Terms) or drawdown prospectus (the Drawdown Prospectus) or securities note (Securities Note) a copy of which is annexed hereto. If a Drawdown Prospectus or a Securities Note is annexed hereto, each reference in this Temporary Global Note to Final Terms shall be read and construed as a reference to the final terms of the Notes set out in such Drawdown Prospectus or Securities Note. The Notes:
| (a) |
Trust Deed: (insofar as they are represented by this Temporary Global Note) are subject to and have the benefit of an amended and restated trust deed made on 21 September 2023 (as further amended, supplemented or restated from time to time, the Trust Deed) made between the Issuer, the Guarantors and U.S. Bank Trustees Limited as trustee (the Trustee, which expression shall include all persons for the time being the trustee or trustees appointed under the Trust Deed); and |
| (b) |
Agency Agreement: are the subject of an amended and restated agency agreement dated 21 September 2023 (as further amended, supplemented or restated from time to time, the Agency Agreement) made between, inter alios, the Issuer, the Guarantors, the Trustee and Elavon Financial Services DAC, UK Branch as principal paying agent (the Principal Paying Agent, which expression includes any successor or additional principal paying agent appointed from time to time in connection with the Notes, and together with any additional or successor paying agents appointed from time to time in connection with the Notes, the Paying Agents). |
1.2 Construction
All references in this Temporary Global Note to an agreement, instrument or other document (including the Agency Agreement and the Trust Deed) shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time provided that, in the case of any amendment, supplement, replacement or novation made after the date hereof, it is made in accordance with the Conditions and the Trust Deed. Headings and sub-headings are for ease of reference only and shall not affect the construction of this Temporary Global Note.
1.3 References to Conditions
Any reference herein to the Conditions is to the Conditions as defined in the Trust Deed, as supplemented, amended and/or replaced by the Final Terms and any reference to a numbered “Condition” is to the correspondingly numbered provision thereof. Words and expressions defined in Condition 2(a) (Interpretation - Definitions) shall have the same meanings when used in this Temporary Global Note.
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2. PROMISE TO PAY
2.1 Pay to bearer
The Issuer, for value received, promises to pay to the bearer of this Temporary Global Note, in respect of each Note represented by this Temporary Global Note, on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions, the Redemption Amount or such lesser amount as is repayable upon any such redemption or repayment (or to pay such other amounts of principal on such dates as may be specified in the Final Terms), and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this Temporary Global Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions; provided, however, that such interest shall be payable only:
| (a) |
Before the Exchange Date: in the case of interest falling due before the Exchange Date (as defined below), to the extent that a certificate or certificates issued by Euroclear Bank SA/NV (Euroclear) and/or Clearstream Banking S.A. (Clearstream and, together with Euroclear, the international central securities depositaries or ICSDs) and/or any other relevant clearing system dated not earlier than the date on which such interest falls due and in substantially the form set out in Schedule 3 (Form of Euroclear/Clearstream, Certification) hereto is/are delivered to the Specified Office of the Principal Paying Agent; or |
| (b) |
Failure to exchange: in the case of interest falling due at any time, to the extent that the Issuer has failed to procure the exchange for a permanent global note of that portion of this Temporary Global Note in respect of which such interest has accrued. |
2.2 NGN Principal Amount
If the Final Terms specify that the New Global Note form is applicable, this Temporary Global Note shall be a “New Global Note” or “NGN” and the principal amount of Notes represented by this Temporary Global Note shall be the aggregate amount from time to time entered in the records of both ICSDs. The records of the ICSDs (which expression in this Temporary Global Note means the records that each ICSD holds for its customers which reflect the amount of such customers’ interests in the Notes (but excluding any interest in any Notes of one ICSD shown in the records of another ICSD)) shall be conclusive evidence of the principal amount of Notes represented by this Temporary Global Note and, for these purposes, a statement issued by an ICSD (which statement shall be made available to the bearer upon request) stating the principal amount of Notes represented by this Temporary Global Note at any time shall be conclusive evidence of the records of the ICSD at that time.
2.3 CGN Principal Amount
If the Final Terms specify that the New Global Note form is not applicable, this Temporary Global Note shall be a “Classic Global Note” or “CGN” and the principal amount of Notes represented by this Temporary Global Note shall be the amount stated in the Final Terms or, if lower, the principal amount most recently entered by or on behalf of the Issuer in the relevant column in Schedule 1 (Payments, Exchange and Cancellation of Notes).
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3. NEGOTIABILITY
This Temporary Global Note is negotiable and, accordingly, title to this Temporary Global Note shall pass by delivery.
4. EXCHANGE
4.1 Permanent Global Note
If the Final Terms specify the form of Notes as being “Temporary Global Note exchangeable for a Permanent Global Note”, then on or after the day following the expiry of 40 days after the date of issue of this Temporary Global Note (the Exchange Date), the Issuer shall procure (in the case of first exchange) the delivery of a Permanent Global Note (which expression has the meaning given in the Trust Deed) in accordance with the Agency Agreement to the bearer of this Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of the Permanent Global Note in accordance with its terms against:
| (a) |
Presentation and surrender: presentation and (in the case of final exchange) surrender of this Temporary Global Note to or to the order of the Principal Paying Agent; and |
| (b) |
Certification: receipt by the Principal Paying Agent of a certificate or certificates issued by Euroclear and/or Clearstream and/or any other relevant clearing system dated not earlier than the Exchange Date and in substantially the form set out in Schedule 3 (Form of Euroclear/Clearstream Certification) hereto. |
The principal amount of Notes represented by the Permanent Global Note shall be equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream and/or any other relevant clearing system and received by the Principal Paying Agent; provided, however, that in no circumstances shall the principal amount of Notes represented by the Permanent Global Note exceed the initial principal amount of Notes represented by this Temporary Global Note.
4.2 Definitive Notes; Not D Rules
If the Final Terms specify the form of Notes as being “Temporary Global Note exchangeable for Definitive Notes” and also specifies that the C Rules are applicable or that neither the C Rules or the D Rules are applicable, then on or after the day following the expiry of 40 days after the date of issue of this Temporary Global Note (the Exchange Date), the Issuer shall procure the delivery of Definitive Notes (which expression has the meaning given in the Agency Agreement) in accordance with the Agency Agreement with Coupons and Talons (if so specified in the Final Terms) attached and in an aggregate principal amount equal to the principal amount of Notes represented by this Temporary Global Note to the bearer of this Temporary Global Note against presentation and surrender of this Temporary Global Note to or to the order of the Principal Paying Agent.
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4.3 Definitive Notes; D Rules
If the Final Terms specify the form of Notes as being “Temporary Global Note exchangeable for Definitive Notes” and also specifies that the D Rules are applicable, then on or after the day following the expiry of 40 days after the date of issue of this Temporary Global Note (the Exchange Date), the Issuer shall procure the delivery of Definitive Notes (which expression has the meaning given in the Agency Agreement) in accordance with the Agency Agreement with Coupons and Talons (if so specified in the Final Terms) attached against:
| (a) |
Presentation and surrender: presentation and (in the case of final exchange) surrender of this Temporary Global Note to or to the order of the Principal Paying Agent; and |
| (b) |
Certification: receipt by the Principal Paying Agent of a certificate or certificates issued by Euroclear and/or Clearstream and/or any other relevant clearing system dated not earlier than the Exchange Date and in substantially the form set out in Schedule 3 (Form of Euroclear/Clearstream Certification) hereto. |
The Definitive Notes so delivered from time to time shall be in an aggregate principal amount equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream and/or any other relevant clearing system and received by the Principal Paying Agent; provided, however, that in no circumstances shall the aggregate principal amount of Definitive Notes so delivered exceed the initial principal amount of Notes represented by this Temporary Global Note.
5. DELIVERY OF PERMANENT GLOBAL OR DEFINITIVE NOTES
5.1 Permanent Global Note
Whenever any interest in this Temporary Global Note is to be exchanged for an interest in a Permanent Global Note, the Issuer shall procure (in the case of first exchange) the prompt delivery (free of charge to the bearer) of such Permanent Global Note, duly authenticated, to the bearer of this Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of Notes represented by such Permanent Global Note in accordance with its terms, in each case in an aggregate principal amount equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream and/or any other relevant clearing system and received by the Principal Paying Agent against presentation and (in the case of final exchange) surrender of this Temporary Global Note to or to the order of the Principal Paying Agent within 7 days of the bearer requesting such exchange.
5.2 Definitive Notes
Whenever this Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the Final Terms), in an aggregate principal amount equal to the principal amount of Notes represented by this Temporary Global Note to the bearer of this Temporary Global Note against the surrender of this Temporary Global Note to or to the order of the Principal Paying Agent within 30 days of the bearer requesting such exchange.
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6. WRITING DOWN
On each occasion on which:
6.1 Permanent Global Note: the Permanent Global Note is delivered or the principal amount of Notes represented thereby is increased in accordance with its terms in exchange for a further portion of this Temporary Global Note; or
6.2 Definitive Notes: Definitive Notes are delivered in exchange for this Temporary Global Note; or
6.3 Cancellation: Notes represented by this Temporary Global Note are to be cancelled in accordance with Condition 9(k) (Redemption and Purchase - Cancellation),
the Issuer shall procure that:
| (a) |
if the Final Terms specify that the New Global Note form is not applicable, (i) the principal amount of Notes represented by the Permanent Global Note, the principal amount of such increase or (as the case may be) the aggregate principal amount of such Notes and (ii) the remaining principal amount of Notes represented by this Temporary Global Note (which shall be the previous principal amount of Notes represented by this Temporary Global Note less the aggregate of the amounts referred to in (i) above) are entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto, whereupon the principal amount of Notes represented by this Temporary Global Note shall for all purposes be as most recently so entered; and |
| (b) |
if the Final Terms specify that the New Global Note form is applicable, details of the exchange or cancellation shall be entered pro rata in the records of the ICSDs. |
7. PAYMENTS
7.1 Recording of Payments
Upon any payment being made in respect of the Notes represented by this Temporary Global Note, the Issuer shall procure that:
| (a) |
CGN: if the Final Terms specify that the New Global Note form is not applicable, details of such payment shall be entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto and, in the case of any payment of principal, the principal amount of the Notes represented by this Temporary Global Note shall be reduced by the principal amount so paid; and |
| (b) |
NGN: if the Final Terms specify that the New Global Note form is applicable, details of such payment shall be entered pro rata in the records of the ICSDs and, in the case of any payment of principal, the principal amount of the Notes entered in the records of ICSDs and represented by this Temporary Global Note shall be reduced by the principal amount so paid. |
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7.2 Discharge of Issuer’s obligations
Payments due in respect of Notes for the time being represented by this Temporary Global Note shall be made to the bearer of this Temporary Global Note and each payment so made will discharge the Issuer’s obligations in respect thereof. Any failure to make the entries referred to above shall not affect such discharge.
7.3 Payment Business Day
If the currency of any payment made in respect of Notes represented by this Temporary Global Note is euro, the applicable Payment Business Day shall be any day which is a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or, if the currency of any payment made in respect of the Notes represented by this Temporary Global Note is not euro, the applicable Payment Business Day shall be any day which is a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre.
8. CONDITIONS APPLY
Until this Temporary Global Note has been exchanged as provided herein or cancelled in accordance with the Agency Agreement, the bearer of this Temporary Global Note shall be subject to the Conditions and the Trust Deed and, subject as otherwise provided herein, shall be entitled to the same rights and benefits under the Conditions and the Trust Deed as if the bearer were the holder of Definitive Notes and any related Coupons and Talons in the smallest Specified Denomination and in an aggregate principal amount equal to the principal amount of the Notes represented by this Temporary Global Note.
9. NOTICES
Notwithstanding Condition 18 (Notices), while all the Notes are represented by this Temporary Global Note (or by this Temporary Global Note and the Permanent Global Note) and this Temporary Global Note is (or this Temporary Global Note and the Permanent Global Note are) deposited with a depositary or a common depositary for Euroclear and/or Clearstream and/or any other relevant clearing system or a Common Safekeeper (which expression has the meaning given in the Agency Agreement), notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream and/or any other relevant clearing system and, in any case, such notices shall be deemed to have been given to the Noteholders in accordance with the Condition 18 (Notices) on the date of delivery to Euroclear and/or Clearstream and/or any other relevant clearing system.
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10. MEETINGS
The holders of this Temporary Global Note shall, at any meeting of the Noteholders, be treated as having one vote in respect of each £1 in principal amount of the Notes represented by this Temporary Global Note.
11. TRUSTEE’S POWERS
In considering the interests of Noteholders while this Temporary Global Note is held on behalf of a clearing system, the Trustee may have regard to any information provided to it by any such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to this Temporary Global Note and may consider such interests as if such accountholders were the holders of this Temporary Global Note.
12. AUTHENTICATION
This Temporary Global Note shall not be valid for any purpose until it has been authenticated by and on behalf of Elavon Financial Services DAC UK Branch as principal paying agent.
13. EFFECTUATION
If the Final Terms specify that the New Global Note form is applicable, this Temporary Global Note shall not be valid for any purpose until it has been effectuated for and on behalf of the entity appointed as common safekeeper by the ICSDs.
14. GOVERNING LAW
This Temporary Global Note and any non-contractual obligations arising out of or in connection with it are governed by English law.
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AS WITNESS the manual/electronic signature of a duly authorised person on behalf of the Issuer.
| INTERCONTINENTAL HOTELS |
) |
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| GROUP PLC |
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| ISSUED on the Issue Date |
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| AUTHENTICATED by and on behalf of |
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| ELAVON FINANCIAL SERVICES DAC, |
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| UK BRANCH |
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| as principal paying agent without |
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| EFFECTUATED for and on behalf of |
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| as common safekeeper without recourse, |
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| warranty or liability |
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| By: |
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| electronic/manual signature |
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| (duly authorised) |
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[Temporary Global Note for InterContinental Hotels Group PLC – Signature Page]
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SCHEDULE 12
TO THE TEMPORARY GLOBAL NOTE
Payments, Exchange and Cancellation of Notes
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Amount of interest then paid |
Principal amount of Permanent Global Note then delivered or by which Permanent Global Note then increased or aggregate principal amount of Definitive Notes then delivered |
Aggregate principal amount of Notes then cancelled |
Remaining principal amount of this Temporary Global Note |
Authorised Signature |
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Schedule 1 should only be completed where the Final Terms specify that the New Global Note form is not applicable. |
Page 139
SCHEDULE 2
TO THE TEMPORARY GLOBAL NOTE
Form of Accountholder’s Certification
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
[Aggregate principal amount of Series]
[Title of Notes]
This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (a) are owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source (United States persons), (b) are owned by United States person(s) that (i) are foreign branches of a United States financial institution (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv)) (financial institutions) purchasing for their own account or for resale, or (ii) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (i) or (ii), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the issuer or the issuer’s agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (c) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Securities is a United States or foreign financial institution described in clause (c) (whether or not also described in clause (a) or (b)) this is to further certify that such financial institution has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.
If the Securities are of the category contemplated in Section 230.903(b)(3) of Regulation S under the Securities Act of 1933, as amended (the Act), then this is also to certify that, except as set forth below, the Securities are beneficially owned by (1) non-U.S. person(s) or (2) U.S. person(s) who purchased the Securities in transactions which did not require registration under the Act. As used in this paragraph the term U.S. person has the meaning given to it by Regulation S under the Act.
As used herein, United States means the United States of America (including the States and the District of Columbia); and its possessions include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by electronic transmission on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date.
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This certification excepts and does not relate to [currency] [amount] of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of definitive Securities (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.
We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings or official enquiries are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.
Dated: [ ]]
[name of account holder]
as, or as agent for,
the beneficial owner(s) of the Securities
to which this certificate relates.
| By: |
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SCHEDULE 3
TO THE TEMPORARY GLOBAL NOTE
FORM OF EUROCLEAR/CLEARSTREAM CERTIFICATION
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
[Aggregate principal amount of Series]
[Title of Notes]
This is to certify that, based solely on certifications we have received in writing, by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our Member Organisations) substantially to the effect set forth in the temporary global note issued in respect of the securities, as of the date hereof, [currency] [amount] principal amount of the above-captioned Securities (a) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source (United States persons), (b) is owned by United States persons that (i) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv)) (financial institutions) purchasing for their own account or for resale, or (ii) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (i) or (ii), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer’s agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (c) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in clause (c) (whether or not also described in clause (a) or (b)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.
If the Securities are of the category contemplated in Section 230.903(b)(3) of Regulation S under the Securities Act of 1933, as amended (the Act), then this is also to certify with respect to the principal amount of Securities set forth above that, except as set forth below, we have received in writing, by electronic transmission, from our Member Organisations entitled to a portion of such principal amount, certifications with respect to such portion substantially to the effect set forth in the temporary global note issued in respect of the Securities.
Page 142
We further certify (1) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global security excepted in such certifications and (2) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings or official enquiries are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.
Dated: [ ]]
Euroclear Bank SA/NV
or
Clearstream Banking S.A.
| By: |
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PART B
FORM OF PERMANENT GLOBAL NOTE FOR INTERCONTINENTAL
HOTELS GROUP PLC
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]3
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
[Aggregate principal amount of Series]
[Title of Notes]
unconditionally and irrevocably guaranteed by
IHG FINANCE LLC
(formed in the State of Delaware with company number 7546892)
and
SIX CONTINENTS LIMITED
(incorporated in England and Wales with company number 913450)
and
INTERCONTINENTAL HOTELS LIMITED
(incorporated in England and Wales with company number 4551528)
PERMANENT GLOBAL NOTE
| 1. |
INTRODUCTION |
| 1.1 |
The Notes |
This Global Note is issued in respect of the notes (the Notes) of InterContinental Hotels Group PLC (the Issuer) and guaranteed by (i) Six Continents Limited, (ii) InterContinental Hotels Limited, and (iii) from (and including) the Guarantor Accession Date (as defined in the Conditions), IHG Finance LLC (in each case and, in respect of IHG Finance LLC, from (and including) the Guarantor Accession Date, each a Guarantor and together, the Guarantors) described in the final terms (the Final Terms) or drawdown prospectus (Drawdown Prospectus) or securities note (Securities Note) a copy of which is annexed hereto. If a Drawdown Prospectus or a Securities Note is annexed hereto, each reference in this Global Note to “Final Terms” shall be read and construed as a reference to the final terms of the Notes set out in such Drawdown Prospectus or Securities Note. The Notes:
| 3 |
Legend to appear on every Note with a maturity of more than one year. |
Page 144
| (a) |
Trust Deed: (insofar as they are represented by this Global Note) are subject to and have the benefit of an amended and restated trust deed made on 21 September 2023 (as further amended, supplemented or restated from time to time, the Trust Deed) made between the Issuer, the Guarantors and U.S. Bank Trustees Limited as trustee (the Trustee, which expression shall include all persons for the time being the trustee or trustees appointed under the Trust Deed); and |
| (b) |
Agency Agreement: are the subject of an amended and restated agency agreement dated 21 September 2023 (as further amended, supplemented or restated from time to time) (the Agency Agreement) made between, inter alios, the Issuer, the Guarantors, the Trustee and Elavon Financial Services DAC, UK Branch as principal paying agent (the Principal Paying Agent, which expression includes any successor or additional principal paying agent appointed from time to time in connection with the Notes, and, together with any additional or successor paying agents appointed from time to time in connection with the Notes, the Paying Agents). |
| 1.2 |
Construction |
All references in this Global Note to an agreement, instrument or other document (including the Agency Agreement and the Trust Deed) shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time provided that, in the case of any amendment, supplement, replacement or novation made after the date hereof, it is made in accordance with the Conditions and the Trust Deed. Headings and sub-headings are for ease of reference only and shall not affect the construction of this Global Note.
| 1.3 |
References to Conditions |
Any reference herein to the “Conditions” is to the Terms and Conditions of the Notes set out in Schedule 2 (Terms and Conditions of the Notes) hereto, as supplemented, amended and/or replaced by the Final Terms and any reference to a numbered “Condition” is to the correspondingly numbered provision thereof. Words and expressions defined in the Conditions shall have the same meanings when used in this Global Note.
| 2. |
PROMISE TO PAY |
| 2.1 |
Pay to bearer |
The Issuer, for value received, promises to pay to the bearer of this Global Note, in respect of each Note represented by this Global Note, on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions, the Redemption Amount or such lesser amount as is repayable upon any such redemption (or to repay such other amounts of principal on such dates as may be specified in the Final Terms and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this Global Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions.
Page 145
| 2.2 |
NGN Principal Amount |
If the Final Terms specify that the New Global Note form is applicable, this Global Note shall be a “New Global Note” or “NGN” and the principal amount of Notes represented by this Global Note shall be the aggregate amount from time to time entered in the records of both ICSDs. The records of the ICSDs (which expression in this Global Note means the records that each ICSD holds for its customers which reflect the amount of such customers’ interests in the Notes (but excluding any interest in any Notes of one ICSD shown in the records of another ICSD)) shall be conclusive evidence of the principal amount of Notes represented by this Global Note and, for these purposes, a statement issued by an ICSD (which statement shall be made available to the bearer upon request) stating the principal amount of Notes represented by this Global Note at any time shall be conclusive evidence of the records of the ICSD at that time.
| 2.3 |
CGN Principal Amount |
If the Final Terms specify that the New Global Note form is not applicable, this Global Note shall be a “Classic Global Note” or “CGN” and the principal amount of Notes represented by this Global Note shall be the amount stated in the Final Terms or, if lower, the principal amount most recently entered by or on behalf of the Issuer in the relevant column in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto.
3. NEGOTIABILITY
This Global Note is negotiable and, accordingly, title to this Global Note shall pass by delivery.
4. EXCHANGE
This Global Note will become exchangeable, in whole but not in part only and at the request of the bearer of this Global Note, for Definitive Notes (which expression has the meaning given in the Trust Deed) in accordance with the Agency Agreement:
4.1 Upon notice: on the expiry of such period of notice as may be specified in the Final Terms; or
4.2 Upon demand: at any time, if so specified in the Final Terms; or
4.3 In limited circumstances: if the Final Terms specify “in the limited circumstances described in the Permanent Global Note”, then if either of the following events occurs:
| (a) |
Closure of clearing systems: Euroclear Bank SA/NV (Euroclear) or Clearstream Banking S.A. (Clearstream and, together with Euroclear, the international central securities depositaries or ICSDs) or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business and no successor clearing system approved by the Trustee is available; or |
Page 146
| (b) |
Event of Default: any of the circumstances described in Condition 12 (Events of Default) occurs; or |
| (c) |
Adverse tax consequences: the Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by the Permanent Global Note in definitive form. |
5. DELIVERY OF DEFINITIVE NOTES
Whenever this Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the Final Terms), in an aggregate principal amount equal to the principal amount of Notes represented by this Global Note to the bearer of this Global Note against the surrender of this Global Note to or to the order of the Principal Paying Agent within 30 days of the bearer requesting such exchange.
6. WRITING DOWN
On each occasion on which:
6.1 Payment of principal: a payment of principal is made in respect of this Global Note;
6.2 Definitive Notes: Definitive Notes are delivered; or
6.3 Cancellation: Notes represented by this Global Note are to be cancelled in accordance with Condition 9(k) (Redemption and Purchase - Cancellation),
the Issuer shall procure that:
| (a) |
if the Final Terms specify that the New Global Note Form is not applicable, (i) the amount of such payment and the aggregate principal amount of such Notes; and (ii) the remaining principal amount of Notes represented by this Global Note (which shall be the previous principal amount hereof less the aggregate of the amounts referred to in (i) above) are entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto, whereupon the principal amount of Notes represented by this Global Note shall for all purposes be as most recently so entered; and |
| (b) |
if the Final Terms specify that the New Global Note Form is applicable, details of the exchange or cancellation shall be entered pro rata in the records of the ISCDs. |
Page 147
| 7. |
WRITING UP |
| 7.1 |
Initial Exchange |
If this Global Note was originally issued in exchange for part only of a temporary global note representing the Notes, then all references in this Global Note to the principal amount of Notes represented by this Global Note shall be construed as references to the principal amount of Notes represented by the part of the temporary global note in exchange for which this Global Note was originally issued which the Issuer shall procure:
| (a) |
CGN: if the Final Terms specify that the New Global Note form is not applicable, is entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto, whereupon the principal amount of Notes represented by this Global Note shall for all purposes be as most recently so entered; and |
| (b) |
NGN: if the Final Terms specify that the New Global Note form is applicable, is entered by the ICSDs in their records. |
| 7.2 |
Subsequent Exchange |
If at any subsequent time any further portion of such temporary global note is exchanged for an interest in this Global Note, the principal amount of Notes represented by this Global Note shall be increased by the amount of such further portion, and the Issuer shall procure that the principal amount of Notes represented by this Global Note (which shall be the previous principal amount of Notes represented by this Global Note plus the amount of such further portion) is:
| (a) |
CGN: if the Final Terms specify that the New Global Note form is not applicable, entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto, whereupon the principal amount of this Global Note shall for all purposes be as most recently so entered; and |
| (b) |
NGN: if the Final Terms specify that the New Global Note form is applicable, entered by the ICSDs in their records. |
| 8. |
PAYMENTS |
| 8.1 |
Recording of Payments |
Upon any payment being made in respect of the Notes represented by this Global Note, the Issuer shall procure that:
| (a) |
CGN: if the Final Terms specify that the New Global Note form is not applicable, details of such payment shall be entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto and, in the case of any payment of principal, the principal amount of the Notes represented by this Global Note shall be reduced by the principal amount so paid; and |
Page 148
| (b) |
NGN: if the Final Terms specify that the New Global Note form is applicable, details of such payment shall be entered pro rata in the records of the ICSDs and, in the case of any payment of principal, the principal amount of the Notes entered in the records of ICSDs and represented by this Global Note shall be reduced by the principal amount so paid. |
| 8.2 |
Discharge of Issuer’s obligations |
Payments due in respect of Notes for the time being represented by this Global Note shall be made to the bearer of this Global Note and each payment so made will discharge the Issuer’s obligations in respect thereof. Any failure to make the entries referred to above shall not affect such discharge.
| 8.3 |
Payment Business Day |
If the currency of any payment made in respect of Notes represented by this Global Note is euro, the applicable Payment Business Day shall be any day which is a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or, if the currency of any payment made in respect of the Notes represented by this Global Note is not euro, the applicable Payment Business Day shall be any day which is a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre.
| 9. |
CONDITIONS APPLY |
Until this Global Note has been exchanged as provided herein or cancelled in accordance with the Agency Agreement, the bearer of this Global Note shall be subject to the Conditions and, subject as otherwise provided herein, shall be entitled to the same rights and benefits under the Conditions as if the bearer were the holder of Definitive Notes and any related Coupons and Talons in the smallest Specified Denomination and in an aggregate principal amount equal to the principal amount of Notes represented by this Global Note.
| 10. |
EXERCISE OF PUT OPTION OR CHANGE OF CONTROL PUT OPTION |
For so long as all of the Notes are represented by one or both of the Global Notes and such Global Note(s) is/are held on behalf of Euroclear and/or Clearstream, the option of the Noteholders provided for in Condition 9(f) (Redemption and Purchase - Redemption at the option of the Noteholders) or, as the case may be, the option of the Noteholders provided for in Condition 9(g) (Redemption and Purchase - Change of Control redemption) may be exercised by an accountholder giving notice to the Principal Paying Agent in accordance with the standard procedures of Euroclear and Clearstream (which may include notice being given on his instructions by Euroclear or Clearstream or any common depositary for them to the Principal Paying Agent by electronic means) of the principal amount of the Notes in respect of which such option is exercised and at the same time presenting or procuring the presentation of the relevant Global Note to the Principal Paying Agent for notation accordingly within the time limits set forth in the relevant Condition.
Page 149
| 11. |
EXERCISE OF CALL OPTION |
For so long as all of the Notes are represented by one or both of the temporary global note and this Global Note and such Global Note(s) is/are held on behalf of Euroclear and/or Clearstream, no drawing of Notes will be required under Condition 9(e) (Redemption and Purchase - Partial redemption) in the event that the Issuer exercises its call option pursuant to Condition 9(c) (Redemption and Purchase - Redemption at the option of the Issuer (Issuer Call Option)) in respect of less than the aggregate principal amount of the Notes outstanding at such time. In such event, the standard procedures of Euroclear and/or Clearstream shall operate to determine which interests in the Global Note(s) are to be subject to such option.
| 12. |
NOTICES |
Notwithstanding Condition 18 (Notices), while all the Notes are represented by this Global Note (or by this Global Note and a temporary global note) and this Global Note is (or this Global Note and the temporary global note are) deposited with a depositary or a common depositary for Euroclear and/or Clearstream and/or any other relevant clearing system or a Common Safekeeper (which expression has the meaning given in the Agency Agreement), notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream and/or any other relevant clearing system and, in any case, such notices shall be deemed to have been given to the Noteholders in accordance with Condition 18 (Notices) on the date of delivery to Euroclear and/or Clearstream and/or any other relevant clearing system.
Whilst any Notes held by a Noteholder are represented by a Global Note, notices to be given by such Noteholder may be given by such Noteholder to the Principal Paying Agent through Euroclear and/or Clearstream, as the case may be, in such a manner as the Principal Paying Agent and Euroclear and/or Clearstream, as the case may be, may approve for this purpose.
| 13. |
MEETINGS |
The holders of this Global Note shall, at any meeting of the Noteholders, be treated as having one vote in respect of each £1 in principal amount of the Notes represented by this Global Note.
| 14. |
TRUSTEE’S POWERS |
In considering the interests of Noteholders while this Global Note is held on behalf of a clearing system, the Trustee may have regard to any information provided to it by any such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to this Global Note and may consider such interests as if such accountholders were the holders of this Global Note.
| 15. |
AUTHENTICATION |
This Global Note shall not be valid for any purpose until it has been authenticated by and on behalf of Elavon Financial Services DAC, UK Branch as principal paying agent.
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| 16. |
EFFECTUATION |
If the Final Terms specify that the New Global Note form is applicable, this Permanent Global Note shall not be valid for any purpose until it has been effectuated for and on behalf of the entity appointed as Common Safekeeper (which expression has the meaning given in the Agency Agreement).
| 17. |
GOVERNING LAW |
This Global Note, and any non-contractual obligations arising out of or in connection with it, are governed by English law.
Page 151
AS WITNESS the manual/electronic signature of a duly authorised person on behalf of the Issuer.
| INTERCONTINENTAL HOTELS |
) |
|
| GROUP PLC |
) |
| By: |
||
| electronic or manual signature (duly authorised) |
||
| ISSUED on the Issue Date |
||
| AUTHENTICATED for and on behalf of |
) |
|
| ELAVON FINANCIAL SERVICES DAC, |
) |
|
| UK BRANCH |
) |
|
| as principal paying agent |
) |
|
| without recourse, warranty or liability |
) |
|
| By: |
||
| electronic/manual signature (duly authorised) |
||
| EFFECTUATED for and on behalf of |
) |
|
| [COMMON SAFEKEEPER] |
) |
|
| as common safekeeper without recourse, |
) |
|
| warranty or liability |
) |
| By: |
||
| electronic/manual signature (duly authorised) |
||
[Permanent Global Note for InterContinental Hotels Group PLC – Signature Page]
Page 152
SCHEDULE 14
TO THE PERMANENT GLOBAL NOTE
PAYMENTS, EXCHANGE AND CANCELLATION OF NOTES
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Amount of interest then paid |
Amount of principal then paid |
Principal amount of Note
then |
Aggregate principal amount of Definitive Notes then delivered |
Aggregate principal amount of Notes then cancelled |
New principal amount of this Global Note |
Authorised signature |
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| 4 |
Schedule 1 should only be completed where the Final Terms specify that the New Global Note form is not applicable. |
Page 153
SCHEDULE 2
TO THE PERMANENT GLOBAL NOTE
Terms and Conditions of the Notes
[As set out in Schedule 1 to the Trust Deed]
Page 154
PART C
FORM OF DEFINITIVE NOTE FOR INTERCONTINENTAL HOTELS
GROUP PLC
[On the face of the Note:]
[currency][denomination]
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
[Aggregate principal amount of Series]
[Title of Notes]
unconditionally and irrevocably guaranteed by
IHG FINANCE LLC
(formed in the State of Delaware with company number 7546892)
and
SIX CONTINENTS LIMITED
(incorporated in England and Wales with company number 913450)
and
INTERCONTINENTAL HOTELS LIMITED
(incorporated in England and Wales with company number 4551528)
This Note is one of a series of notes (the Notes) of InterContinental Hotels Group PLC (the Issuer) and guaranteed by (i) Six Continents Limited, (ii) InterContinental Hotels Limited, and (iii) from (and including) the Guarantor Accession Date (as defined in the Conditions), IHG Finance LLC (in each case and, in respect of IHG Finance LLC, from (and including) the Guarantor Accession Date, each a Guarantor and together, the Guarantors) as described in the final terms (the Final Terms) or drawdown prospectus (Drawdown Prospectus) or securities note (Securities Note) a copy of the relevant particulars of which is endorsed on this Note. Any reference herein to the Conditions is to the Terms and Conditions of the Notes endorsed on this Note, as supplemented, amended and/or replaced by the Final Terms or Drawdown Prospectus or Securities Note and any reference to a numbered Condition is to the correspondingly numbered provision thereof. Words and expressions defined in Condition 2(a) (Interpretation – Definitions) shall have the same meanings when used in this Note.
Page 155
This Note is issued subject to, and with the benefit of, the Conditions and an amended and restated trust deed (as further modified and/or supplemented and/or novated from time to time, the Trust Deed) dated 21 September 2023 and made between the Issuer, the Guarantors and U.S. Bank Trustees Limited as trustee for the holders of the Notes.
The Issuer, for value received, promises to pay to the bearer of this Note the Redemption Amount on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions (or to pay such other amounts of principal on such dates as may be specified in the Final Terms or Drawdown Prospectus or Securities Note), and to pay interest (if any) on the nominal amount of this Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions.
This Note shall not be valid for any purpose until it has been authenticated by and on behalf of Elavon Financial Services DAC, UK Branch as principal paying agent.
This Note, and any non-contractual obligations arising out of or in connection with it, are governed by English law.
Page 156
AS WITNESS the electronic or manual signature of a duly authorised person on behalf of the Issuer.
| INTERCONTINENTAL HOTELS |
) |
|
| GROUP PLC |
) |
|
| ) |
| By: |
||
| electronic or manual signature (duly authorised) |
||
| ISSUED on the Issue Date |
||
| AUTHENTICATED by and on behalf of |
) |
|
| ELAVON FINANCIAL SERVICES DAC, |
) |
|
| UK BRANCH |
) |
|
| as principal paying agent |
) |
|
| without recourse, warranty or liability |
) |
|
| By: |
||
| electronic or manual signature (duly authorised) |
||
[Definitive Note for InterContinental Hotels Group PLC – Signature Page]
Page 157
[On the reverse of the Note:]
FINAL TERMS
The following is a copy of the relevant particulars of the Final Terms or Drawdown Prospectus or Securities Note.
TERMS AND CONDITIONS
[As set out in Schedule 1 to the Trust Deed]
[At the foot of the Terms and Conditions:]
PRINCIPAL PAYING AGENT
ELAVON FINANCIAL SERVICES DAC, UK BRANCH
125 Old Broad Street
Fifth Floor
London EC2N 1AR
Page 158
PART D
FORM OF COUPON FOR INTERCONTINENTAL HOTELS GROUP PLC
[On the face of the Coupon:]
[For Fixed Rate Notes]
INTERCONTINENTAL HOTELS GROUP PLC
[Title of Notes]
unconditionally and irrevocably guaranteed by
[IHG FINANCE LLC
and]
SIX CONTINENTS LIMITED
and
INTERCONTINENTAL HOTELS LIMITED
Coupon for [currency][amount of interest payment] due on [interest payment date].
Such amount is payable, subject to the terms and conditions (the Conditions) endorsed on the Note to which this Coupon relates (which are binding on the holder of this Coupon whether or not it is for the time being attached to such Note), against presentation and surrender of this Coupon at the specified office for the time being of any of the agents shown on the reverse of this Coupon (or any successor or additional agents appointed from time to time in accordance with the Conditions).
[For Floating Rate Notes]
INTERCONTINENTAL HOTELS GROUP PLC
[Title of Notes]
unconditionally and irrevocably guaranteed by
IHG FINANCE LLC
and
SIX CONTINENTS LIMITED
and
INTERCONTINENTAL HOTELS LIMITED
This Coupon relates to a Note in the denomination of [currency] [amount].
Coupon for the amount of interest due on the Interest Payment Date falling in [month and year].
Page 159
Such amount is payable, subject to the terms and conditions (the Conditions) endorsed on the Note to which this Coupon relates (which are binding on the holder of this Coupon whether or not it is for the time being attached to such Note), against presentation and surrender of this Coupon at the specified office for the time being of any of the agents shown on the reverse of this Coupon (or any successor or additional agents appointed from time to time in accordance with the Conditions).
The Note to which this Coupon relates may, in certain circumstances specified in the Conditions, fall due for redemption before the maturity date of this Coupon. In such event, this Coupon shall become void and no payment will be made in respect hereof.
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]5
[On the reverse of the Coupon:]
Principal Paying Agent: Elavon Financial Services DAC, UK Branch, 125 Old Broad Street, Fifth Floor, London EC2N 1AR
| 5 |
Legend to appear on every Note with a maturity of more than one year. |
Page 160
PART E
FORM OF TALON FOR INTERCONTINENTAL HOTELS GROUP PLC
[On the face of the Talon:]
INTERCONTINENTAL HOTELS GROUP PLC
[Title of Notes]
unconditionally and irrevocably guaranteed by
[IHG FINANCE LLC
and]
SIX CONTINENTS LIMITED
and
INTERCONTINENTAL HOTELS LIMITED
Talon for further Coupons.
On or after the maturity date of the final Coupon which is (or was at the time of issue) part of the Coupon Sheet to which this Talon is (or was at the time of issue) attached, this Talon may be exchanged at the specified office for the time being of the principal paying agent shown on the reverse of this Talon (or any successor principal paying agent appointed from time to time in accordance with the terms and conditions (the Conditions) of the Notes to which this Talon relates) for a further Coupon Sheet (including a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to the Conditions).
The Note to which this Talon relates may, in certain circumstances specified in the Conditions, fall due for redemption before the maturity date of such final Coupon. In such event, this Talon shall become void and no Coupon will be delivered in respect hereof.
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]6
[On the reverse of the Talon:]
Principal Paying Agent: Elavon Financial Services DAC, UK Branch, 125 Old Broad Street, Fifth Floor, London EC2N 1AR
| 6 |
Legend to appear on every Note with a maturity of more than one year. |
Page 161
PART F
FORM OF TEMPORARY GLOBAL NOTE FOR IHG FINANCE LLC
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]7
IHG Finance LLC
(formed in the State of Delaware with company number 7546892)
[Aggregate principal amount of Series]
[Title of Notes]
unconditionally and irrevocably guaranteed by
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
and
SIX CONTINENTS LIMITED
(incorporated in England and Wales with company number 913450)
and
INTERCONTINENTAL HOTELS LIMITED
(incorporated in England and Wales with company number 4551528)
TEMPORARY GLOBAL NOTE
| 1. |
INTRODUCTION |
1.1 The Notes
This Temporary Global Note is issued in respect of the notes (the Notes) of IHG Finance LLC (the Issuer) and guaranteed by InterContinental Hotels Group PLC, Six Continents Limited and InterContinental Hotels Limited (each a Guarantor and together, the Guarantors) described in the final terms (the Final Terms) or drawdown prospectus (the Drawdown Prospectus) or securities note (Securities Note) a copy of which is annexed hereto. If a Drawdown Prospectus or a Securities Note is annexed hereto, each reference in this Temporary Global Note to “Final Terms” shall be read and construed as a reference to the final terms of the Notes set out in such Drawdown Prospectus or Securities Note. The Notes:
| 7 |
Legend to appear on every Note with a maturity of more than one year. |
Page 162
| (a) |
Trust Deed: (insofar as they are represented by this Temporary Global Note) are subject to and have the benefit of an amended and restated trust deed made on 21 September 2023 (as further amended, supplemented or restated from time to time, the Trust Deed) made between the Issuer, the Guarantors and U.S. Bank Trustees Limited as trustee (the Trustee, which expression shall include all persons for the time being the trustee or trustees appointed under the Trust Deed); and |
| (b) |
Agency Agreement: are the subject of an amended and restated agency agreement dated 21 September 2023 (as further amended, supplemented or restated from time to time, the Agency Agreement) made between, inter alios, the Issuer, the Guarantors, the Trustee and Elavon Financial Services DAC, UK Branch as principal paying agent (the Principal Paying Agent, which expression includes any successor or additional principal paying agent appointed from time to time in connection with the Notes, and together with any additional or successor paying agents appointed from time to time in connection with the Notes, the Paying Agents). |
1.2 Construction
All references in this Temporary Global Note to an agreement, instrument or other document (including the Agency Agreement and the Trust Deed) shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time provided that, in the case of any amendment, supplement, replacement or novation made after the date hereof, it is made in accordance with the Conditions and the Trust Deed. Headings and sub-headings are for ease of reference only and shall not affect the construction of this Temporary Global Note.
1.3 References to Conditions
Any reference herein to the Conditions is to the Conditions as defined in the Trust Deed, as supplemented, amended and/or replaced by the Final Terms and any reference to a numbered Condition is to the correspondingly numbered provision thereof. Words and expressions defined in Condition 2(a) (Interpretation – Definitions) shall have the same meanings when used in this Temporary Global Note.
2. PROMISE TO PAY
2.1 Pay to bearer
The Issuer, for value received, promises to pay to the bearer of this Temporary Global Note, in respect of each Note represented by this Temporary Global Note, on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions, the Redemption Amount or such lesser amount as is repayable upon any such redemption or repayment (or to pay such other amounts of principal on such dates as may be specified in the Final Terms), and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this Temporary Global Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions; provided, however, that such interest shall be payable only:
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| (a) |
Before the Exchange Date: in the case of interest falling due before the Exchange Date (as defined below), to the extent that a certificate or certificates issued by Euroclear Bank SA/NV (Euroclear) and/or Clearstream Banking S.A. (Clearstream and, together with Euroclear, the international central securities depositaries or ICSDs) and/or any other relevant clearing system dated not earlier than the date on which such interest falls due and in substantially the form set out in Schedule 3 (Form of Euroclear/Clearstream, Certification) hereto is/are delivered to the Specified Office of the Principal Paying Agent; or |
| (b) |
Failure to exchange: in the case of interest falling due at any time, to the extent that the Issuer has failed to procure the exchange for a permanent global note of that portion of this Temporary Global Note in respect of which such interest has accrued. |
2.2 NGN Principal Amount
If the Final Terms specify that the New Global Note form is applicable, this Temporary Global Note shall be a “New Global Note” or “NGN” and the principal amount of Notes represented by this Temporary Global Note shall be the aggregate amount from time to time entered in the records of both ICSDs. The records of the ICSDs (which expression in this Temporary Global Note means the records that each ICSD holds for its customers which reflect the amount of such customers’ interests in the Notes (but excluding any interest in any Notes of one ICSD shown in the records of another ICSD)) shall be conclusive evidence of the principal amount of Notes represented by this Temporary Global Note and, for these purposes, a statement issued by an ICSD (which statement shall be made available to the bearer upon request) stating the principal amount of Notes represented by this Temporary Global Note at any time shall be conclusive evidence of the records of the ICSD at that time.
2.3 CGN Principal Amount
If the Final Terms specify that the New Global Note form is not applicable, this Temporary Global Note shall be a “Classic Global Note” or “CGN” and the principal amount of Notes represented by this Temporary Global Note shall be the amount stated in the Final Terms or, if lower, the principal amount most recently entered by or on behalf of the Issuer in the relevant column in Schedule 1 (Payments, Exchange and Cancellation of Notes).
3. NEGOTIABILITY
This Temporary Global Note is negotiable and, accordingly, title to this Temporary Global Note shall pass by delivery.
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4. EXCHANGE
4.1 Permanent Global Note
If the Final Terms specify the form of Notes as being “Temporary Global Note exchangeable for a Permanent Global Note”, then on or after the day following the expiry of 40 days after the date of issue of this Temporary Global Note (the Exchange Date), the Issuer shall procure (in the case of first exchange) the delivery of a Permanent Global Note (which expression has the meaning given in the Trust Deed) in accordance with the Agency Agreement to the bearer of this Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of the Permanent Global Note in accordance with its terms against:
| (a) |
Presentation and surrender: presentation and (in the case of final exchange) surrender of this Temporary Global Note to or to the order of the Principal Paying Agent; and |
| (b) |
Certification: receipt by the Principal Paying Agent of a certificate or certificates issued by Euroclear and/or Clearstream and/or any other relevant clearing system dated not earlier than the Exchange Date and in substantially the form set out in Schedule 3 (Form of Euroclear/Clearstream Certification) hereto. |
The principal amount of Notes represented by the Permanent Global Note shall be equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream and/or any other relevant clearing system and received by the Principal Paying Agent; provided, however, that in no circumstances shall the principal amount of Notes represented by the Permanent Global Note exceed the initial principal amount of Notes represented by this Temporary Global Note.
4.2 Definitive Notes; Not D Rules
If the Final Terms specify the form of Notes as being “Temporary Global Note exchangeable for Definitive Notes” and also specifies that the C Rules are applicable or that neither the C Rules or the D Rules are applicable, then on or after the day following the expiry of 40 days after the date of issue of this Temporary Global Note (the Exchange Date), the Issuer shall procure the delivery of Definitive Notes (which expression has the meaning given in the Agency Agreement) in accordance with the Agency Agreement with Coupons and Talons (if so specified in the Final Terms) attached and in an aggregate principal amount equal to the principal amount of Notes represented by this Temporary Global Note to the bearer of this Temporary Global Note against presentation and surrender of this Temporary Global Note to or to the order of the Principal Paying Agent.
4.3 Definitive Notes; D Rules
If the Final Terms specify the form of Notes as being “Temporary Global Note exchangeable for Definitive Notes” and also specifies that the D Rules are applicable, then on or after the day following the expiry of 40 days after the date of issue of this Temporary Global Note (the Exchange Date), the Issuer shall procure the delivery of Definitive Notes (which expression has the meaning given in the Agency Agreement) in accordance with the Agency Agreement with Coupons and Talons (if so specified in the Final Terms) attached against:
| (a) |
Presentation and surrender: presentation and (in the case of final exchange) surrender of this Temporary Global Note to or to the order of the Principal Paying Agent; and |
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| (b) |
Certification: receipt by the Principal Paying Agent of a certificate or certificates issued by Euroclear and/or Clearstream and/or any other relevant clearing system dated not earlier than the Exchange Date and in substantially the form set out in Schedule 3 (Form of Euroclear/Clearstream Certification) hereto. |
The Definitive Notes so delivered from time to time shall be in an aggregate principal amount equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream and/or any other relevant clearing system and received by the Principal Paying Agent; provided, however, that in no circumstances shall the aggregate principal amount of Definitive Notes so delivered exceed the initial principal amount of Notes represented by this Temporary Global Note.
5. DELIVERY OF PERMANENT GLOBAL OR DEFINITIVE NOTES
5.1 Permanent Global Note
Whenever any interest in this Temporary Global Note is to be exchanged for an interest in a Permanent Global Note, the Issuer shall procure (in the case of first exchange) the prompt delivery (free of charge to the bearer) of such Permanent Global Note, duly authenticated, to the bearer of this Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of Notes represented by such Permanent Global Note in accordance with its terms, in each case in an aggregate principal amount equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream and/or any other relevant clearing system and received by the Principal Paying Agent against presentation and (in the case of final exchange) surrender of this Temporary Global Note to or to the order of the Principal Paying Agent within 7 days of the bearer requesting such exchange.
5.2 Definitive Notes
Whenever this Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the Final Terms), in an aggregate principal amount equal to the principal amount of Notes represented by this Temporary Global Note to the bearer of this Temporary Global Note against the surrender of this Temporary Global Note to or to the order of the Principal Paying Agent within 30 days of the bearer requesting such exchange.
6. WRITING DOWN
On each occasion on which:
6.1 Permanent Global Note: the Permanent Global Note is delivered or the principal amount of Notes represented thereby is increased in accordance with its terms in exchange for a further portion of this Temporary Global Note; or
6.2 Definitive Notes: Definitive Notes are delivered in exchange for this Temporary Global Note; or
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6.3 Cancellation: Notes represented by this Temporary Global Note are to be cancelled in accordance with Condition 9(k) (Redemption and Purchase – Cancellation),
the Issuer shall procure that:
| (a) |
if the Final Terms specify that the New Global Note form is not applicable, (i) the principal amount of Notes represented by the Permanent Global Note, the principal amount of such increase or (as the case may be) the aggregate principal amount of such Notes and (ii) the remaining principal amount of Notes represented by this Temporary Global Note (which shall be the previous principal amount of Notes represented by this Temporary Global Note less the aggregate of the amounts referred to in (i) above) are entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto, whereupon the principal amount of Notes represented by this Temporary Global Note shall for all purposes be as most recently so entered; and |
| (b) |
if the Final Terms specify that the New Global Note form is applicable, details of the exchange or cancellation shall be entered pro rata in the records of the ICSDs. |
| 7. |
PAYMENTS |
7.1 Recording of Payments
Upon any payment being made in respect of the Notes represented by this Temporary Global Note, the Issuer shall procure that:
| (a) |
CGN: if the Final Terms specify that the New Global Note form is not applicable, details of such payment shall be entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto and, in the case of any payment of principal, the principal amount of the Notes represented by this Temporary Global Note shall be reduced by the principal amount so paid; and |
| (b) |
NGN: if the Final Terms specify that the New Global Note form is applicable, details of such payment shall be entered pro rata in the records of the ICSDs and, in the case of any payment of principal, the principal amount of the Notes entered in the records of ICSDs and represented by this Temporary Global Note shall be reduced by the principal amount so paid. |
7.2 Discharge of Issuer’s obligations
Payments due in respect of Notes for the time being represented by this Temporary Global Note shall be made to the bearer of this Temporary Global Note and each payment so made will discharge the Issuer’s obligations in respect thereof. Any failure to make the entries referred to above shall not affect such discharge.
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7.3 Payment Business Day
If the currency of any payment made in respect of Notes represented by this Temporary Global Note is euro, the applicable Payment Business Day shall be any day which is a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or, if the currency of any payment made in respect of the Notes represented by this Temporary Global Note is not euro, the applicable Payment Business Day shall be any day which is a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre.
| 8. |
CONDITIONS APPLY |
Until this Temporary Global Note has been exchanged as provided herein or cancelled in accordance with the Agency Agreement, the bearer of this Temporary Global Note shall be subject to the Conditions and the Trust Deed and, subject as otherwise provided herein, shall be entitled to the same rights and benefits under the Conditions and the Trust Deed as if the bearer were the holder of Definitive Notes and any related Coupons and Talons in the smallest Specified Denomination and in an aggregate principal amount equal to the principal amount of the Notes represented by this Temporary Global Note.
| 9. |
NOTICES |
Notwithstanding Condition 18 (Notices), while all the Notes are represented by this Temporary Global Note (or by this Temporary Global Note and the Permanent Global Note) and this Temporary Global Note is (or this Temporary Global Note and the Permanent Global Note are) deposited with a depositary or a common depositary for Euroclear and/or Clearstream and/or any other relevant clearing system or a Common Safekeeper (which expression has the meaning given in the Agency Agreement), notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream and/or any other relevant clearing system and, in any case, such notices shall be deemed to have been given to the Noteholders in accordance with the Condition 18 (Notices) on the date of delivery to Euroclear and/or Clearstream and/or any other relevant clearing system.
| 10. |
MEETINGS |
The holders of this Temporary Global Note shall, at any meeting of the Noteholders, be treated as having one vote in respect of each £1 in principal amount of the Notes represented by this Temporary Global Note.
| 11. |
TRUSTEE’S POWERS |
In considering the interests of Noteholders while this Temporary Global Note is held on behalf of a clearing system, the Trustee may have regard to any information provided to it by any such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to this Temporary Global Note and may consider such interests as if such accountholders were the holders of this Temporary Global Note.
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| 12. |
AUTHENTICATION |
This Temporary Global Note shall not be valid for any purpose until it has been authenticated by and on behalf of Elavon Financial Services DAC, UK Branch as principal paying agent.
| 13. |
EFFECTUATION |
If the Final Terms specify that the New Global Note form is applicable, this Temporary Global Note shall not be valid for any purpose until it has been effectuated for and on behalf of the entity appointed as common safekeeper by the ICSDs.
| 14. |
GOVERNING LAW |
This Temporary Global Note and any non-contractual obligations arising out of or in connection with it are governed by English law.
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AS WITNESS the manual/electronic signature of a duly authorised person on behalf of the Issuer.
| IHG FINANCE LLC |
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| (duly authorised) |
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[Temporary Global Note for IHG Finance LLC – Signature Page]
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SCHEDULE 18
TO THE TEMPORARY GLOBAL NOTE
Payments, Exchange and Cancellation of Notes
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Amount of interest then paid |
Principal amount of Permanent Global Note then delivered or by which Permanent Global Note then increased or aggregate principal amount of Definitive Notes then delivered |
Aggregate principal amount of Notes then cancelled |
Remaining principal amount of this Temporary Global Note |
Authorised Signature |
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Schedule 1 should only be completed where the Final Terms specify that the New Global Note form is not applicable. |
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SCHEDULE 2
TO THE TEMPORARY GLOBAL NOTE
Form of Accountholder’s Certification
IHG FINANCE LLC
(formed in the State of Delaware with company number 7546892)
[Aggregate principal amount of Series]
[Title of Notes]
This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (a) are owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source (United States persons), (b) are owned by United States person(s) that (i) are foreign branches of a United States financial institution (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv)) (financial institutions) purchasing for their own account or for resale, or (ii) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (i) or (ii), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the issuer or the issuer’s agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (c) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Securities is a United States or foreign financial institution described in clause (c) (whether or not also described in clause (a) or (b)) this is to further certify that such financial institution has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.
If the Securities are of the category contemplated in Section 230.903(b)(3) of Regulation S under the Securities Act of 1933, as amended (the Act), then this is also to certify that, except as set forth below, the Securities are beneficially owned by (1) non-U.S. person(s) or (2) U.S. person(s) who purchased the Securities in transactions which did not require registration under the Act. As used in this paragraph the term U.S. person has the meaning given to it by Regulation S under the Act.
As used herein, United States means the United States of America (including the States and the District of Columbia); and its possessions include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by electronic transmission on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date.
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This certification excepts and does not relate to [currency] [amount] of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of definitive Securities (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.
We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings or official enquiries are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.
Dated: [ ]]
[name of account holder]
as, or as agent for,
the beneficial owner(s) of the Securities
to which this certificate relates.
| By: |
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Page 173
SCHEDULE 3
TO THE TEMPORARY GLOBAL NOTE
FORM OF EUROCLEAR/CLEARSTREAM CERTIFICATION
IHG FINANCE LLC
(formed in the State of Delaware with company number 7546892)
[Aggregate principal amount of Series]
[Title of Notes]
This is to certify that, based solely on certifications we have received in writing, by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our Member Organisations) substantially to the effect set forth in the temporary global note issued in respect of the securities, as of the date hereof, [currency] [amount] principal amount of the above-captioned Securities (a) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source (United States persons), (b) is owned by United States persons that (i) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv)) (financial institutions) purchasing for their own account or for resale, or (ii) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (i) or (ii), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer’s agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (c) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in clause (c) (whether or not also described in clause (a) or (b)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.
If the Securities are of the category contemplated in Section 230.903(b)(3) of Regulation S under the Securities Act of 1933, as amended (the Act), then this is also to certify with respect to the principal amount of Securities set forth above that, except as set forth below, we have received in writing, by electronic transmission, from our Member Organisations entitled to a portion of such principal amount, certifications with respect to such portion substantially to the effect set forth in the temporary global note issued in respect of the Securities.
We further certify (1) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global security excepted in such certifications and (2) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as of the date hereof.
Page 174
We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings or official enquiries are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.
Dated: [ ]]
Euroclear Bank SA/NV
or
Clearstream Banking S.A.
| By: |
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Page 175
PART G
FORM OF PERMANENT GLOBAL NOTE FOR IHG FINANCE LLC
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]9
IHG FINANCE LLC
(formed in the State of Delaware with company number 7546892)
[Aggregate principal amount of Series]
[Title of Notes]
unconditionally and irrevocably guaranteed by
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
and
SIX CONTINENTS LIMITED
(incorporated in England and Wales with company number 913450)
and
INTERCONTINENTAL HOTELS LIMITED
(incorporated in England and Wales with company number 4551528)
PERMANENT GLOBAL NOTE
| 1. |
INTRODUCTION |
1.1 The Notes
This Global Note is issued in respect of the notes (the Notes) of IHG Finance LLC (the Issuer) and guaranteed by InterContinental Hotels Group PLC, Six Continents Limited and InterContinental Hotels Limited (each a Guarantor and together, the Guarantors) described in the final terms (the Final Terms) or drawdown prospectus (Drawdown Prospectus) or securities note (Securities Note) a copy of which is annexed hereto. If a Drawdown Prospectus or a Securities Note is annexed hereto, each reference in this Global Note to “Final Terms” shall be read and construed as a reference to the final terms of the Notes set out in such Drawdown Prospectus or Securities Note. The Notes:
| (a) |
Trust Deed: (insofar as they are represented by this Global Note) are subject to and have the benefit of an amended and restated trust deed made on 21 September 2023 (as further amended, supplemented or restated from time to time, the Trust Deed) made between the Issuer, the Guarantors and U.S. Bank Trustees Limited as trustee (the Trustee, which expression shall include all persons for the time being the trustee or trustees appointed under the Trust Deed); and |
| 9 |
Legend to appear on every Note with a maturity of more than one year. |
Page 176
| (b) |
Agency Agreement: are the subject of an amended and restated agency agreement dated 21 September 2023 (as further amended, supplemented or restated from time to time) (the Agency Agreement) made between, inter alios, the Issuer, the Guarantors, the Trustee and Elavon Financial Services DAC, UK Branch as principal paying agent (the Principal Paying Agent, which expression includes any successor or additional principal paying agent appointed from time to time in connection with the Notes, and, together with any additional or successor paying agents appointed from time to time in connection with the Notes, the Paying Agents). |
1.2 Construction
All references in this Global Note to an agreement, instrument or other document (including the Agency Agreement and the Trust Deed) shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time provided that, in the case of any amendment, supplement, replacement or novation made after the date hereof, it is made in accordance with the Conditions and the Trust Deed. Headings and sub-headings are for ease of reference only and shall not affect the construction of this Global Note.
1.3 References to Conditions
Any reference herein to the “Conditions” is to the Terms and Conditions of the Notes set out in Schedule 2 (Terms and Conditions of the Notes) hereto, as supplemented, amended and/or replaced by the Final Terms and any reference to a numbered “Condition” is to the correspondingly numbered provision thereof. Words and expressions defined in the Conditions shall have the same meanings when used in this Global Note.
| 2. |
PROMISE TO PAY |
2.1 Pay to bearer
The Issuer, for value received, promises to pay to the bearer of this Global Note, in respect of each Note represented by this Global Note, on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions, the Redemption Amount or such lesser amount as is repayable upon any such redemption (or to repay such other amounts of principal on such dates as may be specified in the Final Terms and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this Global Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions.
2.2 NGN Principal Amount
If the Final Terms specify that the New Global Note form is applicable, this Global Note shall be a “New Global Note” or “NGN” and the principal amount of Notes represented by this Global Note shall be the aggregate amount from time to time entered in the records of both ICSDs.
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The records of the ICSDs (which expression in this Global Note means the records that each ICSD holds for its customers which reflect the amount of such customers’ interests in the Notes (but excluding any interest in any Notes of one ICSD shown in the records of another ICSD)) shall be conclusive evidence of the principal amount of Notes represented by this Global Note and, for these purposes, a statement issued by an ICSD (which statement shall be made available to the bearer upon request) stating the principal amount of Notes represented by this Global Note at any time shall be conclusive evidence of the records of the ICSD at that time.
2.3 CGN Principal Amount
If the Final Terms specify that the New Global Note form is not applicable, this Global Note shall be a “Classic Global Note” or “CGN” and the principal amount of Notes represented by this Global Note shall be the amount stated in the Final Terms or, if lower, the principal amount most recently entered by or on behalf of the Issuer in the relevant column in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto.
| 3. |
NEGOTIABILITY |
This Global Note is negotiable and, accordingly, title to this Global Note shall pass by delivery.
| 4. |
EXCHANGE |
This Global Note will become exchangeable, in whole but not in part only and at the request of the bearer of this Global Note, for Definitive Notes (which expression has the meaning given in the Trust Deed) in accordance with the Agency Agreement:
4.1 Upon notice: on the expiry of such period of notice as may be specified in the Final Terms; or
4.2 Upon demand: at any time, if so specified in the Final Terms; or
4.3 In limited circumstances: if the Final Terms specify “in the limited circumstances described in the Permanent Global Note”, then if either of the following events occurs:
| (a) |
Closure of clearing systems: Euroclear Bank SA/NV (Euroclear) or Clearstream Banking S.A. (Clearstream and, together with Euroclear, the international central securities depositaries or ICSDs) or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business and no successor clearing system approved by the Trustee is available; or |
| (b) |
Event of Default: any of the circumstances described in Condition 12 (Events of Default) occurs; or |
| (c) |
Adverse tax consequences: the Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by the Permanent Global Note in definitive form. |
| 5. |
DELIVERY OF DEFINITIVE NOTES |
Whenever this Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the Final Terms), in an aggregate principal amount equal to the principal amount of Notes represented by this Global Note to the bearer of this Global Note against the surrender of this Global Note to or to the order of the Principal Paying Agent within 30 days of the bearer requesting such exchange.
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| 6. |
WRITING DOWN |
On each occasion on which:
6.1 Payment of principal: a payment of principal is made in respect of this Global Note;
6.2 Definitive Notes: Definitive Notes are delivered; or
6.3 Cancellation: Notes represented by this Global Note are to be cancelled in accordance with Condition 9(k) (Redemption and Purchase – Cancellation),
the Issuer shall procure that:
| (a) |
if the Final Terms specify that the New Global Note Form is not applicable, (i) the amount of such payment and the aggregate principal amount of such Notes; and (ii) the remaining principal amount of Notes represented by this Global Note (which shall be the previous principal amount hereof less the aggregate of the amounts referred to in (i) above) are entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto, whereupon the principal amount of Notes represented by this Global Note shall for all purposes be as most recently so entered; and |
| (b) |
if the Final Terms specify that the New Global Note Form is applicable, details of the exchange or cancellation shall be entered pro rata in the records of the ISCDs. |
| 7. |
WRITING UP |
7.1 Initial Exchange
If this Global Note was originally issued in exchange for part only of a temporary global note representing the Notes, then all references in this Global Note to the principal amount of Notes represented by this Global Note shall be construed as references to the principal amount of Notes represented by the part of the temporary global note in exchange for which this Global Note was originally issued which the Issuer shall procure:
| (a) |
CGN: if the Final Terms specify that the New Global Note form is not applicable, is entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto, whereupon the principal amount of Notes represented by this Global Note shall for all purposes be as most recently so entered; and |
| (b) |
NGN: if the Final Terms specify that the New Global Note form is applicable, is entered by the ICSDs in their records. |
7.2 Subsequent Exchange
If at any subsequent time any further portion of such temporary global note is exchanged for an interest in this Global Note, the principal amount of Notes represented by this Global Note shall be increased by the amount of such further portion, and the Issuer shall procure that the principal amount of Notes represented by this Global Note (which shall be the previous principal amount of Notes represented by this Global Note plus the amount of such further portion) is:
| (a) |
CGN: if the Final Terms specify that the New Global Note form is not applicable, entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto, whereupon the principal amount of this Global Note shall for all purposes be as most recently so entered; and |
Page 179
| (b) |
NGN: if the Final Terms specify that the New Global Note form is applicable, entered by the ICSDs in their records. |
| 8. |
PAYMENTS |
8.1 Recording of Payments
Upon any payment being made in respect of the Notes represented by this Global Note, the Issuer shall procure that:
| (a) |
CGN: if the Final Terms specify that the New Global Note form is not applicable, details of such payment shall be entered in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto and, in the case of any payment of principal, the principal amount of the Notes represented by this Global Note shall be reduced by the principal amount so paid; and |
| (b) |
NGN: if the Final Terms specify that the New Global Note form is applicable, details of such payment shall be entered pro rata in the records of the ICSDs and, in the case of any payment of principal, the principal amount of the Notes entered in the records of ICSDs and represented by this Global Note shall be reduced by the principal amount so paid. |
8.2 Discharge of Issuer’s obligations
Payments due in respect of Notes for the time being represented by this Global Note shall be made to the bearer of this Global Note and each payment so made will discharge the Issuer’s obligations in respect thereof. Any failure to make the entries referred to above shall not affect such discharge.
8.3 Payment Business Day
If the currency of any payment made in respect of Notes represented by this Global Note is euro, the applicable Payment Business Day shall be any day which is a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or, if the currency of any payment made in respect of the Notes represented by this Global Note is not euro, the applicable Payment Business Day shall be any day which is a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre.
| 9. |
CONDITIONS APPLY |
Until this Global Note has been exchanged as provided herein or cancelled in accordance with the Agency Agreement, the bearer of this Global Note shall be subject to the Conditions and, subject as otherwise provided herein, shall be entitled to the same rights and benefits under the Conditions as if the bearer were the holder of Definitive Notes and any related Coupons and Talons in the smallest Specified Denomination and in an aggregate principal amount equal to the principal amount of notes represented by this Global Note.
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| 10. |
EXERCISE OF PUT OPTION OR CHANGE OF CONTROL PUT OPTION |
For so long as all of the Notes are represented by one or both of the Global Notes and such Global Note(s) is/are held on behalf of Euroclear and/or Clearstream, the option of the Noteholders provided for in Condition 9(f) (Redemption and Purchase – Redemption at the option of the Noteholders) or, as the case may be, the option of the Noteholders provided for in Condition 9(g) (Redemption and Purchase – Change of Control redemption) may be exercised by an accountholder giving notice to the Principal Paying Agent in accordance with the standard procedures of Euroclear and Clearstream (which may include notice being given on his instructions by Euroclear or Clearstream or any common depositary for them to the Principal Paying Agent by electronic means) of the principal amount of the Notes in respect of which such option is exercised and at the same time presenting or procuring the presentation of the relevant Global Note to the Principal Paying Agent for notation accordingly within the time limits set forth in the relevant Condition.
| 11. |
EXERCISE OF CALL OPTION |
For so long as all of the Notes are represented by one or both of the temporary global note and this Global Note and such Global Note(s) is/are held on behalf of Euroclear and/or Clearstream, no drawing of Notes will be required under Condition 9(e) (Redemption and Purchase - Partial redemption) in the event that the Issuer exercises its call option pursuant to Condition 9(c) (Redemption and Purchase - Redemption at the option of the Issuer (Issuer Call Option)) in respect of less than the aggregate principal amount of the Notes outstanding at such time. In such event, the standard procedures of Euroclear and/or Clearstream shall operate to determine which interests in the Global Note(s) are to be subject to such option.
| 12. |
NOTICES |
Notwithstanding Condition 18 (Notices), while all the Notes are represented by this Global Note (or by this Global Note and a temporary global note) and this Global Note is (or this Global Note and the temporary global note are) deposited with a depositary or a common depositary for Euroclear and/or Clearstream and/or any other relevant clearing system or a Common Safekeeper (which expression has the meaning given in the Agency Agreement), notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream and/or any other relevant clearing system and, in any case, such notices shall be deemed to have been given to the Noteholders in accordance with Condition 18 (Notices) on the date of delivery to Euroclear and/or Clearstream and/or any other relevant clearing system.
Whilst any Notes held by a Noteholder are represented by a Global Note, notices to be given by such Noteholder may be given by such Noteholder to the Principal Paying Agent through Euroclear and/or Clearstream, as the case may be, in such a manner as the Principal Paying Agent and Euroclear and/or Clearstream, as the case may be, may approve for this purpose.
| 13. |
MEETINGS |
The holders of this Global Note shall, at any meeting of the Noteholders, be treated as having one vote in respect of each £1 in principal amount of the Notes represented by this Global Note.
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| 14. |
TRUSTEE’S POWERS |
In considering the interests of Noteholders while this Global Note is held on behalf of a clearing system, the Trustee may have regard to any information provided to it by any such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to this Global Note and may consider such interests as if such accountholders were the holders of this Global Note.
| 15. |
AUTHENTICATION |
This Global Note shall not be valid for any purpose until it has been authenticated by and on behalf of Elavon Financial Services DAC, UK Branch as principal paying agent.
| 16. |
EFFECTUATION |
If the Final Terms specify that the New Global Note form is applicable, this Permanent Global Note shall not be valid for any purpose until it has been effectuated for and on behalf of the entity appointed as Common Safekeeper (which expression has the meaning given in the Agency Agreement).
| 17. |
GOVERNING LAW |
This Global Note, and any non-contractual obligations arising out of or in connection with it, are governed by English law.
Page 182
AS WITNESS the manual/electronic signature of a duly authorised person on behalf of the Issuer.
| IHG Finance LLC |
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| warranty or liability |
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| electronic/manual signature |
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| (duly authorised) |
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[Permanent Global Note for IHG Finance LLC – Signature Page]
Page 183
SCHEDULE 110
TO THE PERMANENT GLOBAL NOTE
PAYMENTS, EXCHANGE AND CANCELLATION OF NOTES
| Date of payment, exchange, delivery or cancellation |
Amount of interest then paid |
Amount of principal then paid |
Principal amount of Temporary Global Note then exchanged |
Aggregate principal amount of Definitive Notes then delivered |
Aggregate principal amount of Notes then cancelled |
New principal amount of this Global Note |
Authorised signature |
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Schedule 1 should only be completed where the Final Terms specify that the New Global Note form is not applicable. |
Page 184
SCHEDULE 2
TO THE PERMANENT GLOBAL NOTE
Terms and Conditions of the Notes
[As set out in Schedule 1 to the Trust Deed]
Page 185
PART H
FORM OF DEFINITIVE NOTE FOR IHG FINANCE LLC
[On the face of the Note:]
[currency][denomination]
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]
IHG FINANCE LLC
(formed in the State of Delaware with company number 7546892)
[Aggregate principal amount of Series]
[Title of Notes]
unconditionally and irrevocably guaranteed by
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
and
SIX CONTINENTS LIMITED
(incorporated in England and Wales with company number 913450)
and
INTERCONTINENTAL HOTELS LIMITED
(incorporated in England and Wales with company number 4551528)
This Note is one of a series of notes (the Notes) of IHG Finance LLC (the Issuer) and guaranteed by InterContinental Hotels Group PLC, Six Continents Limited and InterContinental Hotels Limited (together, the Guarantors) as described in the final terms (the Final Terms) or drawdown prospectus (Drawdown Prospectus) or securities note (Securities Note) a copy of the relevant particulars of which is endorsed on this Note. Any reference herein to the Conditions is to the Terms and Conditions of the Notes endorsed on this Note, as supplemented, amended and/or replaced by the Final Terms or Drawdown Prospectus or Securities Note and any reference to a numbered Condition is to the correspondingly numbered provision thereof. Words and expressions defined in Condition 2(a) (Interpretation – Definitions) shall have the same meanings when used in this Note.
This Note is issued subject to, and with the benefit of, the Conditions and an amended and restated trust deed (as further modified and/or supplemented and/or novated from time to time, the Trust Deed) dated 21 September 2023 and made between the Issuer, the Guarantors and U.S. Bank Trustees Limited as trustee for the holders of the Notes.
Page 186
The Issuer, for value received, promises to pay to the bearer of this Note the Redemption Amount on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions (or to pay such other amounts of principal on such dates as may be specified in the Final Terms or Drawdown Prospectus or Securities Note), and to pay interest (if any) on the nominal amount of this Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions.
This Note shall not be valid for any purpose until it has been authenticated by and on behalf of Elavon Financial Services DAC, UK Branch as principal paying agent.
This Note, and any non-contractual obligations arising out of or in connection with it, are governed by English law.
Page 187
AS WITNESS the electronic or manual signature of a duly authorised person on behalf of the Issuer.
| IHG FINANCE LLC |
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| AUTHENTICATED by and on behalf of |
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| ELAVON FINANCIAL SERVICES DAC, |
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| UK BRANCH |
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| as principal paying agent |
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| without recourse, warranty or liability |
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| By: |
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[Definitive Note for IHG Finance LLC – Signature Page]
Page 188
[On the reverse of the Note:]
FINAL TERMS
The following is a copy of the relevant particulars of the Final Terms or Drawdown Prospectus or Securities Note.
TERMS AND CONDITIONS
[As set out in Schedule 1 to the Trust Deed]
[At the foot of the Terms and Conditions:]
PRINCIPAL PAYING AGENT
ELAVON FINANCIAL SERVICES DAC, UK BRANCH
125 Old Broad Street
Fifth Floor
London EC2N 1AR
Page 189
PART I
FORM OF COUPON FOR IHG FINANCE LLC
[On the face of the Coupon:]
[For Fixed Rate Notes]
IHG FINANCE LLC
[Title of Notes]
unconditionally and irrevocably guaranteed by
INTERCONTINENTAL HOTELS GROUP PLC
and
SIX CONTINENTS LIMITED
and
INTERCONTINENTAL HOTELS LIMITED
Coupon for [currency][amount of interest payment] due on [interest payment date].
Such amount is payable, subject to the terms and conditions (the Conditions) endorsed on the Note to which this Coupon relates (which are binding on the holder of this Coupon whether or not it is for the time being attached to such Note), against presentation and surrender of this Coupon at the specified office for the time being of any of the agents shown on the reverse of this Coupon (or any successor or additional agents appointed from time to time in accordance with the Conditions).
[For Floating Rate Notes]
IHG FINANCE LLC
[Title of Notes]
unconditionally and irrevocably guaranteed by
INTERCONTINENTAL HOTELS GROUP PLC
and
SIX CONTINENTS LIMITED
and
INTERCONTINENTAL HOTELS LIMITED
This Coupon relates to a Note in the denomination of [currency] [amount].
Coupon for the amount of interest due on the Interest Payment Date falling in [month and year].
Such amount is payable, subject to the terms and conditions (the Conditions) endorsed on the Note to which this Coupon relates (which are binding on the holder of this Coupon whether or not it is for the time being attached to such Note), against presentation and surrender of this Coupon at the specified office for the time being of any of the agents shown on the reverse of this Coupon (or any successor or additional agents appointed from time to time in accordance with the Conditions).
Page 190
The Note to which this Coupon relates may, in certain circumstances specified in the Conditions, fall due for redemption before the maturity date of this Coupon. In such event, this Coupon shall become void and no payment will be made in respect hereof.
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]11
[On the reverse of the Coupon:]
Principal Paying Agent: Elavon Financial Services DAC, UK Branch, 125 Old Broad Street, Fifth Floor, London EC2N 1AR
| 11 |
Legend to appear on every Note with a maturity of more than one year. |
Page 191
PART J
FORM OF TALON FOR IHG FINANCE LLC
[On the face of the Talon:]
IHG FINANCE LLC
[Title of Notes]
unconditionally and irrevocably guaranteed by
INTERCONTINENTAL HOTELS GROUP PLC
and
SIX CONTINENTS LIMITED
and
INTERCONTINENTAL HOTELS LIMITED
Talon for further Coupons.
On or after the maturity date of the final Coupon which is (or was at the time of issue) part of the Coupon Sheet to which this Talon is (or was at the time of issue) attached, this Talon may be exchanged at the specified office for the time being of the principal paying agent shown on the reverse of this Talon (or any successor principal paying agent appointed from time to time in accordance with the terms and conditions (the Conditions) of the Notes to which this Talon relates) for a further Coupon Sheet (including a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to the Conditions).
The Note to which this Talon relates may, in certain circumstances specified in the Conditions, fall due for redemption before the maturity date of such final Coupon. In such event, this Talon shall become void and no Coupon will be delivered in respect hereof.
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]12
[On the reverse of the Talon:]
Principal Paying Agent: Elavon Financial Services DAC, UK Branch 125 Old Broad Street, Fifth Floor, London EC2N 1AR
| 12 |
Legend to appear on every Note with a maturity of more than one year. |
Page 192
SCHEDULE 3
FORM OF GLOBAL REGISTERED NOTE CERTIFICATES
PART A
FORM OF GLOBAL REGISTERED NOTE CERTIFICATE FOR
INTERCONTINENTAL HOTELS GROUP PLC
[THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION UNDER THE SECURITIES ACT.]
[[ISIN]: [•]]
[Common Code: [•]]
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
[Aggregate principal amount of Series]
[Title of Notes]
unconditionally and irrevocably guaranteed by
IHG FINANCE LLC
(formed in the State of Delaware with company number 7546892)
and
SIX CONTINENTS LIMITED
(incorporated in England and Wales with company number 913450)
and
INTERCONTINENTAL HOTELS LIMITED
(incorporated in England and Wales with company number 4551528)
GLOBAL REGISTERED NOTE CERTIFICATE
Page 193
1. INTRODUCTION
1.1 The Notes
This Global Registered Note Certificate is issued in respect of the notes (the Notes) of InterContinental Hotels Group PLC (the Issuer) described in the final terms (the Final Terms) or drawdown prospectus (Drawdown Prospectus) a copy of which is annexed hereto. [If a Drawdown Prospectus is annexed hereto, each reference in this Global Registered Note Certificate to “Final Terms” shall be read and construed as a reference to the final terms of the Notes set out in such Drawdown Prospectus. The Notes:
| (a) |
Trust Deed: (insofar as they are represented by this Global Note) are subject to and have the benefit of an amended and restated trust deed made on 21 September 2023 (as further amended, supplemented or restated from time to time, the Trust Deed) made between the Issuer, the Guarantors and U.S. Bank Trustees Limited as trustee (the Trustee, which expression shall include all persons for the time being the trustee or trustees appointed under the Trust Deed); and |
| (b) |
Agency Agreement: are the subject of an amended and restated agency agreement dated 21 September 2023 (as further amended, supplemented or restated from time to time) (the Agency Agreement) made between the Issuer, the Guarantors, Elavon Financial Services DAC as registrar (the Registrar which expression includes any successor registrar appointed from time to time in connection with the Notes) and as principal paying agent and Trustee and the other paying agents and the transfer agents named therein. |
1.2 Construction
All references in this Global Registered Note Certificate to an agreement, instrument or other document (including the Agency Agreement and the Trust Deed) shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time provided that, in the case of any amendment, supplement, replacement or novation made after the date hereof, it is made in accordance with the Conditions. Headings and sub-headings are for ease of reference only and shall not affect the construction of this Global Registered Note Certificate.
1.3 References to Conditions
Any reference herein to the Conditions is to the Terms and Conditions of the Notes set out in Schedule 1 (Terms and Conditions of the Notes) hereto, as supplemented, amended and/or replaced by the Final Terms, and any reference to a numbered Condition is to the correspondingly numbered provision thereof. Words and expressions defined in the Conditions shall have the same meanings when used in this Global Registered Note Certificate.
2. REGISTERED HOLDER
This certifies that the person whose name is entered in the register maintained by the Registrar in relation to the Notes (the Register) is the duly registered holder (the Holder) of an aggregate principal amount equal to the Aggregate Nominal Amount specified in the Final Terms or (if the Aggregate Nominal Amount in respect of the Series specified in the Final Terms is different from the Aggregate Nominal Amount in respect of the Tranche specified in the Final Terms) the Aggregate Nominal Amount in respect of the Tranche specified in the Final Terms.
Page 194
3. PROMISE TO PAY
The Issuer, for value received, promises to pay to the Holder, in respect of each Note represented by this Global Registered Note Certificate, the Redemption Amount on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions (or to pay such other amounts of principal on such dates as may be specified in the Final Terms), and to pay interest on each such Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions.
4. PAYMENT CONDITIONS
4.1 Payment Business Day: If the currency of any payment made in respect of Notes represented by this Global Registered Note Certificate is euro, the applicable Payment Business Day shall be any day which is a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or, if the currency of any payment made in respect of Notes represented by this Global Registered Note Certificate is not euro, the applicable Payment Business Day shall be any day which is a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre.
4.2 Payment Record Date: Each payment made in respect of this Global Registered Note Certificate will be made to the person shown as the Holder in the Register at the close of business (in the relevant clearing system) on the Clearing System Business Day before the due date for such payment (the Record Date) where Clearing System Business Day means a day on which each clearing system for which this Global Registered Note Certificate is being held is open for business.
5. EXCHANGE FOR INDIVIDUAL NOTE CERTIFICATES
This Global Registered Note Certificate will be exchanged in whole (but not in part) for duly authenticated and completed Individual Note Certificates (which expression has the meaning given in the Trust Deed) in accordance with the Agency Agreement:
5.1 Upon notice: on the expiry of such period of notice as may be specified in the Final Terms; or
5.2 Upon demand: at any time, if so specified in the Final Terms; or
5.3 In limited circumstances: if the Final Terms specifies “in the limited circumstances described in the Global Registered Note Certificate ”, then if either of the following events occurs:
| (a) |
Closure of clearing systems: [Euroclear Bank S.A./N.V. (Euroclear) or Clearstream Banking S.A. (Clearstream)] or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business; or |
Page 195
| (b) |
Event of Default: an Event of Default as defined in Condition 12 (Events of Default) occurs. |
6. DELIVERY OF INDIVIDUAL NOTE CERTIFICATES
Whenever this Global Registered Note Certificate is to be exchanged for Individual Note Certificates, such Individual Note Certificates shall be issued in an aggregate principal amount equal to the principal amount of this Global Registered Note Certificate within five business days of the delivery, by or on behalf of the Holder, Euroclear and/or Clearstream to the Registrar of such information as is required to complete and deliver such Individual Note Certificates (including, without limitation, the names and addresses of the persons in whose names the Individual Note Certificates are to be registered and the principal amount of each such person’s holding) against the surrender of this Global Registered Note Certificate at the Specified Office of the Registrar. Such exchange shall be effected in accordance with the provisions of the Agency Agreement and the regulations concerning the transfer and registration of Notes scheduled thereto and, in particular, shall be effected without charge to any Holder, but against such indemnity as the Registrar may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such exchange. In this paragraph, “business day” means a day on which commercial banks are open for business (including dealings in foreign currencies) in the city in which the Registrar has its Specified Office.
7. CONDITIONS APPLY
Save as otherwise provided herein, the Holder of this Global Registered Note Certificate shall have the benefit of, and be subject to, the Conditions and, for the purposes of this Global Registered Note Certificate, any reference in the Conditions to “Note Certificate” or “Note Certificates” shall, except where the context otherwise requires, be construed so as to include this Global Registered Note Certificate.
8. EXERCISE OF PUT OPTION
In order to exercise the option contained in Condition 9(f) (Redemption and Purchase – Redemption at the option of the Noteholders) or Condition 9(g) (Change of Control redemption), the Holder must, within the period specified in the Conditions for the deposit of the relevant Note Certificate and Put Option Notice or Change of Control Put Exercise Notice (as applicable) (as each such expression is defined in the Agency Agreement) give notice of such exercise to the Principal Paying Agent, in accordance with the rules and procedures of Euroclear, Clearstream and/or any other relevant clearing system, specifying the principal amount of Notes in respect of which the Put Option or the Change of Control Put Option (as applicable) is being exercised. Any such notice shall be irrevocable and may not be withdrawn.
9. EXERCISE OF CALL OPTION
In connection with an exercise of the option contained in Condition 9(c) (Redemption at the option of the relevant Issuer (Issuer Call Option)) in relation to some only of the Notes, the Notes represented by this Global Registered Note Certificate may be redeemed in part in the principal amount specified by the Issuer in accordance with the Conditions and the Notes to be redeemed will not be selected as provided in the Conditions but in accordance with the rules and procedures of Euroclear, Clearstream (to be reflected in the records of Euroclear and Clearstream as either a pool factor or a reduction in principal amount, at their discretion).
Page 196
10. NOTICES
Notwithstanding Condition 18 (Notices), so long as this Global Registered Note Certificate is held on behalf of Euroclear, Clearstream or any other clearing system (an Alternative Clearing System), notices to Holders of Notes represented by this Global Registered Note Certificate may be given by delivery of the relevant notice to Euroclear, Clearstream or (as the case may be) such Alternative Clearing System.
11. DETERMINATION OF ENTITLEMENT
This Global Registered Note Certificate is evidence of entitlement only and is not a document of title. Entitlements are determined by the Register and only the Holder is entitled to payment in respect of this Global Registered Note Certificate.
12. AUTHENTICATION
This Global Registered Note Certificate shall not be valid for any purpose until it has been authenticated for and on behalf of Elavon Financial Services DAC as registrar.
13. [EFFECTUATION
This Global Registered Note Certificate shall not be valid for any purpose until it has been effectuated for or on behalf of the entity appointed as common safekeeper by Euroclear or Clearstream.]
14. GOVERNING LAW
This Global Registered Note Certificate and any non-contractual obligations arising out of or in connection with it are governed by English law.
Page 197
AS WITNESS the electronic/manual signature of a duly authorised person for and on behalf of the Issuer.
INTERCONTINENTAL HOTELS GROUP PLC
| By: |
||
| [electronic / manual signature] (duly authorised) |
||
ISSUED on the Issue Date
AUTHENTICATED for and on behalf of
ELAVON FINANCIAL SERVICES DAC
as registrar without recourse, warranty
or liability
| By: |
||
| [electronic / manual signature] (duly authorised) |
||
EFFECTUATED for and on behalf of
[COMMON SAFEKEEPER] as common safekeeper
without recourse, warranty or liability
| By: |
||
| [electronic / manual signature] (duly authorised) |
||
[Registered Global Note for InterContinental Hotels Group PLC – Signature Page]
Page 198
FORM OF TRANSFER
FOR VALUE RECEIVED , being the registered holder of this Global Registered Note Certificate, hereby transfers to
|
|
|
of |
|
|
| , |
[currency] in principal amount of the Notes and irrevocably requests and authorises Elavon Financial Services DAC in its capacity as registrar in relation to the Notes (or any successor in its capacity as such) to effect the relevant transfer by means of appropriate entries in the register kept by it.
| Dated: |
| By: |
||
| (duly authorised) |
||
Notes
The name of the person by or on whose behalf this form of transfer is signed must correspond with the name of the registered holder as it appears on the face of this Global Registered Note Certificate.
| (a) |
A representative of such registered holder should state the capacity in which such representative signs, e.g. executor. |
| (b) |
The signature of the person effecting a transfer shall conform to any list of duly authorised specimen signatures supplied by the registered holder or be certified by a recognised bank, notary public or in such other manner as the Registrar may require. |
| (c) |
Any transfer of Notes shall be in an amount equal to a Specified Denomination. |
Page 199
SCHEDULE 1
Terms and Conditions of the Notes
[As set out in the Base Prospectus[/Drawdown Prospectus (as applicable)]]
Page 200
PART B
FORM OF INDIVIDUAL NOTE CERTIFICATE FOR INTERCONTINENTAL
HOTELS GROUP PLC
[ISIN: [•]]
[CUSIP No.: [•]]
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
[Aggregate principal amount of Series]
[Title of Notes]
unconditionally and irrevocably guaranteed by
[IHG FINANCE LLC
(formed in the State of Delaware with company number 7546892)
and]
SIX CONTINENTS LIMITED
(incorporated in England and Wales with company number 913450)
and
INTERCONTINENTAL HOTELS LIMITED
(incorporated in England and Wales with company number 4551528)
INDIVIDUAL NOTE CERTIFICATE
This Note Certificate is issued in respect of a series of notes (the Notes) of InterContinental Hotels Group PLC (the Issuer) described in the final terms (the Final Terms) [or drawdown prospectus (Drawdown Prospectus)] a copy of the relevant particulars of which is endorsed on this Note. Any reference herein to the Conditions is to the Terms and Conditions of the Notes endorsed on this Note, as supplemented, amended and/or replaced by the Final Terms [or Drawdown Prospectus], and any reference to a numbered Condition is to the correspondingly numbered provision thereof. Words and expressions defined in the Conditions shall have the same meanings when used in this Note.
This is to certify that:
| of |
||||||
is the person registered in the register maintained by the Registrar in relation to the Notes (the Register) as the duly registered holder or, if more than one person is so registered, the first-named of such persons (the Holder) of:
| [currency] |
||||
| ( [CURRENCY IN WORDS]) |
Page 201
in aggregate principal amount of the Notes.
The Issuer, for value received, hereby promises to pay the Redemption Amount to the Holder on Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions (or to pay such other amounts of principal on such dates as may be specified in the Final Terms [or Drawdown Prospectus]), and to pay interest on this Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions.
This Note Certificate is evidence of entitlement only and is not a document of title. Entitlements are determined by the Register and only the Holder is entitled to payment in respect of this Note Certificate.
This Note Certificate shall not be valid for any purpose until it has been authenticated for and on behalf of Elavon Financial Services DAC as registrar.
This Note and any non-contractual obligations arising out of or in connection with it are governed by English law.
Page 202
AS WITNESS the electronic / manual signature of a duly authorised person for and on behalf of the Issuer.
| INTERCONTINENTAL HOTELS GROUP PLC |
||
| By: |
||
| [electronic / manual signature] (duly authorised) |
||
ISSUED as of [issue date]
| AUTHENTICATED for and on behalf of ELAVON FINANCIAL SERVICES DAC as registrar without recourse, warranty or liability |
||
| By: |
||
| [electronic / manual signature] (duly authorised) |
||
| [EFFECTUATED for and on behalf of [COMMON SAFEKEEPER] as common safekeeper without recourse, warranty or liability |
||
| By: |
||
| [electronic / manual signature] (duly authorised) |
||
[Individual Note Certificate for InterContinental Hotels Group PLC – Signature Page]
Page 203
FORM OF TRANSFER
FOR VALUE RECEIVED , being the registered holder of this Note Certificate, hereby transfers to
|
|
|
of |
|
|
|
|
[currency] in principal amount of the Notes and irrevocably requests and authorises Elavon Financial Services DAC in its capacity as registrar in relation to the Notes (or any successor in its capacity as such) to effect the relevant transfer by means of appropriate entries in the register kept by it.
| Dated: |
| By: |
||
| (duly authorised) |
||
Notes
The name of the person by or on whose behalf this form of transfer is signed must correspond with the name of the registered holder as it appears on the face of this Note Certificate.
| (a) |
A representative of such registered holder should state the capacity in which such representative signs, e.g. executor. |
| (b) |
The signature of the person effecting a transfer shall conform to any list of duly authorised specimen signatures supplied by the registered holder or be certified by a recognised bank, notary public or in such other manner as the Registrar may require. |
| (c) |
Any transfer of Notes shall be in an amount equal to a Specified Denomination. |
Page 204
[On the reverse of the Note Certificate:]
FINAL TERMS
The following is a copy of the relevant particulars of the Final Terms [or Drawdown Prospectus].
TERMS AND CONDITIONS
[As set out in the Base Prospectus [/ Drawdown Prospectus (as applicable)]]
[At the foot of the Terms and Conditions:]
PRINCIPAL PAYING AGENT
ELAVON FINANCIAL SERVICES
DAC, UK BRANCH
125 Old Broad Street
Fifth Floor
London EC2N 1AR
REGISTRAR AND TRANSFER AGENT
ELAVON FINANCIAL SERVICES DAC
[Block F1
Cherrywood Business Park
Cherrywood
Dublin 18 D18 W2X7
Ireland]
Page 205
PART C
FORM OF GLOBAL REGISTERED NOTE CERTIFICATE FOR IHG FINANCE LLC
[THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION UNDER THE SECURITIES ACT.]
[[ISIN]: [•]]
[Common Code: [•]]
IHG FINANCE LLC
(formed in the State of Delaware with company number 7546892)
[Aggregate principal amount of Series]
[Title of Notes]
unconditionally and irrevocably guaranteed by
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
and
SIX CONTINENTS LIMITED
(incorporated in England and Wales with company number 913450)
and
INTERCONTINENTAL HOTELS LIMITED
(incorporated in England and Wales with company number 4551528)
GLOBAL REGISTERED NOTE CERTIFICATE
1. INTRODUCTION
1.1 The Notes
This Global Registered Note Certificate is issued in respect of the notes (the Notes) of IHG Finance LLC (the Issuer) described in the final terms (the Final Terms) or drawdown prospectus (Drawdown Prospectus) a copy of which is annexed hereto. [If a Drawdown Prospectus is annexed hereto, each reference in this Global Registered Note Certificate to “Final Terms” shall be read and construed as a reference to the final terms of the Notes set out in such Drawdown Prospectus. The Notes:
| (a) |
Trust Deed: (insofar as they are represented by this Global Note) are subject to and have the benefit of an amended and restated trust deed made on 21 September 2023 (as further amended, supplemented or restated from time to time, the Trust Deed) made between the Issuer, the Guarantors and U.S. Bank Trustees Limited as trustee (the Trustee, which expression shall include all persons for the time being the trustee or trustees appointed under the Trust Deed); and |
Page 206
| (b) |
Agency Agreement: are the subject of an amended and restated agency agreement dated 21 September 2023 (as further amended, supplemented or restated from time to time) (the Agency Agreement) made between the Issuer, the Guarantors, Elavon Financial Services DAC as registrar (the Registrar which expression includes any successor registrar appointed from time to time in connection with the Notes) and as principal paying agent and Trustee and the other paying agents and the transfer agents named therein. |
1.2 Construction
All references in this Global Registered Note Certificate to an agreement, instrument or other document (including the Agency Agreement and the Trust Deed) shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time provided that, in the case of any amendment, supplement, replacement or novation made after the date hereof, it is made in accordance with the Conditions. Headings and sub-headings are for ease of reference only and shall not affect the construction of this Global Registered Note Certificate.
1.3 References to Conditions
Any reference herein to the Conditions is to the Terms and Conditions of the Notes set out in Schedule 1 (Terms and Conditions of the Notes) hereto, as supplemented, amended and/or replaced by the Final Terms, and any reference to a numbered Condition is to the correspondingly numbered provision thereof. Words and expressions defined in the Conditions shall have the same meanings when used in this Global Registered Note Certificate.
2. REGISTERED HOLDER
This certifies that the person whose name is entered in the register maintained by the Registrar in relation to the Notes (the Register) is the duly registered holder (the Holder) of an aggregate principal amount equal to the Aggregate Nominal Amount specified in the Final Terms or (if the Aggregate Nominal Amount in respect of the Series specified in the Final Terms is different from the Aggregate Nominal Amount in respect of the Tranche specified in the Final Terms) the Aggregate Nominal Amount in respect of the Tranche specified in the Final Terms.
3. PROMISE TO PAY
The Issuer, for value received, promises to pay to the Holder, in respect of each Note represented by this Global Registered Note Certificate, the Redemption Amount on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions (or to pay such other amounts of principal on such dates as may be specified in the Final Terms), and to pay interest on each such Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions.
Page 207
4. PAYMENT CONDITIONS
4.1 Payment Business Day: If the currency of any payment made in respect of Notes represented by this Global Registered Note Certificate is euro, the applicable Payment Business Day shall be any day which is a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or, if the currency of any payment made in respect of Notes represented by this Global Registered Note Certificate is not euro, the applicable Payment Business Day shall be any day which is a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre.
4.2 Payment Record Date: Each payment made in respect of this Global Registered Note Certificate will be made to the person shown as the Holder in the Register at the close of business (in the relevant clearing system) on the Clearing System Business Day before the due date for such payment (the Record Date) where Clearing System Business Day means a day on which each clearing system for which this Global Registered Note Certificate is being held is open for business.
5. EXCHANGE FOR INDIVIDUAL NOTE CERTIFICATES
This Global Registered Note Certificate will be exchanged in whole (but not in part) for duly authenticated and completed Individual Note Certificates (which expression has the meaning given in the Trust Deed) in accordance with the Agency Agreement:
5.1 Upon notice: on the expiry of such period of notice as may be specified in the Final Terms; or
5.2 Upon demand: at any time, if so specified in the Final Terms; or
5.3 In limited circumstances: if the Final Terms specifies “in the limited circumstances described in the Global Registered Note Certificate ”, then if either of the following events occurs:
| (a) |
Closure of clearing systems: [Euroclear Bank S.A./N.V. (Euroclear) or Clearstream Banking S.A. (Clearstream)] or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business; or |
| (b) |
Event of Default: an Event of Default as defined in Condition 12 (Events of Default) occurs. |
6. DELIVERY OF INDIVIDUAL NOTE CERTIFICATES
Whenever this Global Registered Note Certificate is to be exchanged for Individual Note Certificates, such Individual Note Certificates shall be issued in an aggregate principal amount equal to the principal amount of this Global Registered Note Certificate within five business days of the delivery, by or on behalf of the Holder, Euroclear and/or Clearstream to the Registrar of such information as is required to complete and deliver such Individual Note Certificates (including, without limitation, the names and addresses of the persons in whose names the Individual Note Certificates are to be registered and the principal amount of each such person’s holding) against the surrender of this Global Registered Note Certificate at the Specified Office of the Registrar.
Page 208
Such exchange shall be effected in accordance with the provisions of the Agency Agreement and the regulations concerning the transfer and registration of Notes scheduled thereto and, in particular, shall be effected without charge to any Holder, but against such indemnity as the Registrar may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such exchange. In this paragraph, “business day” means a day on which commercial banks are open for business (including dealings in foreign currencies) in the city in which the Registrar has its Specified Office.
7. CONDITIONS APPLY
Save as otherwise provided herein, the Holder of this Global Registered Note Certificate shall have the benefit of, and be subject to, the Conditions and, for the purposes of this Global Registered Note Certificate, any reference in the Conditions to Note Certificate or Note Certificates shall, except where the context otherwise requires, be construed so as to include this Global Registered Note Certificate.
8. EXERCISE OF PUT OPTION
In order to exercise the option contained in Condition 9(f) (Redemption and Purchase – Redemption at the option of the Noteholders) or Condition 9(g) (Change of Control redemption), the Holder must, within the period specified in the Conditions for the deposit of the relevant Note Certificate and Put Option Notice or Change of Control Put Exercise Notice (as applicable) (as each such expression is defined in the Agency Agreement) give notice of such exercise to the Principal Paying Agent, in accordance with the rules and procedures of Euroclear, Clearstream and/or any other relevant clearing system, specifying the principal amount of Notes in respect of which the Put Option or the Change of Control Put Option (as applicable) is being exercised. Any such notice shall be irrevocable and may not be withdrawn.
9. EXERCISE OF CALL OPTION
In connection with an exercise of the option contained in Condition 9(c) (Redemption at the option of the relevant Issuer (Issuer Call Option)) in relation to the Notes, the Notes represented by this Global Registered Note Certificate may be redeemed at the option of the Issuer in whole or in part in the principal amount specified by the Issuer in accordance with the Conditions and the Notes to be redeemed will not be selected as provided in the Conditions but in accordance with the rules and procedures of Euroclear, Clearstream (to be reflected in the records of Euroclear and Clearstream as either a pool factor or a reduction in principal amount, at their discretion).
10. NOTICES
Notwithstanding Condition 18 (Notices), so long as this Global Registered Note Certificate is held on behalf of Euroclear, Clearstream or any other clearing system (an Alternative Clearing System), notices to Holders of Notes represented by this Global Registered Note Certificate may be given by delivery of the relevant notice to Euroclear, Clearstream or (as the case may be) such Alternative Clearing System.
Page 209
11. DETERMINATION OF ENTITLEMENT
This Global Registered Note Certificate is evidence of entitlement only and is not a document of title. Entitlements are determined by the Register and only the Holder is entitled to payment in respect of this Global Registered Note Certificate.
12. AUTHENTICATION
This Global Registered Note Certificate shall not be valid for any purpose until it has been authenticated for and on behalf of Elavon Financial Services DAC as registrar.
13. [EFFECTUATION
This Global Registered Note Certificate shall not be valid for any purpose until it has been effectuated for or on behalf of the entity appointed as common safekeeper by Euroclear or Clearstream.]
14. GOVERNING LAW
This Global Registered Note Certificate and any non-contractual obligations arising out of or in connection with it are governed by English law.
Page 210
AS WITNESS the electronic / manual signature of a duly authorised person for and on behalf of the Issuer.
| IHG FINANCE LLC |
||
| By: |
||
| [manual or electronic signature] (duly authorised) |
||
ISSUED on the Issue Date
| AUTHENTICATED for and on behalf of ELAVON FINANCIAL SERVICES DAC as registrar without recourse, warranty or liability |
||
| By: |
||
| [electronic / manual signature] (duly authorised) |
||
| [EFFECTUATED for and on behalf of [COMMON SAFEKEEPER] as common safekeeper without recourse, warranty or liability |
||
| By: |
||
| [electronic / manual signature] (duly authorised) |
||
[Registered Global Note for IHG Finance LLC – Signature Page]
Page 211
FORM OF TRANSFER
FOR VALUE RECEIVED , being the registered holder of this Global Registered Note Certificate, hereby transfers to
|
|
|
of |
|
|
|
|
, [currency] in principal amount of the Notes and irrevocably requests and authorises Elavon Financial Services DAC in its capacity as registrar in relation to the Notes (or any successor in its capacity as such) to effect the relevant transfer by means of appropriate entries in the register kept by it.
| Dated: |
| By: |
||
| (duly authorised) |
||
Notes
The name of the person by or on whose behalf this form of transfer is signed must correspond with the name of the registered holder as it appears on the face of this Global Registered Note Certificate.
| (d) |
A representative of such registered holder should state the capacity in which such representative signs, e.g. executor. |
| (e) |
The signature of the person effecting a transfer shall conform to any list of duly authorised specimen signatures supplied by the registered holder or be certified by a recognised bank, notary public or in such other manner as the Registrar may require. |
| (f) |
Any transfer of Notes shall be in an amount equal to a Specified Denomination. |
Page 212
SCHEDULE 1
Terms and Conditions of the Notes
[As set out in the Base Prospectus[/Drawdown Prospectus (as applicable)]]
Page 213
PART D
FORM OF INDIVIDUAL NOTE CERTIFICATE FOR IHG FINANCE LLC
[ISIN: [•]]
[CUSIP No.: [•]]
IHG FINANCE LLC
(formed in the State of Delaware with company number 7546892)
[Aggregate principal amount of Series]
[Title of Notes]
unconditionally and irrevocably guaranteed by
INTERCONTINENTAL HOTELS GROUP PLC
(incorporated in England and Wales with company number 05134420)
and
SIX CONTINENTS LIMITED
(incorporated in England and Wales with company number 913450)
and
INTERCONTINENTAL HOTELS LIMITED
(incorporated in England and Wales with company number 4551528)
INDIVIDUAL NOTE CERTIFICATE
This Note Certificate is issued in respect of a series of notes (the Notes) of IHG Finance LLC (the Issuer) described in the final terms (the Final Terms) [or drawdown prospectus (Drawdown Prospectus)] a copy of the relevant particulars of which is endorsed on this Note. Any reference herein to the Conditions is to the Terms and Conditions of the Notes endorsed on this Note, as supplemented, amended and/or replaced by the Final Terms [or Drawdown Prospectus], and any reference to a numbered Condition is to the correspondingly numbered provision thereof. Words and expressions defined in the Conditions shall have the same meanings when used in this Note.
This is to certify that:
| of |
||||||
is the person registered in the register maintained by the Registrar in relation to the Notes (the Register) as the duly registered holder or, if more than one person is so registered, the first-named of such persons (the Holder) of:
| [currency] |
||||
| ( [CURRENCY IN WORDS]) |
Page 214
in aggregate principal amount of the Notes.
The Issuer, for value received, hereby promises to pay the Redemption Amount to the Holder on Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions (or to pay such other amounts of principal on such dates as may be specified in the Final Terms [or Drawdown Prospectus]), and to pay interest on this Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions.
This Note Certificate is evidence of entitlement only and is not a document of title. Entitlements are determined by the Register and only the Holder is entitled to payment in respect of this Note Certificate.
This Note Certificate shall not be valid for any purpose until it has been authenticated for and on behalf of Elavon Financial Services DAC as registrar.
This Note and any non-contractual obligations arising out of or in connection with it are governed by English law.
Page 215
AS WITNESS the electronic / manual signature of a duly authorised person for and on behalf of the Issuer.
| IHG FINANCE LLC |
||
| By: |
||
| [manual or electronic signature] (duly authorised) |
||
ISSUED as of [issue date]
| AUTHENTICATED for and on behalf of ELAVON FINANCIAL SERVICES DAC as registrar without recourse, warranty or liability |
||
| By: |
||
| [electronic / manual signature] (duly authorised) |
||
| [EFFECTUATED for and on behalf of [COMMON SAFEKEEPER] as common safekeeper without recourse, warranty or liability |
||
| By: |
||
| [electronic / manual signature] (duly authorised) |
||
[Individual Note Certificate for IHG Finance LLC – Signature Page]
Page 216
FORM OF TRANSFER
FOR VALUE RECEIVED , being the registered holder of this Note Certificate, hereby transfers
to
|
of |
||
[currency] in principal amount of the Notes and irrevocably requests and authorises Elavon Financial Services DAC in its capacity as registrar in relation to the Notes (or any successor in its capacity as such) to effect the relevant transfer by means of appropriate entries in the register kept by it.
| Dated: |
|
|||||
| By: |
|
|||||
| (duly authorised) |
Notes
The name of the person by or on whose behalf this form of transfer is signed must correspond with the name of the registered holder as it appears on the face of this Note Certificate.
| (g) |
A representative of such registered holder should state the capacity in which such representative signs, e.g. executor. |
| (h) |
The signature of the person effecting a transfer shall conform to any list of duly authorised specimen signatures supplied by the registered holder or be certified by a recognised bank, notary public or in such other manner as the Registrar may require. |
| (i) |
Any transfer of Notes shall be in an amount equal to a Specified Denomination. |
Page 217
[On the reverse of the Note Certificate:]
FINAL TERMS
The following is a copy of the relevant particulars of the Final Terms [or Drawdown Prospectus].
TERMS AND CONDITIONS
[As set out in the Base Prospectus[ / Drawdown Prospectus (as applicable)]]
[At the foot of the Terms and Conditions:]
PRINCIPAL PAYING AGENT
ELAVON FINANCIAL SERVICES
DAC, UK BRANCH
125 Old Broad Street
Fifth Floor
London EC2N 1AR
REGISTRAR AND TRANSFER
AGENT
ELAVON FINANCIAL SERVICES
DAC
[Block F1
Cherrywood Business Park
Cherrywood
Dublin 18 D18 W2X7
Ireland]
Page 218
SCHEDULE 4
PROVISIONS FOR MEETINGS OF NOTEHOLDERS
1. DEFINITIONS
In this Trust Deed and the Conditions, the following expressions have the following meanings:
| 1.1 |
In relation to Meetings of holders of Registered Notes and/or holders of Bearer Notes: |
Chairperson means, in relation to any Meeting, the individual who takes the chair in accordance with paragraph 8 (Chairperson);
Extraordinary Resolution means:
| (a) |
a resolution passed at a Meeting duly convened and held in accordance with this Schedule by a majority of not less than three quarters of the persons voting thereat upon a show of hands or if a poll is duly demanded by a majority consisting of not less than three-quarters of the votes cast on such poll; or |
| (b) |
consent given by way of electronic consents through the relevant clearing system(s) (in a form satisfactory to the Trustee) by or on behalf of at least three-quarters in nominal amount of the Notes for the time being outstanding. |
Meeting means a meeting of Noteholders (whether originally convened or resumed following an adjournment, and whether held virtually or in person);
Relevant Fraction means:
| (a) |
for all business other than voting on an Extraordinary Resolution, one tenth; |
| (b) |
for voting on any Extraordinary Resolution other than one relating to a Reserved Matter, more than half; and |
| (c) |
for voting on any Extraordinary Resolution relating to a Reserved Matter, not less than three quarters; |
provided, however, that, in the case of a Meeting which has resumed after adjournment for want of a quorum, it means:
| (i) |
for all business other than voting on an Extraordinary Resolution relating to a Reserved Matter, the fraction of the aggregate principal amount of the outstanding Notes represented or held by the Voters actually present at the Meeting; and |
| (ii) |
for voting on any Extraordinary Resolution relating to a Reserved Matter, not less than one quarter; |
Page 219
Reserved Matter means any proposal:
| (a) |
to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes or to alter the method of calculating the amount of any payment in respect of the Notes on redemption or maturity provided however for the avoidance of doubt that neither a Benchmark Amendment nor a Benchmark Replacement Conforming Change shall constitute a Reserved Matter; |
| (b) |
to effect the exchange or substitution of the Notes for, or the conversion of the Notes into, shares, bonds or other obligations or securities of the Relevant Issuer or any other person or body corporate formed or to be formed (other than as permitted under Clause 9.3 (Substitution) of this Trust Deed); |
| (c) |
to change the currency in which amounts due in respect of the Notes are payable; |
| (d) |
to change the quorum required at any Meeting or the majority required to pass an Extraordinary Resolution; or |
| (e) |
to amend this definition; |
Written Resolution means a resolution in writing signed by or on behalf of holders of Notes, who for the time being are entitled to receive notice of a Meeting in accordance with the provisions of this Schedule, holding not less than three-quarters in nominal amount of the Notes of such Series for the time being outstanding, whether contained in one document or several documents in the same form, each signed by or on behalf of one or more such holders of the Notes;
24 hours means a period of 24 hours including all or part of a day (disregarding for this purpose the day upon which such Meeting is to be held) upon which banks are open for business in both the place where the relevant Meeting is to be held and in each of the places where the Paying Agents have their Specified Offices and such period shall be extended by one period or, to the extent necessary, more periods of 24 hours until there is included as aforesaid all or part of a day upon which banks are open for business as aforesaid; and
48 hours means 2 consecutive periods of 24 hours.
| 1.2 |
In relation to Meetings of holders of Bearer Notes only: |
Block Voting Instruction means, in relation to any Meeting, a document in the English language issued by a Paying Agent:
| (a) |
certifying that the Deposited Notes have been deposited with such Paying Agent (or to its order at a bank or other depositary) or blocked in an account with a clearing system and will not be released until the earlier of: |
| (i) |
the conclusion of the Meeting specified in such Block Voting Instruction; and |
Page 220
| (ii) |
the surrender to such Paying Agent, not less than 48 hours before the time fixed for the Meeting (or, if the Meeting has been adjourned, the time fixed for its resumption), of the receipt for the Deposited Notes and notification thereof by such Paying Agent to the Relevant Issuer and the Trustee; and |
| (b) |
certifying that the depositor of each Deposited Note or a duly authorised person on its behalf has instructed the relevant Paying Agent that the votes attributable to such Deposited Note are to be cast in a particular way on each resolution to be put to the Meeting and that, during the period of 48 hours before the time fixed for the Meeting and ending at the conclusion or adjournment thereof, such instructions may not be amended or revoked; |
| (c) |
listing the aggregate nominal amount and (if in definitive form) the certificate numbers of the Deposited Notes, distinguishing for each resolution between those in respect of which instructions have been given to vote for, or against, the resolution; and |
| (d) |
authorising a named individual or individuals to vote in respect of the Deposited Notes in accordance with such instructions; |
Deposited Notes means certain specified Bearer Notes which have been deposited with a Paying Agent (or to its order at a bank or other depositary) held to its order or under its control or blocked in an account with a clearing system, for the purposes of a Block Voting Instruction or a Voting Certificate;
Proxy, in the case of Bearer Notes means, in relation to any Meeting, a person appointed to vote under a Block Voting Instruction other than:
| (a) |
any such person whose appointment has been revoked and in relation to whom the relevant Paying Agent has been notified in writing of such revocation by the time which is 48 hours before the time fixed for such Meeting; and |
| (b) |
any such person appointed to vote at a Meeting which has been adjourned for want of a quorum and who has not been re-appointed to vote at the Meeting when it is resumed; |
Voter means, in relation to any Meeting, the bearer of a Voting Certificate, Proxy or the bearer of a Definitive Note who produces such Definitive Note at the Meeting;
Voting Certificate means, in relation to any Meeting, a certificate in the English language issued by a Paying Agent and dated in which it is stated:
| (a) |
that the Deposited Notes have been deposited with such Paying Agent (or to its order or under its control at a bank or other depositary) or blocked in an account with a clearing system and will not be released until the earlier of: |
| (i) |
the conclusion of the Meeting; and |
| (ii) |
the surrender of such certificate to such Paying Agent; and |
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| (b) |
that the bearer of such certificate is entitled to attend and vote at the Meeting in respect of the Deposited Notes; |
| 1.3 |
In relation to any Meeting of the holders of Registered Notes: |
Block Voting Instruction means, in relation to any Meeting, a document in the English language issued by a Registrar:
| (a) |
certifying: |
| (i) |
that certain specified Registered Notes (each a Blocked Note) have been blocked in an account with a clearing system and will not be released until the conclusion of the Meeting and that the holder of each Blocked Note or a duly authorised person on its behalf has instructed the Registrar that the votes attributable to such Blocked Note are to be cast in a particular way on each resolution to be put to the Meeting; or |
| (ii) |
that each registered holder of certain specified Registered Notes (each a Relevant Note) or a duly authorised person on its behalf has instructed the Registrar that the votes attributable to each Relevant Note held by it are to be cast in a particular way on each resolution to be put to the Meeting; and |
in each case that, during the period of 48 hours before the time fixed for the Meeting, such instructions may not be amended or revoked;
| (b) |
listing the total principal amount of the Blocked Notes and the Relevant Notes, distinguishing for each resolution between those in respect of which instructions have been given to vote for, or against, the resolution; and |
| (c) |
authorising a named individual or individuals to vote in respect of the Blocked Notes and the Relevant Notes in accordance with such instructions; |
Form of Proxy means, in relation to any Meeting, a document in the English language available from the Registrar signed by a Noteholder or, in the case of a corporation, executed under its seal or signed on its behalf by a duly authorised officer and delivered to the Registrar not later than 48 hours before the time fixed for such Meeting, appointing a named individual or individuals to vote in respect of the Registered Notes held by such Noteholder;
Proxy, in the case of Registered Notes means, in relation to any Meeting, a person appointed to vote under a Block Voting Instruction or a Form of Proxy other than:
| (a) |
any such person whose appointment has been revoked and in relation to whom the Registrar has been notified in writing of such revocation by the time which is 48 hours before the time fixed for such Meeting; and |
| (b) |
any such person appointed to vote at a Meeting which has been adjourned for want of a quorum and who has not been reappointed to vote at the Meeting when it is resumed; |
Page 222
Voter means, in relation to any Meeting, (a) a Proxy or (b) (subject to paragraph 5 (Record date in relation to Registered Notes) below) a Noteholder; provided, however, that (subject to paragraph 5 (Record date in relation to Registered Notes) below) any Noteholder which has appointed a Proxy under a Block Voting Instruction or Form of Proxy shall not be a Voter except to the extent that such appointment has been revoked and the Registrar notified in writing of such revocation at least 48 hours before the time fixed for such Meeting.
2. ISSUE OF VOTING CERTIFICATES AND BLOCK VOTING INSTRUCTIONS AND FORMS OF PROXY
| 2.1 |
Bearer Notes |
The holder of a Bearer Note may obtain a Voting Certificate from any Paying Agent or require any Paying Agent to issue a Block Voting Instruction by depositing such Bearer Note with such Paying Agent or arranging for such Bearer Note to be (to its satisfaction) held to its order or under its control or blocked in an account with a clearing system not later than 48 hours before the time fixed for the relevant Meeting. A Voting Certificate or Block Voting Instruction shall be valid until the release of the Deposited Notes to which it relates. So long as a Voting Certificate or Block Voting Instruction is valid, the bearer thereof (in the case of a Voting Certificate) or any Proxy named therein (in the case of a Block Voting Instruction) shall be deemed to be the holder of the Bearer Notes to which it relates for all purposes in connection with the Meeting. A Voting Certificate and a Block Voting Instruction cannot be outstanding simultaneously in respect of the same Bearer Note.
| 2.2 |
Registered Notes |
The holder of a Registered Note may require the Registrar to issue a Block Voting Instruction by arranging (to the satisfaction of the Registrar) for such Registered Note to be blocked in an account with a clearing system not later than 48 hours before the time fixed for the relevant Meeting. The holder of a Registered Note may require the Registrar to issue a Block Voting Instruction by delivering to the Registrar written instructions not later than 48 hours before the time fixed for the relevant Meeting. Any holder of a Note may obtain an uncompleted and unexecuted Form of Proxy from the Registrar. A Block Voting Instruction and a Form of Proxy cannot be outstanding simultaneously in respect of the same Registered Note.
3. REFERENCES TO DEPOSIT/RELEASE OR BLOCKING/RELEASE OF NOTES
| 3.1 |
Bearer Notes |
Where Bearer Notes are represented by a Global Note or are held in definitive form within a clearing system, references to the deposit, or release, of Bearer Notes shall be construed in accordance with the usual practices (including blocking the relevant account) of such clearing system.
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| 3.2 |
Registered Notes |
Where Registered Notes are represented by a Global Registered Note Certificate or are held in definitive form within a clearing system, references to the blocking, or release, of Registered Notes shall be construed in accordance with the usual practices (including blocking the relevant account) of such clearing system.
4. VALIDITY OF BLOCK VOTING INSTRUCTIONS AND FORMS OF PROXY
| 4.1 |
Bearer Notes |
Block Voting Instructions in relation to Bearer Notes shall be valid only if deposited at the Specified Office of the relevant Paying Agent or at some other place approved by the Trustee, at least 24 hours before the time fixed for the relevant Meeting or the Chairperson decides otherwise before the Meeting proceeds to business. If the Trustee so requires, a notarised copy of each Block Voting Instruction and satisfactory proof of the identity of each Proxy named therein shall be produced at the Meeting, but the Trustee shall not be obliged to investigate the validity of any Block Voting Instruction or the authority of any Proxy.
| 4.2 |
Registered Notes |
Block Voting Instructions in relation to Registered Notes and Forms of Proxy shall be valid only if deposited at the specified office of the Registrar or at some other place approved by the Trustee, at least 24 hours before the time fixed for the relevant Meeting or the Chairperson decides otherwise before the Meeting proceeds to business. If the Trustee requires, a notarised copy of each Block Voting Instruction and satisfactory proof of the identity of each Proxy named therein shall be produced at the Meeting, but the Trustee shall not be obliged to investigate the validity of any Block Voting Instruction or the authority of any Proxy.
5. RECORD DATE IN RELATION TO REGISTERED NOTES
The Relevant Issuer may fix a record date for the purposes of any Meeting of the holders of Registered Notes or any resumption thereof following its adjournment for want of a quorum provided that such record date is not more than 10 days prior to the time fixed for such Meeting or (as the case may be) its resumption. The person in whose name a Registered Note is registered in the Register on the record date at close of business in the city in which the Registrar has its Specified Office shall be deemed to be the holder of such Note for the purposes of such Meeting and notwithstanding any subsequent transfer of such Note or entries in the Register.
6. CONVENING OF MEETING
The Relevant Issuer, a Relevant Guarantor or the Trustee may convene a Meeting at any time, and the Trustee shall be obliged to do so subject to its being indemnified and/or secured and/or prefunded to its satisfaction upon the request in writing of Noteholders holding not less than one tenth of the aggregate principal amount of the outstanding Notes. Every Meeting shall be held on a date, and at a time and place (which need not be a physical space and instead may be by way of conference call, including by use of a videoconference platform), approved by the Trustee.
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7. NOTICE
At least 21 days’ notice (exclusive of the day on which the notice is given and of the day on which the relevant Meeting is to be held) specifying the date, time and place of the Meeting shall be given to the Noteholders and the Paying Agents in relation to Bearer Notes, and the Registrar, in relation to Registered Notes (with a copy to the Relevant Issuer) where the Meeting is convened by the Trustee or, where the Meeting is convened by the Relevant Issuer or a Relevant Guarantor, the Trustee.
| 7.1 |
In relation to Bearer Notes |
The notice shall set out the full text of any resolutions to be proposed unless the Trustee agrees that the notice shall instead specify the nature of the resolutions without including the full text and shall state that the Bearer Notes may be deposited with, or to the order of, any Paying Agent for the purpose of obtaining Voting Certificates or appointing Proxies not later than 48 hours before the time fixed for the Meeting.
| 7.2 |
In relation to Registered Notes |
The notice shall set out the full text of any resolutions to be proposed unless the Trustee agrees that the notice shall instead specify the nature of the resolutions without including the full text and shall state that Registered Notes may be blocked in clearing systems for the purposes of appointing Proxies under Block Voting Instructions until 48 hours before the time fixed for the Meeting and a Noteholder may appoint a Proxy either under a Block Voting Instruction by delivering written instructions to the Registrar or by executing and delivering a Form of Proxy to the Specified Office of the Registrar, in either case until 48 hours before the time fixed for the Meeting.
8. CHAIRPERSON
qAn individual (who may, but need not, be a Noteholder) nominated in writing by the Trustee may take the chair at any Meeting but, if no such nomination is made or if the individual nominated is not present within 15 minutes after the time fixed for the Meeting, those present shall elect one of themselves to take the chair failing which, the Relevant Issuer or any Relevant Guarantor may appoint a Chairperson. The Chairperson of an adjourned Meeting need not be the same person as was the Chairperson of the original Meeting.
9. QUORUM
The quorum at any Meeting shall be one or more Voters representing or holding not less than the Relevant Fraction of the aggregate principal amount of the outstanding Notes.
10. ADJOURNMENT FOR WANT OF QUORUM
If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairman may decide) after the time fixed for any Meeting a quorum is not present, then:
| (a) |
in the case of a Meeting requested by Noteholders, it shall be dissolved; and |
Page 225
| (b) |
in the case of any other Meeting (unless the Relevant Issuer, the Relevant Guarantors and the Trustee otherwise agree), it shall be adjourned for such period (which shall be not less than 14 days and not more than 42 days) and to such place (which need not be a physical place and instead may be by way of a conference call, including by use of a videoconference platform) as the Chairperson determines (with the approval of the Trustee); provided, however, that: |
| (i) |
the Meeting shall be dissolved if the Relevant Issuer, the Relevant Guarantors and the Trustee together so decide; and |
| (ii) |
no Meeting may be adjourned more than once for want of a quorum. |
11. ADJOURNED MEETING
The Chairperson may, with the consent of, and shall if directed by, any Meeting adjourn such Meeting from time to time and from place to place, but no business shall be transacted at any adjourned Meeting except business which might lawfully have been transacted at the Meeting from which the adjournment took place.
12. NOTICE FOLLOWING ADJOURNMENT
Paragraph 7 (Notice) shall apply to any Meeting which is to be resumed after adjournment for want of a quorum save that:
| (a) |
10 days’ notice (exclusive of the day on which the notice is given and of the day on which the Meeting is to be resumed) shall be sufficient; and |
| (b) |
the notice shall specifically set out the quorum requirements which will apply when the Meeting resumes. |
It shall not be necessary to give notice of the resumption of a Meeting which has been adjourned for any other reason.
13. PARTICIPATION
The following may attend and speak at a Meeting:
| (a) |
Voters; |
| (b) |
representatives of the Relevant Issuer, the Relevant Guarantors, the Principal Paying Agent and the Trustee; |
| (c) |
the financial advisers of the Relevant Issuer, the Relevant Guarantors and the Trustee; |
| (d) |
the legal counsel to the Relevant Issuer, the Relevant Guarantors and the Trustee and such advisers; |
| (e) |
in relation to Registered Notes, the Registrar, or in relation to Bearer Notes, the Principal Paying Agent; and |
Page 226
| (f) |
any other person approved by the Meeting or the Trustee. |
14. SHOW OF HANDS
Every question submitted to a Meeting shall be decided in the first instance by a show of hands. Unless a poll is validly demanded before or at the time that the result is declared, the Chairperson’s declaration that on a show of hands a resolution has been passed, passed by a particular majority, rejected or rejected by a particular majority shall be conclusive, without proof of the number of votes cast for, or against, the resolution. Where there is only one Voter, this paragraph shall not apply and the resolution will immediately be decided by means of a poll.
15. POLL
A demand for a poll shall be valid if it is made by the Chairperson, the Relevant Issuer, any Relevant Guarantor, the Trustee or one or more Voters representing or holding not less than one fiftieth of the aggregate principal amount of the outstanding Notes. The poll may be taken immediately or after such adjournment as the Chairperson directs, but any poll demanded on the election of the Chairperson or on any question of adjournment shall be taken at the Meeting without adjournment. A valid demand for a poll shall not prevent the continuation of the relevant Meeting for any other business as the Chairperson directs.
16. VOTES
Every Voter shall have:
| (a) |
on a show of hands, one vote; and |
| (b) |
on a poll, the number of votes obtained by dividing the aggregate principal amount of the outstanding Note(s) represented or held by such Voter by the unit of currency in which the Notes are denominated. |
In the case of a voting tie the Chairperson shall have a casting vote.
Unless the terms of any Block Voting Instruction or Form of Proxy state otherwise, a Voter shall not be obliged to exercise all the votes to which they are entitled or to cast all the votes which he exercises in the same way.
In the case of any Meeting of holders of more than one Series of Notes where not all such Series are in the same currency, the principal amount of such Notes shall for all purposes in this Schedule 4 (whether, inter alia, in respect of the Meeting or any poll resulting therefrom), be the equivalent in pounds sterling translated at the spot rate of a bank nominated by the Trustee for the sale of the relevant currency or currencies for pounds sterling on the seventh dealing day prior to such Meeting, or in the case of a written request pursuant to paragraph 6 (Convening of Meeting), the date of such request. In such circumstances, on any poll each person present shall have one vote for each Unit of Notes (converted as above) which he holds.
Page 227
In this paragraph, a “Unit” means the lowest denomination of the Notes as stated in the relevant Final Terms or in the case of a meeting of Noteholders of more than one Series, shall be the lowest common denominator of the lowest denomination of the Notes.
17. VALIDITY OF VOTES BY PROXIES
Any vote by a Proxy in accordance with the relevant Block Voting Instruction in relation to either Bearer Notes or Registered Notes or Form of Proxy in relation to Registered Notes shall be valid even if such Block Voting Instruction or Form of Proxy or any instruction pursuant to which it was given has been amended or revoked, provided that neither the Relevant Issuer, a Relevant Guarantor, the Trustee nor the Chairperson has been notified in writing of such amendment or revocation by the time which is 24 hours before the time fixed for the relevant Meeting. Unless revoked, any appointment of a Proxy under a Block Voting Instruction or a Form of Proxy in relation to a Meeting shall remain in force in relation to any resumption of such Meeting following an adjournment; provided, however, that no such appointment of a Proxy in relation to a Meeting originally convened which has been adjourned for want of a quorum shall remain in force in relation to such Meeting when it is resumed. Any person appointed to vote at such a Meeting must be reappointed under a Block Voting Instruction (or, in relation to Registered Notes, a Form of Proxy) to vote at the Meeting when it is resumed.
18. POWERS
A Meeting shall have power (exercisable only by Extraordinary Resolution), without prejudice to any other powers conferred on it or any other person:
| (a) |
to approve any Reserved Matter; |
| (b) |
to approve any proposal by the Relevant Issuer and the Relevant Guarantors for any modification, abrogation, variation or compromise of any provisions of this Trust Deed, the Agency Agreement or the Conditions or any arrangement in respect of the obligations of the Relevant Issuer or any Relevant Guarantor under or in respect of the Notes; |
| (c) |
(other than as permitted under Clause 9.3 (Substitution) of this Trust Deed) to approve the substitution of any person for the Relevant Issuer (or any previous substitute) as principal obligor under the Notes or the substitution of any person for any Relevant Guarantor (or any previous substitute) as guarantor under the Notes; |
| (d) |
(other than as permitted under Clause 9.3 (Substitution) of this Trust Deed) to waive any breach or authorise any proposed breach by the Relevant Issuer or any Relevant Guarantor of its obligations under or in respect of this Trust Deed or the Notes or any act or omission which might otherwise constitute an Event of Default under the Notes; |
| (e) |
to remove any Trustee; |
| (f) |
to approve the appointment of a new Trustee; |
Page 228
| (g) |
to authorise the Trustee (subject to its being indemnified and/or secured to its satisfaction) or any other person to execute all documents and do all things necessary to give effect to any Extraordinary Resolution; |
| (h) |
to discharge or exonerate the Trustee from any liability in respect of any act or omission for which it may become responsible under this Trust Deed or the Notes; |
| (i) |
to give any other authorisation or approval which under this Trust Deed or the Notes is required to be given by Extraordinary Resolution; |
| (j) |
to appoint any persons as a committee to represent the interests of the Noteholders and to confer upon such committee any powers which the Noteholders could themselves exercise by Extraordinary Resolution; and |
| (k) |
to sanction any scheme or proposal for the exchange or sale of the Notes for or the conversion of the Notes into or the cancellation of the Notes in consideration of shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities of the Relevant Issuer or any other company formed or to be formed, or for or into or in consideration of cash, or partly for or into or in consideration of such shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities as aforesaid and partly for or into or in consideration of cash. |
19. EXTRAORDINARY RESOLUTION BINDS ALL HOLDERS
An Extraordinary Resolution (i) passed at a meeting of the Noteholders duly convened and held; (ii) passed as a resolution in writing; or (iii) passed by way of electronic consents given by Noteholders through the relevant clearing system(s), in accordance with the provisions of this Schedule, shall be binding upon all Noteholders and Couponholders, whether or not present at such Meeting referred to in (i) above and whether or not voting (including when passed as a resolution in writing or by way of electronic consent), and each of the Noteholders shall be bound to give effect to it accordingly. Notice of the result of every vote on an Extraordinary Resolution shall be given to the Noteholders and, in relation to Bearer Notes, the Paying Agents and, in relation to Registered Notes, the Registrar (with a copy to the Relevant Issuer and the Trustee) within 14 days of the conclusion of the Meeting.
20. MINUTES
Minutes of all resolutions and proceedings at each Meeting shall be made. The Chairperson shall sign the minutes, which shall be prima facie evidence of the proceedings recorded therein. Unless and until the contrary is proved, every such Meeting in respect of the proceedings of which minutes have been summarised and signed shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted at it to have been duly passed and transacted.
21. WRITTEN RESOLUTION
A Written Resolution shall take effect as if it were an Extraordinary Resolution.
Page 229
22. FURTHER REGULATIONS
Subject to all other provisions contained in this Trust Deed, the Trustee may without the consent of the Relevant Issuer, the Relevant Guarantors or the Noteholders prescribe such further regulations regarding the holding of Meetings of Noteholders and attendance and voting at them as the Trustee may in its sole discretion determine and agree to the holding of meetings by conference call in circumstances where it may be impossible or inadvisable to hold physical meetings.
23. SEVERAL SERIES
The following provisions shall apply where outstanding Notes belong to more than one Series:
| (a) |
Business which in the opinion of the Trustee affects the Notes of only one Series shall be transacted at a separate Meeting of the holders of the Notes of that Series. |
| (b) |
Business which in the opinion of the Trustee affects the Notes of more than one Series but does not give rise to an actual or potential conflict of interest between the holders of Notes of one such Series and the holders of Notes of any other such Series shall be transacted either at separate Meetings of the holders of the Notes of each such Series or at a single Meeting of the holders of the Notes of all such Series, as the Trustee shall in its absolute discretion determine. |
| (c) |
Business which in the opinion of the Trustee affects the Notes of more than one Series and gives rise to an actual or potential conflict of interest between the holders of Notes of one such Series and the holders of Notes of any other such Series shall be transacted at separate Meetings of the holders of the Notes of each such Series. |
| (d) |
The preceding paragraphs of this Schedule shall be applied as if references to the Notes and Noteholders were to the Notes of the relevant Series and to the holders of such Notes. |
In this paragraph, “business” includes (without limitation) the passing or rejection of any resolution.
Page 230
TRUST DEED
EXECUTION CLAUSES
| The Issuers |
||||
| EXECUTED and DELIVERED as a DEED by |
) |
|||
| INTERCONTINENTAL HOTELS GROUP PLC |
) |
|||
| a company incorporated in England and Wales acting by |
) |
|||
| ) |
/s/ Michael Glover |
|||
| a director of the Company |
) |
Michael Glover |
||
| ) |
/s/ Nicolette Henfrey |
|||
| a director / company secretary of the Company |
) |
Nicolette Henfrey |
||
| EXECUTED and DELIVERED as a DEED by |
) |
|||
| IHG FINANCE LLC |
) |
|||
| a company incorporated in the state of Delaware |
) |
|||
| acting by |
) |
|||
| ) |
/s/ Dilpesh Topiwala |
|||
| an authorised signatory of the Company |
) |
Dilpesh Topiwala |
||
Trust Deed signature pages
Page 231
| The Guarantors |
||||
| EXECUTED and DELIVERED as a DEED by |
) |
|||
| INTERCONTINENTAL HOTELS GROUP PLC |
) |
|||
| a company incorporated in England and Wales acting by |
) |
|||
| ) |
/s/ Michael Glover |
|||
| a director of the Company |
) |
Michael Glover |
||
| ) |
/s/ Nicolette Henfrey |
|||
| a director / company secretary of the Company |
) |
Nicolette Henfrey |
||
| EXECUTED and DELIVERED as a DEED by |
) |
|||
| IHG FINANCE LLC |
) |
|||
| a company incorporated in the state of Delaware |
) |
|||
| acting by |
) |
|||
| ) |
/s/ Dilpesh Topiwala |
|||
| an authorised signatory of the Company |
) |
Dilpesh Topiwala |
||
| EXECUTED and DELIVERED as a DEED by |
) |
|||
| INTERCONTINENTAL HOTELS LIMITED |
) |
|||
| a company incorporated in England and Wales acting by |
) |
|||
| ) |
/s/ Michael Glover |
|||
| a director of the Company |
) |
Michael Glover |
||
| ) |
/s/ Nicolette Henfrey |
|||
| a director / company secretary of the Company |
) |
Nicolette Henfrey |
||
| EXECUTED and DELIVERED as a DEED by |
) |
|||
| SIX CONTINENTS LIMITED |
) |
|||
| a company incorporated in England and Wales acting by |
) |
|||
| ) |
/s/ Michael Glover |
|||
| a director of the Company |
) |
Michael Glover |
||
| ) |
/s/ Nicolette Henfrey |
|||
| a director / company secretary of the Company |
) |
Nicolette Henfrey |
||
Trust Deed signature pages
Page 232
| The Trustee |
||||
| EXECUTED as a DEED by |
) |
|||
| U.S. BANK TRUSTEES LIMITED |
) |
|||
| acting by an authorised signatory |
) |
|||
| in the presence of |
) |
|||
| /s/ Michael Leong |
Signature of attorney |
|||
| Michael Leong |
Name of attorney |
|||
| /s/ Chris Hobbs |
Signature of witness |
|||
| Chris Hobbs |
Name of witness |
|||
| Address of witness |
||||
Trust Deed signature pages
Page 233
Exhibit 4(a)(iii)
| 1 Windsor Dials Arthur Road Windsor Berkshire SL4 1RS United Kingdom
www.ihgplc.com |
EXTENSION REQUEST
| To: |
MUFG Bank, Ltd., as Facility Agent |
| From: |
INTERCONTINENTAL HOTELS GROUP PLC |
Dated 10 March 2023
US$1,350,000,000 Facility Agreement dated 28 April 2022 (the “Agreement”)
| 1. |
We refer to the Agreement. This is an Extension Request. Terms defined in the Agreement have the same meaning in this Extension Request unless given a different meaning in this Extension Request. |
| 2. |
Pursuant to paragraph (b) of clause 7.2 (Extension of the Termination Date) of the Agreement, we hereby unconditionally and irrevocably request that the Termination Date be extended to the First Extended Termination Date. |
| 3. |
We confirm that no Default is continuing or has occurred on the date of this Extension Request and that the Repeating Representations are true and correct as at the date of this Extension Request. |
| 4. |
Each Lender who confirms to you its unconditional agreement to this Extension Request will be entitled to receive an extension fee of 0.05 per cent. of the amount of its individual Commitment as at 28 April 2023, which the Company will pay to the Facility Agent for each relevant consenting Lender’s account within 5 Business Days of 28 April 2023. |
| 5. |
This Extension Request is irrevocable. |
| 6. |
This Extension Request and any non-contractual obligations arising out of or in relation to it are governed by English law. |
Yours faithfully
| By: |
/s/ Renata Padilla |
|
| INTERCONTINENTAL HOTELS GROUP PLC |
||
InterContinental Hotels Group PLC. Registered in England and Wales No. 5134420. Registered Office: 1 Windsor Dials, Arthur Road, Windsor, Berkshire SL4 1RS.
|
|
|
MUFG Bank, Ltd. Processing Centre for Europe, Middle East and Africa Ropemaker Place 25 Ropemaker Street London, EC2Y 9AN |
| Date: |
17 April 2023 |
|
| Facility Name: |
INTERCONTINENTAL HOTELS - RCF TR |
|
| Facility Reference: |
00234815-0006 |
|
| Subject: |
Facility First Extension Termination Date (Approved) |
|
Dear All,
Further to the request dated 10th March 2023, we can confirm that the Extension Request has been approved and the new facility Termination Date will be 28th April 2028.
Please update your records accordingly.
If you have any questions regarding the above, please use the following contact information.
Kind regards,
Peter McGovern
Loan Agency Services
Tel: +44 (0)20-7577-1547/1542/1577
E-mail: loanagency@uk.mufg.jp
| Page 1 of 1 |
|
A member of MUFG, a global financial group |
Exhibit 4(a)(iv)
| 1 Windsor Dials Arthur Road Windsor Berkshire SL4 1RS United Kingdom
www.ihgplc.com |
| To: |
MUFG Bank, Ltd. |
as Facility Agent under the Facility Agreement
(as defined below) and on behalf of the
Finance Parties under the Facility Agreement
10 August 2023
Dear Sir/Madam,
InterContinental Hotels Group PLC – Amendment Request
| 1. |
INTRODUCTION |
1.1 We refer to the $1,350,000,000 Facility Agreement dated 28 April 2022 (as amended from time to time, the Facility Agreement), made between, among others, InterContinental Hotels Group PLC (the Company), Six Continents Limited and InterContinental Hotels Limited as original borrowers and, together with the Company, original guarantors, Bank of America Europe Designated Activity Company, Bank of China Limited, London Branch, Barclays Bank PLC, BNP Paribas, London Branch, Commerzbank Aktiengesellschaft, London Branch, DBS Bank Ltd., London Branch, Mizuho Bank, Ltd., MUFG Bank, Ltd., Standard Chartered Bank, Truist Bank, Unicredit Bank AG, U.S. Bank National Association and Wells Fargo Bank, N.A., London Branch as original lenders and MUFG Bank, Ltd. as facility agent.
1.2 Terms defined in the Facility Agreement have the same meanings in this letter, unless the context otherwise requires. The provisions of Clause 1.2 (Construction) of the Facility Agreement apply to this letter as though they were set out in full in this letter except that references to the Agreement are to be construed as references to this letter.
1.3 We are writing to you as the Company and as Obligors’ agent on behalf of the other Obligors to apply for the consent of the Facility Agent (acting on the instructions of the Majority Lenders) to the following request.
| 2. |
BACKGROUND |
2.1 The International Accounting Standards Board published IFRS 16 (Leases) in January 2016 with an effective date of 1 January 2019. IFRS 16 requires lessees to recognise nearly all leases on the balance sheet, reflecting their right to use an asset for a period of time and the associated liability for payments.
2.2 As disclosed in the audited consolidated financial statements of the Company for the financial year ended 31 December 2019 (the 2019 Financial Statements), the implementation of IFRS 16 resulted in $670,000,000 of leases being recognised on the balance sheet at 31 December 2018. This included $235,000,000 which had previously been recognised as finance leases (related to the InterContinental Boston) plus $435,000,000 which had previously not been recognised (previously classed as operating leases). The lease liability balance at 30 June 2023 has decreased to $428,000,000 as set out below:
InterContinental Hotels Group PLC. Registered in England and Wales No. 5134420. Registered Office: 1 Windsor Dials, Arthur Road, Windsor, Berkshire SL4 1RS.
| December 2018 | December 2019 | December 2021 | December 2022 | June 2023 | ||||||||||||||||
| InterContinental Boston (previous finance lease) |
$ | 235,000,000 | $ | 241,000,000 | $ | 253,000,000 | $ | 257,000,000 | $ | 258,000,000 | ||||||||||
| Other leases (previously operating leases |
$ | 435,000,000 | $ | 419,000,000 | $ | 166,000,000 | $ | 170,000,000 | $ | 170,000,000 | ||||||||||
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| Total |
$ | 670,000,000 | $ | 660,000,000 | $ | 419,000,000 | $ | 427,000,000 | $ | 428,000,000 | ||||||||||
2.3 When the Facility Agreement was negotiated, the financial covenant levels were assessed in light of the implementation of IFRS 16 since historic covenant levels were set. The ratio of Net Borrowings to EBITDA, for example, was increased from 3.50:1 to 4.00:1 (Clause 21.1 (Financial Condition) of the Facility Agreement). However, the baskets included in Clause 22.5 (Subsidiary Indebtedness) of the Facility Agreement, permitting the incurrence of Financial Indebtedness in certain circumstances, were not re-considered in light of the implementation of IFRS 16 and remained at $400,000,000, failing to take into account the increase in Financial Indebtedness resulting from the implementation of IFRS 16 which resulted in the recognition of existing operating leases on the balance sheet.
2.4 As a result of this technical oversight, the Company has just become aware that it has not been in compliance with Clause 22.5 (Subsidiary Indebtedness) of the Facility Agreement since the date of the Facility Agreement. This is a direct result of the implementation of IFRS 16, rather than a result of the incurrence of additional Financial Indebtedness. To resolve this and ensure the implementation of IFRS 16 is accurately reflected in historic negotiated thresholds, the Company is requesting that the basket included in Clause 22.5(a)(i) (Subsidiary Indebtedness) of the Facility Agreement is increased by $170,000,000 (an equivalent amount to the increase in liabilities directly resulting from the implementation of IFRS 16), from $400,000,000 to $570,000,000.
| 3. |
AMENDMENT REQUEST |
3.1 Accordingly, in accordance with Clause 35 (Amendments and Waivers) of the Facility Agreement, we request that you seek the consent of the Majority Lenders to the amendment of Clause 22.5(a)(i) (Subsidiary Indebtedness) of the Facility Agreement so that the reference to “$400,000,000” is replaced with “$570,000,000” (the Amendment Request).
3.2 We request that the Majority Lenders consent to the Amendment Request set out in paragraph 3.1 as soon as possible, and in any event by no later than 5.00pm on 24 August 2023.
| 4. |
CONSENT |
By your countersignature of this letter in the appropriate place, you confirm that the Amendment Request has been approved by the Majority Lenders and that the Amendment Request is immediately effective (the Effective Date).
| 5. |
OBLIGOR CONFIRMATIONS |
5.1 On the Effective Date, the Company (on behalf of itself and as Obligors’ agent on behalf of each other Obligor):
InterContinental Hotels Group PLC. Registered in England and Wales No. 5134420. Registered Office: 1 Windsor Dials, Arthur Road, Windsor, Berkshire SL4 1RS.
| (a) |
confirms its acceptance of the Facility Agreement, as amended by the relevant parts of this letter; |
| (b) |
agrees that it is bound as an Obligor by the terms of the Facility Agreement, as amended by this letter at the appropriate time; and |
| (c) |
if a Guarantor, confirms that its guarantee and indemnity obligations under the Facility Agreement, as amended by this letter: |
| (i) |
continues in full force and effect on the terms of the Facility Agreement (as amended by this letter); and |
| (ii) |
extends to the obligations of the Obligors under the Finance Documents (including the Facility Agreement (as amended by this letter) and notwithstanding the imposition of any amended, additional or more onerous obligations). |
| 6. |
MISCELLANEOUS |
| 6.1 |
Save as expressly set out in this letter: |
| (a) |
the Finance Documents remain in full force and effect; and |
| (b) |
nothing in this letter shall constitute or be construed as a waiver or compromise of any other term or condition of the Finance Documents or any of the Finance Parties rights in relation to them which for the avoidance of doubt shall continue to apply in full force and effect. |
6.2 With effect from the Effective Date this letter shall be (i) designated a Finance Document and (ii) read and construed as one document with the Facility Agreement.
6.3 This letter may be executed in any number of counterparts and all those counterparts taken together shall be deemed to constitute one and the same letter. Delivery of a counterpart of this letter by e-mail attachment or telecopy shall be an effective mode of delivery.
6.4 This letter and any non-contractual obligations arising out of or in relation to this letter are governed by English law.
6.5 The provisions of Clauses 31 (Notices), 33 (Partial invalidity), 34 (Remedies and Waivers), 41 (Governing law) and 42 (Enforcement) of the Facility Agreement apply to this letter as though they were set out in full in this letter except that references to the Agreement are to be construed as references to this letter.
InterContinental Hotels Group PLC. Registered in England and Wales No. 5134420. Registered Office: 1 Windsor Dials, Arthur Road, Windsor, Berkshire SL4 1RS.
Please sign and return to us a counterpart of this letter in order to indicate your agreement to its terms.
| Yours faithfully |
| /s/ Michael Glover |
Michael Glover
for and on behalf of
InterContinental Hotels Group PLC
as the Company and as Obligors’ agent on behalf of each other Obligor
(pursuant to Clause 2.4 (Obligors’ agent) of the Facility Agreement)
InterContinental Hotels Group PLC. Registered in England and Wales No. 5134420. Registered Office: 1 Windsor Dials, Arthur Road, Windsor, Berkshire SL4 1RS.
We acknowledge and agree to the Amendment Request as set out in this letter
| /s/ Nicola Florido |
for and on behalf of
MUFG Bank, Ltd.
as Facility Agent and on behalf of the
Finance Parties (each as defined in the Facility Agreement)
(acting on the instructions of the Majority Lenders
pursuant to Clause 35 (Amendments and Waivers) of the Facility Agreement)
InterContinental Hotels Group PLC. Registered in England and Wales No. 5134420. Registered Office: 1 Windsor Dials, Arthur Road, Windsor, Berkshire SL4 1RS.
Exhibit 4(a)(v)
EXECUTION VERSION
Accession Letter
| To: |
MUFG Bank, Ltd. as Facility Agent |
| From: |
IHG Finance LLC and InterContinental Hotels Group PLC |
| Dated: |
12 October 2023 |
InterContinental Hotels Group PLC—$1,350,000,000 Facility Agreement dated 28 April 2022 (the Agreement)
| 1. |
We refer to the Agreement. This is an Accession Letter. Terms defined in the Agreement have the same meaning in this Accession Letter unless given a different meaning in this Accession Letter. |
| 2. |
IHG Finance LLC agrees to become an Additional Guarantor and to be bound by the terms of the Agreement as an Additional Guarantor pursuant to Clause 25.4 (Additional Guarantors) of the Agreement. IHG Finance LLC is a company duly formed under the laws of the state of Delaware, United States of America. |
| 3. |
IHG Finance LLC’s administrative details are as follows: |
Address: Three Ravinia Drive, Suite 100, Atlanta, Georgia 30346, United States of America
Telephone No: +1 770 604 2000
Email: ihgtreasuryfo@ihg.com and ihgtreasurybo@ihg.com
Attention: The General Counsel and Company Secretary
| 4. |
Notwithstanding anything to the contrary in this Accession Letter or any other Finance Document, the guarantee of each Guarantor is subject to the following limitations: |
| (a) |
each Guarantor’s liability under Clause 18 (Guarantee and indemnity) of the Agreement or any other term contained in the Finance Documents, without the requirement of amendment or any other formality, shall be limited to a maximum aggregate amount equal to the largest amount that would not render its liability hereunder subject to avoidance under applicable US Debtor Relief Law, in all cases before taking into account any liabilities under any other guarantee by such Guarantor; and |
| (b) |
for the avoidance of doubt, the guaranty obligations under Clause 18.1 (Guarantee and indemnity) shall include, without limitation, all amounts which, but for any US Debtor Relief Law, would become due and payable and all interest accruing after the commencement of any proceeding under a US Debtor Relief Law at the rate provided for in the relevant Finance Document, whether or not allowed in any such proceeding. |
Where:
“United States” means the United States of America, its territories, possessions and other areas subject to the jurisdiction of the United States of America.
“US Bankruptcy Code” means Title 11 of the United States Code (entitled Bankruptcy), as amended from time to time and as now or hereafter in effect, or any successor thereto.
“US Debtor Relief Laws” means the US Bankruptcy Code and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, judicial management or similar debtor relief laws of the United States from time to time in effect and affecting the rights of creditors generally.
| 5. |
This Accession Letter and any non-contractual obligations arising out of or in connection with it are governed by English law. |
| 6. |
This Accession Letter has been signed on behalf of InterContinental Hotels Group PLC and executed as a deed by IHG Finance LLC and is delivered on the date stated above. |
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| InterContinental Hotels Group PLC |
IHG Finance LLC |
|||||||
| /s/ Nicolette Henfrey |
/s/ Randall S. Hammer |
|||||||
| By: |
Nicolette Henfrey |
By: |
Randall S. Hammer |
|||||
Accession Letter Signature Page
Exhibit 4(c)(i)
Employment Agreement
between
Six Continents Limited
as Company
and
Michael Glover
as Executive
relating to
the employment of the Executive with the Company
CONTENTS
| 1. |
Appointment |
4 | ||||
| 2. |
Duties and Powers |
5 | ||||
| 3. |
Mobility |
5 | ||||
| 4. |
Remuneration |
5 | ||||
| 5. |
Short Term Incentive Schemes |
6 | ||||
| 6. |
Long Term Incentive and Share Schemes |
6 | ||||
| 7. |
Expenses and Gratuities |
7 | ||||
| 8. |
Professional Memberships |
7 | ||||
| 9. |
Company Car |
7 | ||||
| 10. |
Holidays |
7 | ||||
| 11. |
Sickness and Incapacity |
8 | ||||
| 12. |
Notification of Absence |
9 | ||||
| 13. |
Pension |
9 | ||||
| 14. |
Private Medical Insurance |
9 | ||||
| 15. |
Location / Assignment Specific Benefits |
10 | ||||
| 16. |
Exclusive Service |
10 | ||||
| 17. |
Intellectual Property |
10 | ||||
| 18. |
Confidentiality |
12 | ||||
| 19. |
Restrictive Covenants |
13 | ||||
| 20. |
Notification of Restrictions |
13 | ||||
| 21 |
Directorships |
13 | ||||
| 22 |
Garden Leave |
14 | ||||
| 23 |
Termination |
16 | ||||
| 24 |
Return of Property |
17 | ||||
| 25 |
Disciplinary and Grievance Procedure |
17 | ||||
| 26 |
Data Protection |
18 | ||||
| 27 |
Notices |
18 | ||||
| 28 |
Assignment |
18 |
2
| 29 |
Third Party Rights |
18 | ||||
| 30 |
Law and Jurisdiction |
19 | ||||
| 31 |
Prior Agreements and other employment-related conditions |
18 | ||||
| 32 |
Collective Agreements |
19 | ||||
| 33 |
Severability |
19 | ||||
| 34 |
Miscellaneous |
19 | ||||
| 35 |
Interpretation |
19 | ||||
| SCHEDULE 1 |
22 | |||||
3
THIS AGREEMENT is dated 12 December 2022 and made
BETWEEN:
| (1) |
Six Continents Limited, registered in England and Wales as company number 913450 and having its registered office at Broadwater Park, Denham, Buckinghamshire UB9 5HR (the “Company”); and |
| (2) |
Michael Glover (the “Executive”), [Address redacted] |
THE PARTIES AGREE THAT:
| 1. |
Appointment |
| 1.1 |
The Company employs the Executive and the Executive agrees to serve the Company and any other Group Company or Group Companies as required by the Board in the capacity of Chief Financial Officer or in such other capacity as the Board may, from time to time, determine. The Executive’s reward band is 1. |
| 1.2 |
This Agreement commences on 20th March 2023 and shall continue (subject to termination as provided for below) unless and until terminated by either party giving to the other not less than the following notice period in writing, expiring at any time: |
| a) |
notice period from the Company to the Executive: 52 weeks; |
| b) |
notice period from the Executive to the Company: 26 weeks. |
| 1.3 |
The Executive’s period of continuous employment with the Group commenced on 5 January 2004. |
| 1.4 |
The Executive warrants that: |
| 1.4.1 |
the Executive is not prevented from performing the Executive’s duties in accordance with the terms of this Agreement by any obligation or duty owed to any other party, whether contractual or otherwise; and |
| 1.4.2 |
the Executive has all necessary licences, permissions, consents, approvals, qualifications and memberships required for the Executive to perform the Executive’s duties under this Agreement and as notified to the Company by the Executive or on his behalf and is not and has not been subject to any prohibition, censure, criticism or disciplinary sanction by any professional, regulatory or other body or authority which would prevent the Executive from performing any duties under this Agreement or undermine the confidence of the Board in the Employment by the Company. |
| 1.5 |
Employment is conditional upon the following conditions, if required by the Company: |
| (a) |
the Executive providing to the Company copies or other verification of all academic, professional or other business qualifications notified to the Company; and |
| (b) |
the Executive providing acceptable proof of identity and right to work in the United Kingdom as required under United Kingdom immigration regulations. |
4
| 2. |
Duties and Powers |
| 2.1 |
The Executive shall exercise such powers, perform such duties (if any) and comply with such directions in relation to the business of the Company or any other Group Company as the Board may, from time to time, confer upon or assign or give to him. The Executive shall carry out his duties in a proper, loyal and efficient manner to the best of his ability. |
| 2.2 |
The Executive shall, during the continuance of this Agreement (unless prevented by ill health or accident or as otherwise agreed by the Board in writing), devote the whole of the Executive’s working time and attention and abilities to the Business and shall use the Executive’s reasonable endeavours to promote and protect the general interests and welfare of the Company, the Group and any other Group Company to which the Executive may, from time to time, render the Executive’s services under this Agreement. |
| 2.3 |
The Executive shall at all times promptly give to the Board (in writing if so requested) all such information, explanations and assistance as it may require in connection with the Business and the Executive’s employment under this Agreement. |
| 2.4 |
The Executive shall work normal business hours which are 35 hours per week and such additional hours as may be necessary in the performance of the Executive’s obligations under this Agreement. The nature of the Executive’s job is such that the Executive is largely able to prioritise tasks, determine the time and effort the Executive devotes to those tasks and when the Executive does them. To the extent the Executive therefore determines the Executive’s working hours outside normal business hours, the additional hours will not count as working time towards the weekly working time limit of 48 hours on average. No overtime will be paid with respect to any hours worked by the Executive outside normal business hours. |
| 2.5 |
The Executive will promptly disclose to the Board full details of any wrongdoing by any employee or officer of any Group Company (including the Executive) where that wrongdoing is material to that employee’s employment by the relevant company or to the interests or reputation of any Group Company. |
| 3. |
Mobility |
| 3.1 |
The Executive’s principal place of work may be in such place or places as the Company shall reasonably require. At the date hereof the Executive’s principal place of work is Windsor Dials 1, Arthur Road, Windsor, SL4 1RS United Kingdom. |
| 3.2 |
The Executive may be required to travel both inside and outside the United Kingdom on the business of the Company or any Group Company in the proper performance of the Executive’s duties from time to time. |
| 4. |
Remuneration |
| 4.1 |
The Company shall pay to the Executive a salary at the annual rate of £620,000. Such salary shall be payable not less frequently than every month on a date which will be no later than the last day of the month and shall be deemed to accrue from day to day. Such salary shall include any director’s fees payable to the Executive. The Company shall be entitled to procure payment of the salary for administrative reasons by another Group Company. |
| 4.2 |
The salary payable to the Executive pursuant to Clause 4.1 shall be subject to review in accordance with the Company’s practice from time to time but there shall be no obligation on the Company to increase such salary. |
5
| 4.3 |
The Company shall be entitled at any time to deduct from the Executive’s remuneration (which includes salary, salary supplement (if any), any bonus, holiday or other pay) any sums owing to it or to any other Group Company (including but not limited to any advance of a cash float to cover business expenses, any advance of pay, or any holiday pay relating to holiday taken in excess of entitlement) by the Executive, to which deduction the Executive expressly hereby consents. |
| 5. |
Short Term Incentive Schemes |
| 5.1 |
The Executive may be invited to participate in the Company’s or any Group Company (as appropriate) discretionary incentive plan or bonus plans applicable from time to time for employees in the Executive’s reward band, subject to the rules of the relevant plan(s) from time to time. Details of the current applicable plan(s) will be provided to the Executive. Awards are determined solely at the Company’s or any Group Company’s (as appropriate) discretion, to which the Executive hereby agrees. |
| 5.2 |
The Company or any Group Company (as appropriate) reserves the right, in its absolute discretion, to vary the terms and/or any targets and/or level of bonus opportunity and/or bonus payable, under any incentive plan from time to time in operation or to suspend (for a fixed or indefinite period) or withdraw any such plan without providing any replacement. |
| 5.3 |
The Executive acknowledges that during the course of the Employment and on its termination the Executive has no right to receive a bonus and that the Company is under no obligation to operate a bonus plan and that the Executive will not acquire such a right, nor shall the Company come under such an obligation, merely by virtue of the Executive’s having received one or more bonus payment(s) or the Company or any Group Company (as appropriate) having operated one or more bonus plan during the course of the Employment. Bonus paid to the Executive in one year shall not result in any guarantee of bonus or any obligation upon the Company to pay bonus in any subsequent year. |
| 5.4 |
Any bonus paid is not pensionable and is subject to deductions for tax and social security contributions, or any other deductions which may be required by law. |
| 6. |
Long Term Incentive and Share Schemes |
| 6.1 |
The Executive may be invited to participate in such share option or other share ownership plans as the Company or the Group may operate from time to time and which are applicable to employees in the Executive’s reward band, subject to the rules of the relevant plan(s) from time to time. Details of any current applicable plan(s) will be provided to the Executive. Awards are determined in accordance with the rules of the applicable plan solely at the Company’s or relevant Group Company’s discretion, to which the Executive hereby agrees. |
| 6.2 |
The Company or relevant Group Company reserves the right, in its absolute discretion, to vary the terms of any such plan or to suspend (for a fixed or indefinite period) or withdraw any such plan without providing any replacement. |
| 6.3 |
The Executive acknowledges that during the course of the Employment and on its termination the Executive has no right to receive an award of shares or grant of share options and that the Company or any Group Company is under no obligation to operate such plans and that the Executive will not acquire such a right, nor shall the Company or any Group Company come under such an obligation, merely by virtue of the Executive’s having received one or more award of shares or grant of share options or the Company or |
6
| any Group Company having operated one or more such plans during the course of the Employment. On termination of employment howsoever arising the Executive shall not have any claim for breach of contract in respect of the loss of any rights or benefits under any share option, bonus, long-term incentive plan or other profit sharing scheme operated by the Company or by any Group Company in which he may participate which would otherwise have accrued during any period of notice to which the Executive is entitled. |
| 6.4 |
Any payment made under this clause is not pensionable and is subject to deductions for tax and social security contributions, or any other deductions which may be required by law. |
| 7. |
Expenses and Gratuities |
| 7.1 |
In accordance with Group policy the Company shall pay or refund to the Executive all reasonable travelling, entertainment and other similar out of pocket expenses necessarily and wholly incurred by the Executive in the proper performance of the Executive’s duties subject to production by the Executive of such evidence of such expenses as the Company may require. If the Executive is provided with a company credit card or charge card, the Executive shall use it only for such expenses as the Executive is entitled under this sub-clause to have reimbursed by the Company. |
| 7.2 |
The Executive shall at all times comply with Group policies in force from time to time regarding acceptance of gifts, gratuities and/or benefits. |
| 8. |
Professional Memberships |
| 8.1 |
In accordance with and subject to Company policy, and upon prior approval, the Company shall pay for up to two memberships to recognised professional bodies where membership of such professional body is directly related to and required in relation to the Executive’s job from time to time or the Executive’s normal professional skill. |
| 8.2 |
Where required, whether by the Company, law, any regulatory organisation or otherwise the Executive should at all times during the Executive’s employment with the Company maintain the Executive’s membership of such professional, trade or other bodies necessary for the proper performance of the Executive’s duties. |
| 9. |
Company Car |
The Company shall pay the Executive a taxable, non-pensionable car allowance at a level to be determined by the Company. The allowance will be paid monthly in arrears in the same manner as the Executive’s salary. The Company reserves the right, in its reasonable discretion, to vary the level of car allowance and/or standard of car available and/or rules applicable to employees in the Executive reward band which applies to the Executive.
| 10. |
Holidays |
| 10.1 |
The Company’s holiday year is 1 January to 31 December (the “Holiday Year”). |
| 10.2 |
In addition to public holidays, the Executive shall be entitled to paid holiday in each Holiday Year in accordance with the stated policy for the Executive’s reward band in the principal place of work, to be taken at times to be agreed with the Company in advance. Subject to Clause 10.3, no payment will be made for holidays not taken in the Holiday Year in which they arise, although the Executive may carry forward any unused holiday from one Holiday Year to the next, subject to a maximum of 5 days to be carried forward into the following Holiday Year. |
7
| 10.3 |
Upon termination of this Agreement the Executive shall be entitled to payment in lieu of any untaken outstanding holiday entitlement in the Holiday Year during which the Executive’s employment terminates, which entitlement shall accrue on a pro-rata monthly basis. |
| 10.4 |
Upon termination of the Executive’s employment under this Agreement, the Company shall be entitled to deduct from any sum owed by the Company to the Executive a sum representing overpayment of salary with respect to holiday which the Executive has taken in excess of the Executive’s accrued holiday entitlement calculated on a pro-rata monthly basis as at the date of the termination of the Executive’s employment and the Executive hereby authorises the Company to make such deduction. |
| 10.5 |
The Company shall be entitled to require the Executive to take all or any part of any accrued untaken holiday entitlement during the period of notice to terminate the Executive’s employment (including, for the avoidance of doubt, during any period of garden leave pursuant to Clause 22). If the Company exercises this right, the Executive must obtain agreement prior to the actual days to be taken as holiday. |
| 11. |
Sickness and Incapacity |
| 11.1 |
When the Executive is absent from work and unable to perform the Executive’s duties under this Agreement satisfactorily by reason of any injury, illness, incapacity or other reason satisfactory to the Company and subject to compliance with Clause 12, the Executive shall be entitled to receive the Executive’s full salary and other contractual benefits only for up to the first 26 weeks of any such absence in aggregate in any period of 12 months. Once sick pay under this clause has expired the Executive shall have no further entitlement to sick pay until he has returned to work for a consecutive period of twelve weeks. |
| 11.2 |
Any salary payable pursuant to this clause shall be inclusive of the amount of any benefit or statutory sick pay to which the Executive may be entitled during the period of such inability under any local law for the time being in force. |
| 11.3 |
Subject to applicable laws, the Executive shall submit to a medical examination by a doctor appointed by the Company at the request of the Chief Executive, at the expense of the Company, at any time during the continuance of this Agreement, whether or not the Executive is absent by reason of sickness, injury or other incapacity. The Executive consents to the Company obtaining a copy of the Executive’s medical records from the Executive’s medical practitioner in circumstances where the Company deems such a step to be required and in all cases, subject to applicable laws. If applicable the Executive further agrees that the Executive shall authorise the medical practitioner and the Company to discuss further any matters arising from such medical report, diagnosis or prognosis to the extent relevant to the Executive’s employment or the performance of the Executive’s duties. |
| 11.4 |
If the Executive is absent from work by reason of injuries sustained wholly or partly as a result of actionable negligence, nuisance or breach of any statutory duty on the part of any third party other than the Company or any Group Company, the Executive shall promptly inform the Executive’s line manager of that fact and the Company in its discretion may require the Executive to take all reasonable steps to recover from such third party or its insurers compensation including repayment of all sums paid to the Executive by the Company under this clause in respect of such absence (which shall be deemed to be paid by way of interest free loan by the Company, subject to any limit imposed under relevant legislation). Any such sums (which are paid to the Executive by the Company on that basis) shall in turn be repaid by the Executive when and to the extent that the Executive recovers compensation for loss of earnings from that third party or its insurers by legal action or otherwise less any reasonable costs incurred in recovering any such compensation. |
8
| 12. |
Notification of Absence |
| 12.1 |
If the Executive is unable to come to work for any reason, and the Executive’s absence has not previously been authorised by the Company, the Executive must notify the Company as soon as practicable and in accordance with the stated policy for the Executive’s reward band in the principal place of work and must keep the Company properly and regularly informed of their condition and anticipated return to work date. |
| 13. |
Pension |
| 13.1 |
The Company or relevant Group Company operates various pension schemes. The Executive may be a member of the applicable pension scheme as determined by the Executive’s start date with the Company and the Executive’s reward band (“the Scheme”) at the applicable level and subject to the terms of the trust deed and rules governing the Scheme from time to time, including, without limitation, any powers of alteration and discontinuance. The Executive’s membership of the Scheme shall be in substitution for, and shall operate to, the exclusion of any agreement or representation whether written or oral in relation to pension entitlement made with or to the Executive by any person on behalf of the Company or any Group Company at any time. |
| 13.2 |
The Company will comply with any duties it may have in respect of the Executive under part 1 of the Pensions Act 2008. The Company is currently using the IHG UK Defined Contribution Pension Plan established in 2014 in respect of its duties under part 1 of the Pensions Act 2008. Membership of the scheme is strictly subject to the rules of the scheme as amended from time to time. The Company reserves the right to vary or discontinue any scheme in place from time to time. |
| 13.3 |
The Company shall be entitled to deduct from the Executive’s salary any amounts payable by the Executive as member contributions to any Scheme in which the Executive is a member from time to time. |
| 14. |
Private Medical Insurance |
| 14.1 |
The Executive, the Executive’s spouse and any dependent, unmarried children under age 21 (or 25 if in full time education) or such older age as required by applicable law, as the case may be, will to the extent eligible (as determined by the Executive’s reward band and any applicable scheme rules) be entitled to participate in and receive benefits under the private medical insurance plan made available by the Company or relevant Group Company (and any other schemes which the Company or relevant Group Company may provide from time to time) subject to the rules or insurance policies constituting such schemes from time to time. |
| 14.2 |
A copy of the relevant private medical insurance plans shall be provided to the Executive and the Executive is required to comply with its rules from time to time. The Company or relevant Group Company reserves the right, in its absolute discretion, to vary the plan or to suspend (for a fixed or indefinite period) or withdraw the plan without providing any replacement. |
| 14.3 |
The benefit referred to above is conditional on the relevant insurer accepting cover for the Executive at a premium the rate of which the Company considers reasonable and accepting liability for any particular claim. In the event that the relevant insurer does not accept cover or liability in respect of the Executive at a premium the rate of which the Company considers |
9
| reasonable or any claim by the Executive in respect of the benefits, the Company shall have no obligation to provide any alternative benefit or cover in this regard. The provision of this benefit inclusive shall not restrict the Company’s ability to terminate the employment for any reason including, without limitation, because the Executive is incapacitated. |
| 14.4 |
In the event that the Executive claims under any insurance scheme referred to in sub-Clause 14.1 and such claim is rejected by the insurer, the Company or any Group Company shall not be obliged to issue proceedings in relation to such claim. |
| 15. |
Location / Assignment Specific Benefits |
| 15.1 |
In the event that any special terms apply to the Executive, these are as set out in the Executive’s offer letter from Keith Barr, Chief Executive Officer to Executive. |
| 16. |
Exclusive Service |
| 16.1 |
The Executive will devote the whole of the Executive’s working time, attention and skill to the Employment. It is envisaged that the Executive may take up an external non-executive directorship during the Employment, such position to be subject to Board approval. |
| 16.2 |
At the request of the Company, the Executive will disclose promptly in writing to the Company all the Executive’s interests (for example, shareholdings or directorships) in any business whether or not of a commercial or business nature except the Executive’s interests in any Group Company. |
| 16.3 |
Without prejudice to Clause 16.1 above, and subject to Clause 16.4 below, during the Employment the Executive will not be directly or indirectly engaged or concerned in the conduct of any activity which is similar to or competes with any activity carried on by any Group Company (except as a representative of the Company or with the written consent of the Board) nor, without the consent of the Company, be or make preparations to be engaged or interested either directly or indirectly in any business or occupation (including any charitable work) other than the business of the Company or its Group Companies. |
| 16.4 |
The Executive may not without written consent of the Board hold or be interested in investments which amount to more than five percent of the issued investments of any class of any one company whether or not those investments are listed or quoted on any recognised Stock Exchange or dealt in on the Alternative Investments Market. |
| 17. |
Intellectual Property |
17.1 The Executive acknowledges that:
| (i) |
the Executive may make Inventions in the course of the Employment, whether in the Executive’s normal or other specifically assigned duties; and |
| (ii) |
the Executive has a special obligation to further the interests of the Group as a whole and of each Group Company. |
| 17.2 |
If the Executive makes or is involved in making an Invention during the Employment, the Executive will promptly inform the Company. The Executive will give the Company sufficient details of any Invention to allow the Company to assess the Invention and to decide whether the Invention belongs to the Company. The Company will treat any Invention which is notified to it under this Clause 17, but which does not belong to the Company, as confidential. |
10
“Invention” means any invention within the meaning of the Patents Act 1977 relating to or capable of being used in the business of any Group Company as carried on from time to time.
| 17.3 |
If an Invention belongs to the Company, the Executive will act as a trustee for the Company in relation to that Invention and will, at the request and expense of the Company, do everything necessary to: |
| (i) |
vest all right, title and interest in the Invention in the Company or its nominee; |
| (ii) |
secure full patent or other appropriate protection for the Invention anywhere in the world; and |
| (iii) |
defend the Company’s or its nominee’s rights in the Invention and assist with enforcement anywhere in the world. |
| 17.4 |
If the Executive creates or is involved in creating any Work during the Employment, the Executive will promptly give the Company full details of it. |
“Work” means any idea; method; discovery; computer programme; semiconductor chip layout; database; drawing; literary work; product, packaging or other design; trade or service mark; logo; domain name or other work (whether registrable or not and whether a copyright work or not and whether hardware, software, processes or systems) which is not an Invention and which the Executive creates or is involved in creating:
| (i) |
in connection with the Executive’s Employment; or |
| (ii) |
relating to or capable of being used in those aspects of the businesses of the Group Companies in which the Executive is involved from time to time. |
| 17.5 |
The Executive will at the request and expense of the Company, do everything necessary to: |
| (i) |
assign to the Company to the extent allowed by law, or will assign, all the Executive’s right, title and interest in any current or future Work (whether now existing or brought into being in the future); |
| (ii) |
act as a trustee for the Company in relation to all such Works; and |
| (a) |
vest all right, title and interest in any Work in the Company or its nominee; |
| (b) |
secure full registered or unregistered protection for any Work anywhere in the world; and |
| (c) |
defend the Company’s or its nominee’s rights in any Work and assist with enforcement anywhere in the world. |
| 17.6 |
If the Executive generates any Information or is involved in generating any Information during the Employment the Executive will promptly give to the Company full details of it and the Executive acknowledges that such Information belongs to the Company. |
11
“Information” means any idea, method or information, which is not an Invention or Work, generated by the Executive either:
| (i) |
in the course of the Executive’s Employment; or |
| (ii) |
outside the course of the Executive’s Employment but relating to the business, finance or affairs of any Group Company. |
| 17.7 |
If the Executive becomes aware of any infringement or suspected infringement of any intellectual property right in any Invention, Work or Information the Executive will promptly notify the Company in writing. |
| 17.8 |
The Executive will not copy, disclose or make use of any Invention, Work or Information without the Company’s prior written consent except to comply with this Clause 17 or as necessary for the proper performance of the Executive’s duties. |
| 17.9 |
The Executive acknowledges that for the purpose of the Copyright and Rights in Databases Regulations 1997 (as from time to time amended, extended or re-enacted) the Company shall be treated as the maker of any such databases, where such database is created by the Executive during the Employment. |
| 17.10 |
So far as permitted by law the Executive irrevocably waives any rights the Executive may have under Chapter IV (Moral Rights) of Part 1 of the Copyright, Designs and Patents Act 1988 and any foreign corresponding rights in respect of all Works. |
| 17.11 |
Rights and obligations under this Clause 17 will continue after the termination of this agreement in respect of all Inventions, Works and Information made or obtained during the Employment and will be binding on the personal representatives of the Executive. |
| 17.12 |
The Executive agrees that the Executive will not by the Executive’s acts or omissions do anything which would or might prejudice the rights of any Group Company under this Clause 17. |
| 17.13 |
Except as necessary in the performance of the Executive’s duties, the Executive will not make copies of any computer files belonging to any Group Company or their service providers and will not introduce any of the Executive’s own computer files into any computer used by any Group Company. |
| 17.14 |
By entering into this agreement the Executive irrevocably appoints the Company to act on the Executive’s behalf to execute any document and do anything in the Executive’s name for the purpose of giving the Company (or its nominee) the full benefit of the provision of this Clause 17 or the Company’s entitlement under statute. If there is any doubt as to whether such a document (or other thing) has been carried out within the authority conferred by this Clause 17.14, a certificate in writing (signed by any director or the secretary of the Company) will be sufficient to prove that the act or thing falls within that authority. |
| 18. |
Confidentiality |
| 18.1 |
As Confidential Information will from time to time become known to the Executive, the Company considers, and the Executive acknowledges, that the following restraints are necessary for the reasonable protection by the Company of its business or the business of the Group, the customers and trade connections thereof or their respective affairs. |
| 18.2 |
The Executive shall not at any time, either during the continuance of or after the termination of the Executive’s employment with the Company, use, disclose or communicate to any person whatsoever any Confidential Information or any Trade Secrets of which the Executive has or may have become possessed during the Executive’s employment with the |
12
| Company or supply the names or addresses of any clients, customers, suppliers or agents of the Company or any Group Company to any person except in the proper course of the Business or as authorised in writing by the Board or as ordered by a Court of competent jurisdiction or as required to be disclosed by any law, regulation, governmental or other official body. |
| 18.3 |
The Executive shall not at any time either during the continuance of or after the termination of the Executive’s employment with the Company make, other than for the benefit of the Company or any Group Company, any notes or memoranda relating to any matter within the scope of the Business or concerning any of the dealings or affairs of the Company or any Group Company. |
| 18.4 |
The Executive shall use the Executive’s best endeavours during the continuance of the Employment to prevent the publication, disclosure or misuse of any Confidential Information and shall not remove, nor authorise others to remove, from the premises of the Company or of any Group Company any Confidential Information except to the extent strictly necessary for the proper performance of the Executive’s or the other person’s duties to the Company or any Group Company. |
| 18.5 |
The Executive shall promptly disclose to the Company full details of any knowledge or suspicion the Executive has (whether during or after the Employment) of any actual, threatened or pending publication, disclosure or misuse by any person (including the Executive) of any Confidential Information and shall provide all reasonable assistance and co-operation (at the Company’s expense) as the Company may request in connection with any action or proceedings it or any Group Company may take or contemplate in respect of any such publication, disclosure or misuse. |
| 18.6 |
This Clause 18 is without prejudice to the Executive’s equitable duty of confidence. |
| 18.7 |
Nothing in this Agreement shall preclude the Executive from making a protected disclosure in accordance with the provisions set out in the Employment Rights Act 1996 which should be made in accordance with the Company’s Disclosure Procedure. |
| 19. |
Restrictive Covenants |
| 19.1 |
The provisions of Schedule 1 shall take effect as though part of this Agreement. |
| 20. |
Notification of Restrictions |
| 20.1 |
The Executive agrees that, in the event of the Executive receiving from any person an offer of employment (whether oral or in writing and whether accepted or not) either during the continuance of this Agreement or during the continuance in force of all or any of the restrictions set out in Clause 18 and Schedule 1 of this Agreement, without prejudice to the Executive’s obligations in relation to confidentiality, the Executive will provide to the person making the offer details of the substance of the restrictions contained in Clauses 18 and Schedule 1. |
| 21 |
Directorships |
| 21.1 |
The Executive shall accept appointment as a director of the Company and of any such Group Company or other company as the Company may reasonably require in connection with the Executive’s appointment under this Agreement and the Executive shall resign without claim for compensation from office as a director of any such company at any time on request by the Company, which resignation shall not affect the continuance in any way |
13
| of this Agreement. The Executive shall immediately account to the Company for any director’s fees or other emoluments, remuneration or payments either receivable or received by the Executive by virtue of the Executive’s holding office as such director (or waive any right to the same if so required by the Company). |
| 21.2 |
Upon the termination of the Executive’s employment with the Company however arising, and for whatsoever reason, the Executive shall, upon the request of the Board, resign without claim for compensation (but without prejudice to any claim the Executive may have for damages for breach of this Agreement) from: |
| (a) |
office as a director of the Company or of any Group Company or of any other company in which the Executive holds a directorship at the Company’s request; and |
| (b) |
all offices held by the Executive in any or all of such companies; and |
| (c) |
all trusteeships held by the Executive of any pension scheme or other trusts established by the Company, any Group Company or any other company with whom the Executive has had dealings as a consequence of the Executive’s employment by the Company. |
| 21.3 |
Should the Executive fail to resign from office as a director or from any other office or trusteeship in accordance with Clauses 21.1 or 21.2, either during the Executive’s employment, when so requested by the Company, or on its termination, the Company is hereby irrevocably authorised to appoint a person in the Executive’s name and on the Executive’s behalf to execute any documents and to do all things required to give effect to the resignation. |
| 21.4 |
Save with the prior agreement in writing of the Company, the Executive shall not, during the continuance of this Agreement, resign from any office as a director of the Company, any Group Company or of any other company in which the Executive holds a directorship at the Company’s request or do anything that would cause the Executive to be disqualified from continuing to act as a director. |
| 22 |
Garden Leave |
| 22.1 |
Neither the Company nor any Group Company is under any obligation to provide the Executive with any work. At any time after notice to terminate the Employment is given by either party, or if the Executive resigns without giving due notice and the Company does not accept the Executive’s resignation, the Company may, at its absolute discretion, require the Executive to take a period of absence called garden leave (the “Garden Leave Period”). The provisions of this clause shall apply to any Garden Leave Period. |
| 22.2 |
The Company may require that the Executive will not, without prior written consent of the Board, be employed or otherwise engaged in the conduct of any activity, whether or not of a business nature, during the Garden Leave Period. Further, if so requested by the Company, the Executive will not: |
| 22.2.1 |
enter or attend the premises of the Company or any other Group Company; or |
| 22.2.2 |
contact or have any communication with any hotel owner, guest, customer client of the Company or any other Group Company or other third party with whom the Company or other Group Company has business relations, in each case in relation to the business of the Company or any other Group Company (other than purely social contact); or |
14
| 22.2.3 |
contact or have any communication with any employee, officer, director, agent or consultant of the Company or any other Group Company in relation to the business of the Company or any other Group Company (other than purely social contact); or |
| 22.2.4 |
remain or become involved in any aspect of the business of the Company or any other Group Company except as required by such companies. |
| 22.3 |
The Company may require the Executive: |
| 22.3.1 |
to comply with the provisions of Clause 24; and |
| 22.3.2 |
to immediately resign from any directorship, trusteeships or other offices which the Executive holds in the Company, any other Group Company or any other company where such directorship or other office is held as a consequence or requirement of the Employment, unless the Executive is required to perform duties to which any such directorship, trusteeship or other office relates in which case the Executive may retain such directorships, trusteeships or other offices while those duties are ongoing. |
| 22.4 |
The Executive hereby irrevocably appoints the Company to be the Executive’s attorney to execute any instrument and do anything in the Executive’s name and on behalf of the Executive to effect the Executive’s resignation if the Executive fails to do so in accordance with Clause 22.3.2. |
| 22.5 |
During the Garden Leave Period, the Executive will be entitled to receive the Executive’s salary and all benefits in accordance with the terms of this agreement. Any unused holiday accrued at the commencement of the Garden Leave Period and any holiday accrued during any such period will be deemed to be taken by the Executive during the Garden Leave Period. |
| 22.6 |
At the end of the Garden Leave Period, the Company may, at its sole and absolute discretion, pay the Executive salary in lieu of the balance of any period of notice (less any deductions the Company is required by law to make). |
| 22.7 |
During the Garden Leave Period: |
| 22.7.1 |
the Executive shall provide such assistance as the Company or any Group Company may require to effect an orderly handover of the Executive’s responsibilities to any individual or individuals appointed by the Company or any Group Company to take over the Executive’s role or responsibilities; |
| 22.7.2 |
the Executive may be required to carry out specified duties (consistent with the executive’s skills role and experience) and shall be available to deal with requests for information, provide assistance, be available for meetings and to advise on matters relating to work (unless the Company has agreed that the Executive may be unavailable for a period); and |
| 22.7.3 |
the Company may appoint another person to carry out the Executive’s duties in substitution for the Executive. |
| 22.8 |
All duties of the Employment (whether express or implied) including without limitation the Executive’s duties of fidelity, good faith and exclusive service, shall continue throughout the Garden Leave Period save as expressly varied by this Clause 22. The Executive agrees that the exercise by the Company of its rights pursuant to this Clause 22 shall not entitle the Executive to claim that the Executive has been constructively dismissed. |
15
| 23 |
Termination |
| 23.1 |
This Agreement and the Executive’s employment with the Company hereunder may be terminated immediately by the Company without prior notice if the Executive at any time in the reasonable opinion of the Board: |
| (a) |
commits any act of gross misconduct or gross incompetence or other repudiatory breach of contract; or |
| (b) |
without reasonable excuse and with prior written warning, repeats or continues any misconduct or neglect in the discharge of the Executive’s duties or other breach of contract (not falling within 23.1(a) above); or |
| (c) |
has a bankruptcy order made against the Executive or if the Executive makes any arrangement or composition with the Executive’s creditors or has an interim order made against the Executive pursuant to Section 252 of the Insolvency Act 1986; or |
| (d) |
is convicted of any criminal offence other than an offence which, in the reasonable opinion of the Board, does not affect the Executive’s position as an employee of the Company (bearing in mind the nature of the duties in which the Executive is engaged and the capacity in which the Executive is employed); or |
| (e) |
the Executive is guilty of any bribery, corruption, fraud, dishonesty or any conduct by the Executive’s actions or omission which, brings or is likely to bring himself or the name or reputation of the Company or any Group Company into serious disrepute or seriously prejudices the interests of the business of the Company or any other Group Company. |
Any delay by the Company in exercising such right to termination shall not constitute a waiver thereof.
| 23.2 |
In the event of termination pursuant to Clause 23.1, the Company shall not be obliged to make any further payment to the Executive beyond the amount of any remuneration and payment in lieu of outstanding untaken holiday entitlement actually accrued up to and including the date of such termination, and the Company shall be entitled to deduct from such remuneration any sums owing to it or to any other Group Company (including but not limited to any advance of a cash float to cover business expenses, any advance of pay, or any holiday pay relating to holiday taken in excess of accrued entitlement) by the Executive to which deduction the Executive expressly hereby consents. |
| 23.3 |
In the event of the termination of the Employment of the Executive for whatever reason and whether by notice or in any other manner whatsoever, the Executive agrees that the Executive will not at any time after such termination represent the Executive as still having any connection with the Company or any Group Company save as a former employee for the purpose of communicating with prospective employers or complying with any applicable statutory requirements. |
| 23.4 |
In the event that the Executive is incapacitated by ill health, accident or any other cause from performing the Executive’s duties under this Agreement for a period of 26 weeks or more (whether consecutive or not) in any continuous period of 2 years, then the Company may terminate this Agreement by giving to the Executive six months notice, in writing expiring at any time (whether or not the Executive remains incapacitated from performing the Executive’s duties under this Agreement) provided always that the Executive shall receive all benefits lawfully due to the Executive under this Agreement calculated up to the effective date of termination of employment. |
16
| 23.5 |
Without prejudice to the provisions of Clauses 23.1 and 23.2, the Company may at any time, in its absolute discretion, lawfully terminate this Agreement with immediate effect without prior notice by notifying the Executive in writing that the Company is exercising its right under this clause 23.5 and that it will make within 28 days a payment to the Executive in lieu of notice (“Payment in Lieu”) equal to the basic salary only to which the Executive would have been entitled during the period of notice referred to in clause 1.2 at the rate applying at the date of termination (less deductions for income tax and national insurance contributions and any other deductions the Company is required by law to make). Payment in Lieu will not include any payment of benefits or bonus or any holiday entitlement that would have accrued had the Executive worked for the Company during the notice period for which the Payment in Lieu is made. |
| 23.6 |
As a condition to making the payments and providing the benefits stated in Clause 22.5, or in Clauses 23.5 or 23.6, the Company may require the Executive to execute and deliver a general release in which he (i) releases all claims that he may have in respect of his employment against any Group Company and any of their respective past or present officers, directors or employees other than his rights under Clauses 22.5, 23.5 and 23.6 of this Agreement or another agreement into which he and the Company subsequently enter and (ii) covenants that he has not filed and will not file any civil action, suit, arbitration, administrative charge, or legal proceeding against any of the released parties in respect of the released claims. |
| 24 |
Return of Property |
| 24.1 |
Immediately on request and in any event upon the termination of the Executive’s employment with the Company for whatsoever cause, the Executive shall immediately deliver up to the Company or its authorised representative any property of the Company or any other Group Company which may be in the Executive’s possession, custody or under the Executive’s control, including, without limitation and where relevant, the Car, the car keys, laptop, mobile telephone, electronic organiser, wireless devices, minutes, memoranda, correspondence, notes, records, reports, sketches, plans or other documents or writing (which shall include information recorded or stored in writing or on magnetic tape or disk or otherwise recorded or stored for reproduction whether by mechanical or electronic means and whether or not such reproduction will result in a permanent record being made) and any copies thereof, whether or not the property was originally supplied to the Executive by the Company or any other Group Company. |
| 24.2 |
If so requested, the Executive shall provide to the Company a signed statement confirming that the Executive has fully complied with Clause 24.1. |
| 25 |
Disciplinary and Grievance Procedure |
| 25.1 |
The Executive’s employment is subject to the disciplinary and grievance rules and procedures of the Company from time to time. The Company’s disciplinary and grievance procedures do not form part of the Executive’s contractual terms and conditions of employment. |
17
| 26 |
Data Protection |
| 26.1 |
The Executive consents to the Company and any other Group Company holding and processing, both electronically and manually, the data it collects in relation to the Executive, in the course of the Executive’s employment, for the purposes of the Company’s administration and management of its employees and its business and for compliance with applicable procedures, laws and regulations and to the transfer, storage and processing by the Company or any other agent of such data outside, to and in, the European Economic Area, and in particular to and in the United States and any other country in which the Company or any other Group Company has offices. |
| 27 |
Notices |
| 27.1 |
Any notice to be given under this Agreement shall be given in writing and may be sent, addressed in the case of the Company to its registered office for the time being and in the case of the Executive to the Executive at the Executive’s last known place of residence or given personally and any notice sent by post shall be deemed to have been served at the expiration of 48 hours after the same was posted. |
| 28 |
Assignment |
| 28.1 |
The benefit of each agreement and obligation of the Executive under this Agreement may be assigned to and enforced by all successors or assigns for the time being carrying on the Business and such agreements and obligations shall operate and remain binding notwithstanding the termination of the employment of the Executive. |
| 29 |
Third Party Rights |
To the extent permitted by law, no person other than the parties to this agreement and any Group Company shall have the right to enforce any term of this agreement under the Contracts (Rights of Third Parties) Act 1999. For the avoidance of doubt, save as expressly provided in this clause the application of the Contracts (Rights of Third Parties) Act 1999 is specifically excluded from this Agreement, although this does not affect any other right or remedy of any third party which exists or is available other than under this Act.
| 30 |
Law and Jurisdiction |
| 30.1 |
English law |
This Agreement shall be governed by, and construed in accordance with, English law.
| 30.2 |
Jurisdiction |
In relation to any legal action or proceedings arising out of or in connection with this Agreement (“Proceedings”), each of the parties irrevocably submits to the exclusive jurisdiction of the English courts and waives any objection to Proceedings in such courts on the grounds of venue or on the grounds that Proceedings have been brought in an inappropriate forum.
| 31 |
Prior Agreements and other employment-related conditions |
| 31.1 |
Without prejudice to the terms of the offer letter from Chief Executive Officer, Keith Barr, to the Executive setting out the principal terms of the Executive’s Employment, such terms being incorporated by reference herein, this Agreement shall be in substitution for any other subsisting offer letter, agreement, service agreement or contract of employment (oral or otherwise) made between the Company and the Executive or between any other Group Company and the Executive and where any inconsistency exists between this Agreement and any other document, the terms of this Agreement shall prevail. |
18
| 31.2 |
The Executive’s employment is subject to the Company’s non-contractual rules, policies and procedures which apply for the Executive’s location. If there is any conflict between the non-contractual rules, policies and procedures from time to time and the Executive’s contractual terms and conditions, the contractual terms and conditions shall prevail. |
| 31.3 |
The Executive warrants and agrees that the Executive is not entering into this Agreement in reliance on any representation not expressly set out in this Agreement. |
| 32 |
Collective Agreements |
| 32.1 |
There are no collective agreements currently in force which affect directly or indirectly the terms and conditions of the Executive’s employment. |
| 33 |
Severability and Amendments |
| 33.1 |
If any provision of this Agreement or of a clause hereof, or of any part of Schedule 1 is determined to be illegal or unenforceable by any court of law or any competent governmental or other authority, but would be valid if part of their wording were deleted, such clause shall be severable and enforceable and will apply with such deletion as may be necessary to make it valid or effective. The parties shall negotiate in good faith to replace any such illegal or unenforceable provisions with suitable substitute provisions which will maintain as far as possible the purposes and the effect of this Agreement. |
| 33.2 |
This Agreement may only be modified by the written agreement of the parties. |
| 34 |
Miscellaneous |
| 34.1 |
The Company may withhold from any amounts payable under this Agreement any applicable withholding in respect of any applicable taxes and/or social security as appropriate. |
| 35 |
Interpretation |
| 35.1 |
In this Agreement: |
“Affiliate” means, in respect of any company, a company which is its subsidiary, subsidiary undertaking or holding company, or a company which is a subsidiary or subsidiary undertaking of that holding company.
“the Board” means the Board of Directors of IHG (or Six Continents Limited as the context may require) or the Directors present at a duly convened meeting of the Directors at which a quorum is present and acting throughout or a duly authorised committee of the Board or any person designated by the Board for the purpose or for general employment matters.
“the Business” means (taken together) the business of IHG and the business of any other Group Company with which the Executive is required by the Board under Clause 2 to be concerned.
19
“Confidential Information” means confidential information (which may include commercially sensitive information) relating to the business of the Company or any Group Company or any of their respective customers or their affairs and which includes but is not limited to Trade Secrets, ideas, inventions, business methods, business practices and processes, finances, prices, costs, financial marketing/development/ manpower plans, strategy documents or intentions, products/product specifications, confidential emails/letters/memos, marketing and promotion of products, packages or offers, names and addresses and other details of suppliers, customers, agents of the Company or any Group Company, computer systems and software, information relating to employees, know-how or other matters connected with the products or services manufactured, marketed, provided or obtained by the Company or any Group Company or their respective customers.
“Employment” means the employment governed by this Agreement;
“Group” means the Company and any Affiliate of the Company and “Group Company” shall be construed accordingly.
“IHG” means InterContinental Hotels Group PLC.
“month” means a calendar month.
“Trade Secrets” means trade secrets, and information of such a highly confidential nature as to require the same treatment as trade secrets, of IHG or any Group Company or any supplier, customer, or agent of the Company or any Group Company.
| 35.2 |
In this Agreement, where the context admits: |
| (a) |
words and phrases the definitions of which are contained or referred to in the Companies Act 2006 shall be construed as having the meanings so attributed to them; |
| (b) |
references to any statute or statutory provisions include a reference to those provisions as amended or re-enacted or as their application is modified by other provisions from time to time and any reference to a statutory provision shall include any subordinate legislation made from time to time under that provision; |
| (c) |
references to a “person” include any individual, company, body corporate, corporation sole or aggregate, government, state or agency of a state, firm, partnership, joint venture, association, organisation or trust (in each case, whether or not having separate legal personality and irrespective of the jurisdiction in or under the law of which it was incorporated or exists) and a reference to any of them shall include a reference to the others; |
| (d) |
any reference to “writing” shall include typewriting, printing, lithography, photography, telex, facsimile and the printed out version of a communication by electronic mail and other modes of representing or reproducing words in a legible form; |
| (e) |
words denoting the singular shall include the plural and vice versa; |
| (f) |
the employment of the Executive are references to the employment by the Company whether or not during the continuance of this Agreement; and |
| (g) |
the masculine gender shall be deemed to include the feminine gender. |
| 35.3 |
Headings are inserted for convenience only and shall not affect the construction of this Agreement. |
20
IN WITNESS whereof this Agreement has been entered into the day and year first above written.
| SIGNED by |
) |
/s/ Nicolette Henfrey |
||
| for and on behalf of |
) |
|||
| the Company |
) |
/s/ Martin Bennett |
||
| in the presence of: |
) |
MARTIN BENNETT |
||
| ARTHUR ROAD, WINDSOR SL4 1RS |
||||
| Signature: |
||||
| Name: Nicolette Henfrey |
||||
| Address: Broadwater Park, Denham, Buckinghamshire, UB9 5HR |
||||
| Occupation: EVP, General Counsel & Company Secretary |
||||
| SIGNED AS A DEED |
) |
|||
| and DELIVERED |
) |
|||
| by the Executive in the |
) |
|||
| presence of: |
) |
|||
| Signature: |
/s/ Michael Glover |
|
| Name: |
Michael Glover |
|
Address: [Address redacted]
| /s/ Nimesh Patel |
||
| Nimesh Patel |
SVP & General Counsel – Amer |
21
SCHEDULE 1
| 1. |
1.1 In this Schedule 1 the expressions below have the meaning ascribed to them respectively below: |
“Competing Enterprise” shall mean (a) any person, corporation, partnership, venture or other entity (“entity”) which engages either (i) in the business of managing, franchising, running, leasing, owning or joint venturing at least 50 hotels, or (ii) in the business of any online booking agency in respect of hotel rooms (“hotel booking”) and in the case of (i) and (ii) the entity’s shares are publicly traded and such entity has a market capitalisation of not less than one billion pounds sterling (for these purposes “market capitalisation” shall be the aggregate market value of the ordinary shares of the entity) and (b) any Competitor;
“Competitor” shall mean any of the following companies and/or any of their holding companies or subsidiaries from time to time (both as defined in the Companies Act 2006):
| (i) |
Accor SA |
| (ii) |
Hilton Worldwide Holdings Inc. |
| (iii) |
Marriott International, Inc. |
| (iv) |
Hyatt Hotels Corporation |
| (v) |
Choice Hotels International, Inc. |
| (vi) |
Wyndham Hotels and Resorts Inc. |
| (vii) |
Four Seasons Holdings, Inc. |
| (viii) |
Jin Jiang International Holdings Co., Ltd. |
| (ix) |
Shangri-La International Hotel Management, Ltd. |
| (x) |
Whitbread PLC |
| (xi) |
Expedia, Inc. |
| (xii) |
AirBnB, Inc. |
| (xiii) |
Booking Holdings Inc. |
“Garden Leave Period” has the meaning given in Clause 22 of the Agreement above;
“Key Person” shall mean any person who was a band 4 level or above employee of the Company or any other Group Company (including for this purpose any General Manager of any hotel owned or managed by the Company or any other Group Company) and with whom the Executive had material contact or dealings in performing the duties of the Employment at any time during the period of 12 months ending on the Termination Date;
“Prohibited Area” shall mean all territories in which the Company and any Group Company carries out business;
“Relevant Period” shall mean the period of six months beginning with the Termination Date but reduced by one day for each day of a Garden Leave Period;
22
“Restricted Activities” shall mean executive, managerial, directorial, administrative, strategic, business development or supervisory responsibilities and activities relating to any or all aspects of hotel ownership, hotel management, hotel franchising, hotel running, hotel leasing, hotel joint-venturing or hotel booking;
“Termination Date” shall mean the date on which the Employment terminates.
1.2 The Executive agrees that during the Relevant Period the Executive will not without the prior written consent of the Company:
| (i) |
become associated with or engage in any Restricted Activities within the Prohibited Area in respect of any Competing Enterprise, whether as officer, director, employee, principal, partner, agent, executive, independent contractor or shareholder (other than as a holder of not in excess of 5% of the outstanding voting shares of any publicly traded company) in competition with any business of the Company or any other Group Company being carried on by the Company or any other Group Company at the Termination Date but excluding (a) any association or engagement which solely relates to Restricted Activities which the Executive had undertaken or had been involved in to a material extent in the course of the Employment at any time during the period of 12 months ending on the Termination Date, or (b) the Executive’s employment by a unit of a Competing Enterprise which unit is not itself engaged in hotel ownership, hotel management, hotel franchising, hotel running, hotel leasing, hotel joint-venturing or hotel booking (as defined above), so long as the Executive’s duties and responsibilities with respect to such employment are limited to the business of such unit, or (c) the Executive’s employment by an entity which includes a Competing Enterprise where such Competing Enterprise produces revenues that account for less than 5% of the gross revenues of the entity and performing services for such Competing Enterprise is not a material part of the Executive’s responsibilities; and |
| (ii) |
either on his own behalf or for or with any other person, whether directly or indirectly, solicit or induce or attempt to solicit or induce any Key Person to leave the employ of the Company or any other Group Company whether or not such person would commit any breach of his contract of employment by leaving the service of the Company or any other Group Company; and |
| (iii) |
either on his own behalf or for or with any other person, whether directly or indirectly, interfere with or try to terminate or reduce the level of supplies (whether of products and/or services) by a supplier to the Company or any other Group Company within the Prohibited Area provided the Executive was concerned or involved to a material extent with the supply of products or services by that supplier to the Company or a Group Company in the course of the Employment at any time during the 12 months period ending on the Termination Date. |
1.3 The Executive agrees that each of the paragraphs contained in sub-clause 1.2 of this Schedule 1 constitute an entirely separate and independent covenant on the Executive’s part and the validity of one paragraph shall not be affected by the validity or unenforceability of another.
23
1.4 The Executive agrees that the Executive will at the request and cost of the Company enter into a direct agreement or undertaking with any Group Company whereby the Executive will accept restrictions and provisions corresponding to the restrictions and provisions contained in sub-clauses 1.2 of this Schedule 1 (or such of them as may be reasonable and appropriate in the circumstances) in relation to such activities and such areas and for such a period as such company may reasonably require for the protection of its legitimate interests but provided that the duration of such restrictions and provisions are no greater than the Relevant Period.
1.5 The Executive agrees that having regard to the facts and matters set out above the restrictive covenants contained in this Schedule 1 are necessary for the protection of the business and confidential information of the Company and other Group Companies.
1.6 The Executive and the Company agree that while the restrictions imposed in this Schedule 1 are considered necessary for the protection of the Company and other Group Companies it is agreed that if any one or more of such restrictions shall either taken by itself or themselves together be adjudged to go beyond what is reasonable in all the circumstances for the protection of the Company’s or any Group Company’s legitimate interest but would be adjudged reasonable if any particular restriction or restrictions were deleted or if any part or parts of the wording thereof were deleted, restricted or limited in a particular manner then the said restrictions shall apply with such deletions, restrictions or limitations as the case may be.
1.7 Any termination of the Employment or of this Agreement (or breach of this Agreement by the Executive or the Company) shall have no effect on the continuing operation of this Schedule 1.
1.8 The parties hereto acknowledge that the potential restrictions on the Executive’s future employment imposed by this Schedule 1 are reasonable in both duration and geographic scope and in all other respects.
1.9 The parties agree that this Agreement would not have been entered into and the benefits described in the Agreement would not have been promised in the absence of the Executive’s promises under this Schedule 1.
24
Exhibit 4(c)(iv)
Employment Agreement
between
Six Continents Limited
as Company
and
Elie Maalouf
as Executive
relating to
the employment of the Executive with the Company
CONTENTS
| 1. |
Appointment |
4 | ||||
| 2. |
Duties and Powers |
5 | ||||
| 3. |
Mobility |
5 | ||||
| 4. |
Remuneration |
5 | ||||
| 5. |
Short Term Incentive Schemes |
6 | ||||
| 6. |
Long Term Incentive and Share Schemes |
6 | ||||
| 7. |
Expenses and Gratuities |
7 | ||||
| 8. |
Professional Memberships |
7 | ||||
| 9. |
Company Car |
7 | ||||
| 10. |
Holidays |
7 | ||||
| 11. |
Sickness and Incapacity |
8 | ||||
| 12. |
Notification of Absence |
9 | ||||
| 13. |
Pension |
9 | ||||
| 14. |
Private Medical Insurance |
9 | ||||
| 15. |
Location / Assignment Specific Benefits |
10 | ||||
| 16. |
Exclusive Service |
10 | ||||
| 17. |
Intellectual Property |
11 | ||||
| 18. |
Confidentiality |
13 | ||||
| 19. |
Restrictive Covenants |
13 | ||||
| 20. |
Notification of Restrictions |
14 | ||||
| 21 |
Directorships |
14 | ||||
| 22 |
Garden Leave |
15 | ||||
| 23 |
Termination |
16 | ||||
| 24 |
Return of Property |
17 | ||||
| 25 |
Disciplinary and Grievance Procedure |
18 | ||||
| 26 |
Data Protection |
18 | ||||
| 27 |
Notices |
18 | ||||
| 28 |
Assignment |
18 |
2
| 29 |
Third Party Rights |
18 | ||||
| 30 |
Law and Jurisdiction |
19 | ||||
| 31 |
Prior Agreements and other employment-related conditions |
19 | ||||
| 32 |
Collective Agreements |
19 | ||||
| 33 |
Severability |
19 | ||||
| 34 |
Miscellaneous |
19 | ||||
| 35 |
Interpretation |
20 | ||||
| SCHEDULE 1 |
23 | |||||
3
THIS AGREEMENT is dated 4th May 2023 and made
BETWEEN:
| (1) |
Six Continents Limited, registered in England and Wales as company number 913450 and having its registered office at 1 Windsor Dials, Arthur Road, Windsor, Berkshire, SL4 1RS (the “Company”); and |
| (2) |
Elie Maalouf (the “Executive”), of [Address redacted]. |
THE PARTIES AGREE THAT:
| 1. |
Appointment |
| 1.1 |
The Company employs the Executive and the Executive agrees to serve the Company and any other Group Company or Group Companies as required by the Board in the capacity of Chief Executive Officer or in such other capacity as the Board may, from time to time, determine and as agreed by the Executive. The Executive’s reward band is 1. |
| 1.2 |
This Agreement commences on 1 July 2023 and shall continue (subject to termination as provided for below) unless and until terminated by either party giving to the other not less than the following notice period in writing, expiring at any time: |
| a) |
notice period from the Company to the Executive: 52 weeks; |
| b) |
notice period from the Executive to the Company: 26 weeks. |
| 1.3 |
The Executive’s period of continuous employment with the Group commenced on 12 January 2015. |
| 1.4 |
The Executive warrants that: |
| 1.4.1 |
the Executive is not prevented from performing the Executive’s duties in accordance with the terms of this Agreement by any obligation or duty owed to any other party, whether contractual or otherwise; and |
| 1.4.2 |
the Executive has all necessary licences, permissions, consents, approvals, qualifications and memberships required for the Executive to perform the Executive’s duties under this Agreement and as notified to the Company by the Executive or on his behalf and is not and has not been subject to any prohibition, censure, criticism or disciplinary sanction by any professional, regulatory or other body or authority which would prevent the Executive from performing any duties under this Agreement or undermine the confidence of the Board in the Employment by the Company. |
| 1.5 |
Employment is conditional upon the following conditions, if required by the Company: |
| (a) |
the Executive verifying all academic, professional or other business qualifications notified to the Company; and |
| (b) |
the Executive providing acceptable proof of identity and right to work in the United Kingdom as required under United Kingdom immigration regulations. |
4
| 2. |
Duties and Powers |
| 2.1 |
The Executive shall exercise such powers, perform such duties (if any) and comply with such directions in relation to the business of the Company or any other Group Company as the Board may, from time to time, confer upon or assign or give to him consistent with the duties that are appropriate to Executive’s position as CEO and customarily performed by the CEO of comparable companies. The Executive shall carry out his duties in a proper, loyal and efficient manner to the best of his ability. |
| 2.2 |
The Executive shall, during the continuance of this Agreement (unless prevented by ill health or accident or as otherwise agreed by the Board in writing), devote the whole of the Executive’s working time and attention and abilities to the Business and shall use the Executive’s reasonable endeavours to promote and protect the general interests and welfare of the Company, the Group and any other Group Company to which the Executive may, from time to time, render the Executive’s services under this Agreement. |
| 2.3 |
The Executive shall at all times promptly give to the Board (in writing if so requested) all such information, explanations and assistance as it may require in connection with the Business and the Executive’s employment under this Agreement. |
| 2.4 |
The Executive shall work normal business hours which are 35 hours per week and such additional hours as may be necessary in the performance of the Executive’s obligations under this Agreement. The nature of the Executive’s job is such that the Executive is largely able to prioritise tasks, determine the time and effort the Executive devotes to those tasks and when the Executive does them. To the extent the Executive therefore determines the Executive’s working hours outside normal business hours, the additional hours will not count as working time towards the weekly working time limit of 48 hours on average. No overtime will be paid with respect to any hours worked by the Executive outside normal business hours. |
| 2.5 |
The Executive will promptly disclose to the Board full details of any wrongdoing of which the Executive becomes aware by any employee or officer of any Group Company (including the Executive) where that wrongdoing is material to that employee’s employment by the relevant company or to the interests or reputation of any Group Company. |
| 3. |
Mobility |
| 3.1 |
The Executive’s principal place of work may be in such place or places as the Company shall reasonably require. At the date hereof the Executive’s principal place of work is 1 Windsor Dials, Arthur Road, Windsor, Berkshire, SL4 1RS. |
| 3.2 |
The Executive may be required to travel both inside and outside the United Kingdom on the business of the Company or any Group Company in the proper performance of the Executive’s duties from time to time. |
| 4. |
Remuneration |
| 4.1 |
The Company shall pay to the Executive a salary at the annual rate of £990,000. Such salary shall be payable not less frequently than every month on a date which will be no later than the last day of the month and shall be deemed to accrue from day to day. Such salary shall include any director’s fees payable to the Executive. The Company shall be entitled to procure payment of the salary for administrative reasons by another Group Company. |
| 4.2 |
The salary payable to the Executive pursuant to Clause 4.1 shall be subject to review in accordance with the Company’s practice from time to time but there shall be no obligation on the Company to increase such salary. |
5
| 4.3 |
The Company shall be entitled at any time to deduct from the Executive’s remuneration (which includes salary, salary supplement (if any), any bonus, holiday or other pay) any sums owing to it or to any other Group Company (including but not limited to any advance of a cash float to cover business expenses, any advance of pay, or any holiday pay relating to holiday taken in excess of entitlement) by the Executive, to which deduction the Executive expressly hereby consents. |
| 5. |
Short Term Incentive Schemes |
| 5.1 |
The Executive may be invited to participate in the Company’s or any Group Company (as appropriate) discretionary incentive plan or bonus plans applicable from time to time for employees in the Executive’s reward band, subject to the rules of the relevant plan(s) from time to time. Details of the current applicable plan(s) will be provided to the Executive. Awards are determined solely at the Company’s or any Group Company’s (as appropriate) discretion, to which the Executive hereby agrees. |
| 5.2 |
The Company or any Group Company (as appropriate) reserves the right, in its absolute discretion, to vary the terms and/or any targets and/or level of bonus opportunity and/or bonus payable, under any incentive plan from time to time in operation or to suspend (for a fixed or indefinite period) or withdraw any such plan without providing any replacement. |
| 5.3 |
The Executive acknowledges that during the course of the Employment and on its termination the Executive has no right to receive a bonus and that the Company is under no obligation to operate a bonus plan and that the Executive will not acquire such a right, nor shall the Company come under such an obligation, merely by virtue of the Executive’s having received one or more bonus payment(s) or the Company or any Group Company (as appropriate) having operated one or more bonus plan during the course of the Employment. Bonus paid to the Executive in one year shall not result in any guarantee of bonus or any obligation upon the Company to pay bonus in any subsequent year. |
| 5.4 |
Any bonus paid is not pensionable and is subject to deductions for tax and social security contributions, or any other deductions which may be required by law. |
| 6. |
Long Term Incentive and Share Schemes |
| 6.1 |
The Executive may be invited to participate in such share option or other share ownership plans as the Company or the Group may operate from time to time and which are applicable to employees in the Executive’s reward band, subject to the rules of the relevant plan(s) from time to time. Details of any current applicable plan(s) will be provided to the Executive. Awards are determined in accordance with the rules of the applicable plan solely at the Company’s or relevant Group Company’s discretion, to which the Executive hereby agrees. |
| 6.2 |
The Company or relevant Group Company reserves the right, in its absolute discretion, to vary the terms of any such plan or to suspend (for a fixed or indefinite period) or withdraw any such plan without providing any replacement. |
| 6.3 |
The Executive acknowledges that during the course of the Employment and on its termination the Executive has no right to receive an award of shares or grant of share options and that the Company or any Group Company is under no obligation to operate such plans and that the Executive will not acquire such a right, nor shall the Company or any Group Company come under such an obligation, merely by virtue of the Executive’s |
6
| having received one or more award of shares or grant of share options or the Company or any Group Company having operated one or more such plans during the course of the Employment. On termination of employment howsoever arising the Executive shall not have any claim for breach of contract in respect of the loss of any rights or benefits under any share option, bonus, long-term incentive plan or other profit sharing scheme operated by the Company or by any Group Company in which he may participate which would otherwise have accrued during any period of notice to which the Executive is entitled. |
| 6.4 |
Any payment made under this clause is not pensionable and is subject to deductions for tax and social security contributions, or any other deductions which may be required by law. |
| 7. |
Expenses and Gratuities |
| 7.1 |
In accordance with Group policy the Company shall pay or refund to the Executive all reasonable travelling, entertainment and other similar out of pocket expenses necessarily and wholly incurred by the Executive in the proper performance of the Executive’s duties subject to production by the Executive of such evidence of such expenses as the Company may require. If the Executive is provided with a company credit card or charge card, the Executive shall use it only for such expenses as the Executive is entitled under this sub-clause to have reimbursed by the Company. |
| 7.2 |
The Executive shall at all times comply with Group policies in force from time to time regarding acceptance of gifts, gratuities and/or benefits. |
| 8. |
Professional Memberships |
| 8.1 |
In accordance with and subject to Company policy, and upon prior approval, the Company shall pay for memberships to recognised professional bodies where membership of such professional body is directly related to and required in relation to the Executive’s job from time to time or the Executive’s normal professional skill. |
| 8.2 |
Where required, whether by the Company, law, any regulatory organisation or otherwise the Executive should at all times during the Executive’s employment with the Company maintain the Executive’s membership of such professional, trade or other bodies necessary for the proper performance of the Executive’s duties. |
| 9. |
Company Car |
The Company shall pay the Executive a taxable, non-pensionable car allowance at a level to be determined by the Company. The allowance will be paid monthly in arrears in the same manner as the Executive’s salary. The Company reserves the right, in its reasonable discretion, to vary the level of car allowance and/or standard of car available and/or rules applicable to employees in the Executive reward band which applies to the Executive.
| 10. |
Holidays |
| 10.1 |
The Company’s holiday year is 1 January to 31 December (the “Holiday Year”). |
| 10.2 |
In addition to public holidays, the Executive shall be entitled to paid holiday in each Holiday Year in accordance with the stated policy for the Executive’s reward band in the principal place of work, to be taken at times to be agreed with the Company in advance. Subject to Clause 10.3, no payment will be made for holidays not taken in the Holiday Year in which they arise, although the Executive may carry forward any unused holiday from one Holiday Year to the next, subject to a maximum of 5 days to be carried forward into the following Holiday Year. |
7
| 10.3 |
Upon termination of this Agreement the Executive shall be entitled to payment in lieu of any untaken outstanding holiday entitlement in the Holiday Year during which the Executive’s employment terminates, which entitlement shall accrue on a pro-rata monthly basis. |
| 10.4 |
Upon termination of the Executive’s employment under this Agreement, the Company shall be entitled to deduct from any sum owed by the Company to the Executive a sum representing overpayment of salary with respect to holiday which the Executive has taken in excess of the Executive’s accrued holiday entitlement calculated on a pro-rata monthly basis as at the date of the termination of the Executive’s employment and the Executive hereby authorises the Company to make such deduction. |
| 10.5 |
The Company shall be entitled to require the Executive to take all or any part of any accrued untaken holiday entitlement during the period of notice to terminate the Executive’s employment (including, for the avoidance of doubt, during any period of garden leave pursuant to Clause 22). If the Company exercises this right, the Executive must obtain agreement prior to the actual days to be taken as holiday, which agreement shall not be unreasonably withheld. |
| 11. |
Sickness and Incapacity |
| 11.1 |
When the Executive is absent from work and unable to perform the Executive’s duties under this Agreement satisfactorily by reason of any injury, illness, incapacity or other reason satisfactory to the Company and subject to compliance with Clause 12, the Executive shall be entitled to receive the Executive’s full salary and other contractual benefits only for up to the first 26 weeks of any such absence in aggregate in any period of 12 months. Once sick pay under this clause has expired the Executive shall have no further entitlement to sick pay until he has returned to work for a consecutive period of twelve weeks. |
| 11.2 |
Any salary payable pursuant to this clause shall be inclusive of the amount of any benefit or statutory sick pay to which the Executive may be entitled during the period of such inability under any local law for the time being in force. |
| 11.3 |
Subject to applicable laws, the Executive shall submit to a medical examination by a doctor appointed by the Company at the request of the Company’s Board and agreed to by the Executive, at the expense of the Company, at any time during the continuance of this Agreement, whether or not the Executive is absent by reason of sickness, injury or other incapacity. The Executive consents to the Company’s doctors obtaining a copy of appropriate extracts of the Executive’s medical records from the Executive’s medical practitioner in circumstances where the Company reasonably deems such a step to be required and in all cases, subject to applicable laws. If applicable the Executive further agrees that the Executive shall authorise the medical practitioner and the Company’s doctors to discuss further any matters arising from such medical report, diagnosis or prognosis and agrees that the Company’s doctors may discuss such matters with the Company to the extent relevant to the Executive’s employment or the performance of the Executive’s duties. |
| 11.4 |
If the Executive is absent from work by reason of injuries sustained wholly or partly as a result of actionable negligence, nuisance or breach of any statutory duty on the part of any third party other than the Company or any Group Company, the Executive shall promptly inform the Chair of the Board of that fact and the Company in its discretion may require the Executive to take all reasonable steps to recover from such third party or its insurers compensation including repayment of all sums paid to the Executive by the Company under |
8
| this clause in respect of such absence (which shall be deemed to be paid by way of interest free loan by the Company, subject to any limit imposed under relevant legislation). Any such sums (which are paid to the Executive by the Company on that basis) shall in turn be repaid by the Executive when and to the extent that the Executive recovers compensation for loss of earnings from that third party or its insurers by legal action or otherwise less any reasonable costs incurred in recovering any such compensation. |
| 12. |
Notification of Absence |
| 12.1 |
If the Executive is unable to come to work for any reason, and the Executive’s absence has not previously been authorised by the Company, the Executive must notify the Company as soon as practicable and in accordance with the stated policy for the Executive’s reward band in the principal place of work and must keep the Company properly and regularly informed of their condition and anticipated return to work date. |
| 13. |
Pension |
| 13.1 |
The Company or relevant Group Company operates various pension schemes. The Executive may be a member of the applicable pension scheme as determined by the Executive’s start date with the Company and the Executive’s reward band (“the Scheme”) at the applicable level and subject to the terms of the trust deed and rules governing the Scheme from time to time, including, without limitation, any powers of alteration and discontinuance. The Executive’s membership of the Scheme shall be in substitution for, and shall operate to, the exclusion of any agreement or representation whether written or oral in relation to pension entitlement made with or to the Executive by any person on behalf of the Company or any Group Company at any time. For the avoidance of doubt, in the event of any conflict between this Clause 13 and the provisions relating to “Retirement Plan” in Attachment A to the Executive’s offer letter from Chair of the Board Deanna Oppenheimer, the terms in the offer letter shall govern. |
| 13.2 |
The Company will comply with any duties it may have in respect of the Executive under part 1 of the Pensions Act 2008. The Company is currently using the IHG UK Defined Contribution Pension Plan established in 2014 in respect of its duties under part 1 of the Pensions Act 2008. Membership of the scheme is strictly subject to the rules of the scheme as amended from time to time. The Company reserves the right to vary or discontinue any scheme in place from time to time. |
| 13.3 |
The Company shall be entitled to deduct from the Executive’s salary any amounts payable by the Executive as member contributions to any Scheme in which the Executive is a member from time to time. |
| 14. |
Private Medical Insurance |
| 14.1 |
The Executive, the Executive’s spouse and any dependent, unmarried children under age 21 (or 25 if in full time education) or such older age as required by applicable law, as the case may be, will to the extent eligible (as determined by the Executive’s reward band and any applicable scheme rules) be entitled to participate in and receive benefits under the private medical insurance plan made available by the Company or relevant Group Company (and any other schemes which the Company or relevant Group Company may provide from time to time) subject to the rules or insurance policies constituting such schemes from time to time. In the event of any conflict between this Clause 14 and the provisions relating to “Healthcare” in Attachment A to the Executive’s offer letter from Chair of the Board Deanna Oppenheimer, the terms in the offer letter shall govern. |
9
| 14.2 |
A copy of the relevant private medical insurance plans shall be provided to the Executive and the Executive is required to comply with its rules from time to time. The Company or relevant Group Company reserves the right, in its absolute discretion, to vary the plan or to suspend (for a fixed or indefinite period) or withdraw the plan without providing any replacement. |
| 14.3 |
The benefit referred to above is conditional on the relevant insurer accepting cover for the Executive at a premium the rate of which the Company considers reasonable and accepting liability for any particular claim. In the event that the relevant insurer does not accept cover or liability in respect of the Executive at a premium the rate of which the Company considers reasonable or any claim by the Executive in respect of the benefits, the Company shall have no obligation to provide any alternative benefit or cover in this regard. The provision of this benefit inclusive shall not restrict the Company’s ability to terminate the employment for any reason including, without limitation, because the Executive is incapacitated. |
| 14.4 |
In the event that the Executive claims under any insurance scheme referred to in sub-Clause 14.1 and such claim is rejected by the insurer, the Company or any Group Company shall not be obliged to issue proceedings in relation to such claim. |
| 15. |
Location / Assignment Specific Benefits |
| 15.1 |
In the event that any special terms apply to the Executive, these are as set out in the Executive’s offer letter from Chair of the Board Deanna Oppenheimer and shall govern over any contrary terms in this Agreement. |
| 16. |
Exclusive Service |
| 16.1 |
The Executive will devote the whole of the Executive’s working time, attention and skill to the Employment. It is envisaged that the Executive may take up an external non-executive directorship during the Employment, such position to be subject to Board approval. |
| 16.2 |
At the request of the Company, the Executive will disclose promptly in writing to the Company all the Executive’s interests (for example, shareholdings or directorships) in any business whether or not of a commercial or business nature except the Executive’s interests in any Group Company. |
| 16.3 |
Without prejudice to Clause 16.1 above, and subject to Clause 16.4 below, during the Employment the Executive will not be directly or indirectly engaged or concerned in the conduct of any activity which is similar to or competes with any activity carried on by any Group Company (except as a representative of the Company or with the written consent of the Board) nor, without the consent of the Company, be or make preparations to be engaged or interested either directly or indirectly in any business or occupation (including any charitable work) other than the business of the Company or its Group Companies. |
| 16.4 |
The Executive may not without written consent of the Board hold or be interested in investments which amount to more than five percent of the issued investments of any class of any one company whether or not those investments are listed or quoted on any recognised Stock Exchange or dealt in on the Alternative Investments Market. |
10
| 17. |
Intellectual Property |
| 17.1 |
The Executive acknowledges that: |
| (i) |
the Executive may make Inventions in the course of the Employment, whether in the Executive’s normal or other specifically assigned duties; and |
| (ii) |
the Executive has a special obligation to further the interests of the Group as a whole and of each Group Company. |
| 17.2 |
If the Executive makes or is involved in making an Invention during the Employment, the Executive will promptly inform the Company. The Executive will give the Company sufficient details of any Invention to allow the Company to assess the Invention and to decide whether the Invention belongs to the Company. The Company will treat any Invention which is notified to it under this Clause 17, but which does not belong to the Company, as confidential. |
“Invention” means any invention within the meaning of the Patents Act 1977 relating to or capable of being used in the business of any Group Company as carried on from time to time.
| 17.3 |
If an Invention belongs to the Company, the Executive will act as a trustee for the Company in relation to that Invention and will, at the request and expense of the Company, do everything necessary to: |
| (i) |
vest all right, title and interest in the Invention in the Company or its nominee; |
| (ii) |
secure full patent or other appropriate protection for the Invention anywhere in the world; and |
| (iii) |
defend the Company’s or its nominee’s rights in the Invention and assist with enforcement anywhere in the world. |
| 17.4 |
If the Executive creates or is involved in creating any Work during the Employment, the Executive will promptly give the Company full details of it. |
“Work” means any idea; method; discovery; computer programme; semiconductor chip layout; database; drawing; literary work; product, packaging or other design; trade or service mark; logo; domain name or other work (whether registrable or not and whether a copyright work or not and whether hardware, software, processes or systems) which is not an Invention and which the Executive creates or is involved in creating:
| (i) |
in connection with the Executive’s Employment; or |
| (ii) |
relating to or capable of being used in those aspects of the businesses of the Group Companies in which the Executive is involved from time to time. |
| 17.5 |
The Executive will at the request and expense of the Company, do everything necessary to: |
| (i) |
assign to the Company to the extent allowed by law, or will assign, all the Executive’s right, title and interest in any current or future Work (whether now existing or brought into being in the future); |
11
| (ii) |
act as a trustee for the Company in relation to all such Works; and |
| (a) |
vest all right, title and interest in any Work in the Company or its nominee; |
| (b) |
secure full registered or unregistered protection for any Work anywhere in the world; and |
| (c) |
defend the Company’s or its nominee’s rights in any Work and assist with enforcement anywhere in the world. |
| 17.6 |
If the Executive generates any Information or is involved in generating any Information during the Employment the Executive will promptly give to the Company full details of it and the Executive acknowledges that such Information belongs to the Company. |
“Information” means any idea, method or information, which is not an Invention or Work, generated by the Executive either:
| (i) |
in the course of the Executive’s Employment; or |
| (ii) |
outside the course of the Executive’s Employment but relating to the business, finance or affairs of any Group Company. |
| 17.7 |
If the Executive becomes aware of any infringement or suspected infringement of any intellectual property right in any Invention, Work or Information the Executive will promptly notify the Company in writing. |
| 17.8 |
The Executive will not copy, disclose or make use of any Invention, Work or Information without the Company’s prior written consent except to comply with this Clause 17 or as necessary for the proper performance of the Executive’s duties. |
| 17.9 |
The Executive acknowledges that for the purpose of the Copyright and Rights in Databases Regulations 1997 (as from time to time amended, extended or re-enacted) the Company shall be treated as the maker of any such databases, where such database is created by the Executive during the Employment. |
| 17.10 |
So far as permitted by law the Executive irrevocably waives any rights the Executive may have under Chapter IV (Moral Rights) of Part 1 of the Copyright, Designs and Patents Act 1988 and any foreign corresponding rights in respect of all Works. |
| 17.11 |
Rights and obligations under this Clause 17 will continue after the termination of this agreement in respect of all Inventions, Works and Information made or obtained during the Employment and will be binding on the personal representatives of the Executive. |
| 17.12 |
The Executive agrees that the Executive will not by the Executive’s acts or omissions do anything which would or might prejudice the rights of any Group Company under this Clause 17. |
| 17.13 |
Except as necessary in the performance of the Executive’s duties, the Executive will not make copies of any computer files belonging to any Group Company or their service providers and will not introduce any of the Executive’s own computer files into any computer used by any Group Company. |
12
| 17.14 |
By entering into this agreement the Executive irrevocably appoints the Company to act on the Executive’s behalf to execute any document and do anything in the Executive’s name for the purpose of giving the Company (or its nominee) the full benefit of the provision of this Clause 17 or the Company’s entitlement under statute. If there is any doubt as to whether such a document (or other thing) has been carried out within the authority conferred by this Clause 17.14, a certificate in writing (signed by any director or the secretary of the Company) will be sufficient to prove that the act or thing falls within that authority. |
| 18. |
Confidentiality |
| 18.1 |
As Confidential Information will from time to time become known to the Executive, the Company considers, and the Executive acknowledges, that the following restraints are necessary for the reasonable protection by the Company of its business or the business of the Group, the customers and trade connections thereof or their respective affairs. |
| 18.2 |
The Executive shall not at any time, either during the continuance of or after the termination of the Executive’s employment with the Company, use, disclose or communicate to any person whatsoever any Confidential Information or any Trade Secrets of which the Executive has or may have become possessed during the Executive’s employment with the Company or supply the names or addresses of any clients, customers, suppliers or agents of the Company or any Group Company to any person except in the proper course of the Business or as authorised in writing by the Board or as ordered by a Court of competent jurisdiction or as required to be disclosed by any law, regulation, governmental or other official body. |
| 18.3 |
The Executive shall not at any time either during the continuance of or after the termination of the Executive’s employment with the Company make, other than for the benefit of the Company or any Group Company, any notes or memoranda relating to any matter within the scope of the Business or concerning any of the dealings or affairs of the Company or any Group Company. |
| 18.4 |
The Executive shall use the Executive’s best endeavours during the continuance of the Employment to prevent the publication, disclosure or misuse of any Confidential Information and shall not remove, nor authorise others to remove, from the premises of the Company or of any Group Company any Confidential Information except to the extent strictly necessary for the proper performance of the Executive’s or the other person’s duties to the Company or any Group Company. |
| 18.5 |
The Executive shall promptly disclose to the Company full details of any knowledge or suspicion the Executive has (whether during or after the Employment) of any actual, threatened or pending publication, disclosure or misuse by any person (including the Executive) of any Confidential Information and shall provide all reasonable assistance and co-operation (at the Company’s expense) as the Company may request in connection with any action or proceedings it or any Group Company may take or contemplate in respect of any such publication, disclosure or misuse. |
| 18.6 |
This Clause 18 is without prejudice to the Executive’s equitable duty of confidence. |
| 18.7 |
Nothing in this Agreement shall preclude the Executive from making a protected disclosure in accordance with the provisions set out in the Employment Rights Act 1996 which should be made in accordance with the Company’s Disclosure Procedure. |
| 19. |
Restrictive Covenants |
| 19.1 |
The provisions of Schedule 1 shall take effect as though part of this Agreement. |
13
| 20. |
Notification of Restrictions |
| 20.1 |
The Executive agrees that, in the event of the Executive receiving from any person an offer of employment (whether oral or in writing and whether accepted or not) either during the continuance of this Agreement or during the continuance in force of all or any of the restrictions set out in Clause 18 and Schedule 1 of this Agreement, without prejudice to the Executive’s obligations in relation to confidentiality, the Executive will provide to the person making the offer details of the substance of the restrictions contained in Clauses 18 and Schedule 1. |
| 21 |
Directorships |
| 21.1 |
The Executive shall accept appointment as a director of the Company and of any such Group Company or other company as the Company may reasonably require in connection with the Executive’s appointment under this Agreement and the Executive shall resign without claim for compensation from office as a director of any such company at any time on request by the Company, which resignation shall not affect the continuance in any way of this Agreement. The Executive shall immediately account to the Company for any director’s fees or other emoluments, remuneration or payments either receivable or received by the Executive by virtue of the Executive’s holding office as such director (or waive any right to the same if so required by the Company). |
| 21.2 |
Upon the termination of the Executive’s employment with the Company however arising, and for whatsoever reason, the Executive shall, upon the request of the Board, resign without claim for compensation (but without prejudice to any claim the Executive may have for damages for breach of this Agreement) from: |
| (a) |
office as a director of the Company or of any Group Company or of any other company in which the Executive holds a directorship at the Company’s request; and |
| (b) |
all offices held by the Executive in any or all of such companies; and |
| (c) |
all trusteeships held by the Executive of any pension scheme or other trusts established by the Company, any Group Company or any other company with whom the Executive has had dealings as a consequence of the Executive’s employment by the Company. |
| 21.3 |
Should the Executive fail to resign from office as a director or from any other office or trusteeship in accordance with Clauses 21.1 or 21.2, either during the Executive’s employment, when so requested by the Company, or on its termination, the Company is hereby irrevocably authorised to appoint a person in the Executive’s name and on the Executive’s behalf to execute any documents and to do all things required to give effect to the resignation. |
| 21.4 |
Save with the prior agreement in writing of the Company, the Executive shall not, during the continuance of this Agreement, resign from any office as a director of the Company, any Group Company or of any other company in which the Executive holds a directorship at the Company’s request or do anything that would cause the Executive to be disqualified from continuing to act as a director. |
14
| 22 |
Garden Leave |
| 22.1 |
Neither the Company nor any Group Company is under any obligation to provide the Executive with any work. At any time after notice to terminate the Employment is given by either party, or if the Executive resigns without giving due notice and the Company does not accept the Executive’s resignation, the Company may, at its absolute discretion, require the Executive to take a period of absence called garden leave (the “Garden Leave Period”). The provisions of this clause shall apply to any Garden Leave Period. |
| 22.2 |
The Company may require that the Executive will not, without prior written consent of the Board, be employed or otherwise engaged in the conduct of any activity, whether or not of a business nature, during the Garden Leave Period. Further, if so requested by the Company, the Executive will not: |
| 22.2.1 |
enter or attend the premises of the Company or any other Group Company; or |
| 22.2.2 |
contact or have any communication with any hotel owner, guest, customer client of the Company or any other Group Company or other third party with whom the Company or other Group Company has business relations, in each case in relation to the business of the Company or any other Group Company (other than purely social contact); or |
| 22.2.3 |
contact or have any communication with any employee, officer, director, agent or consultant of the Company or any other Group Company in relation to the business of the Company or any other Group Company (other than purely social contact); or |
| 22.2.4 |
remain or become involved in any aspect of the business of the Company or any other Group Company except as required by such companies. |
| 22.3 |
The Company may require the Executive: |
| 22.3.1 |
to comply with the provisions of Clause 24; and |
| 22.3.2 |
to immediately resign from any directorship, trusteeships or other offices which the Executive holds in the Company, any other Group Company or any other company where such directorship or other office is held as a consequence or requirement of the Employment, unless the Executive is required to perform duties to which any such directorship, trusteeship or other office relates in which case the Executive may retain such directorships, trusteeships or other offices while those duties are ongoing. |
| 22.4 |
The Executive hereby irrevocably appoints the Company to be the Executive’s attorney to execute any instrument and do anything in the Executive’s name and on behalf of the Executive to effect the Executive’s resignation if the Executive fails to do so in accordance with Clause 22.3.2. |
| 22.5 |
During the Garden Leave Period, the Executive will be entitled to receive the Executive’s salary and all benefits in accordance with the terms of this agreement. Any unused holiday accrued at the commencement of the Garden Leave Period and any holiday accrued during any such period will be deemed to be taken by the Executive during the Garden Leave Period. |
| 22.6 |
At the end of the Garden Leave Period, the Company may, at its sole and absolute discretion, pay the Executive salary in lieu of the balance of any period of notice (less any deductions the Company is required by law to make). In any event, the Company’s payment in lieu of the unexpired period of notice, as well as payment of any base salary attributable to the Garden Leave Period, will be completed within 2.5 months following the later of the end of the calendar year or the Company fiscal year that occurs immediately following the commencement of the Garden Leave Period. |
15
| 22.7 |
During the Garden Leave Period: |
| 22.7.1 |
the Executive shall provide such assistance as the Company or any Group Company may require to effect an orderly handover of the Executive’s responsibilities to any individual or individuals appointed by the Company or any Group Company to take over the Executive’s role or responsibilities; |
| 22.7.2 |
the Executive may be required to carry out specified duties (consistent with the executive’s skills role and experience) and shall be available to deal with requests for information, provide assistance, be available for meetings and to advise on matters relating to work (unless the Company has agreed that the Executive may be unavailable for a period); and |
| 22.7.3 |
the Company may appoint another person to carry out the Executive’s duties in substitution for the Executive. |
| 22.8 |
All duties of the Employment (whether express or implied) including without limitation the Executive’s duties of fidelity, good faith and exclusive service, shall continue throughout the Garden Leave Period save as expressly varied by this Clause 22. The Executive agrees that the exercise by the Company of its rights pursuant to this Clause 22 shall not entitle the Executive to claim that the Executive has been constructively dismissed. |
| 23 |
Termination |
| 23.1 |
This Agreement and the Executive’s employment with the Company hereunder may be terminated immediately by the Company without prior notice if the Executive at any time in the reasonable opinion of the Board: |
| (a) |
commits any act of gross misconduct or gross incompetence or other repudiatory breach of contract; or |
| (b) |
without reasonable excuse and with prior written warning, repeats or continues any misconduct or gross neglect in the discharge of the Executive’s duties or other material breach of contract (not falling within 23.1(a) above); or |
| (c) |
has a bankruptcy order made against the Executive or if the Executive makes any arrangement or composition with the Executive’s creditors or has an interim order made against the Executive pursuant to Section 252 of the Insolvency Act 1986; or |
| (d) |
is convicted of any criminal offence other than an offence which, in the reasonable opinion of the Board, does not affect the Executive’s position as an employee of the Company (bearing in mind the nature of the duties in which the Executive is engaged and the capacity in which the Executive is employed); or |
| (e) |
the Executive is guilty of any bribery, corruption, fraud, dishonesty or any conduct by the Executive’s actions or omission which, brings or is likely to bring himself or the name or reputation of the Company or any Group Company into serious disrepute or seriously prejudices the interests of the business of the Company or any other Group Company. |
Any delay by the Company in exercising such right to termination shall not constitute a waiver thereof.
16
| 23.2 |
In the event of termination pursuant to Clause 23.1, the Company shall not be obliged to make any further payment to the Executive beyond the amount of any remuneration and payment in lieu of outstanding untaken holiday entitlement actually accrued up to and including the date of such termination, and the Company shall be entitled to deduct from such remuneration any sums owing to it or to any other Group Company (including but not limited to any advance of a cash float to cover business expenses, any advance of pay, or any holiday pay relating to holiday taken in excess of accrued entitlement) by the Executive to which deduction the Executive expressly hereby consents. |
| 23.3 |
In the event of the termination of the Employment of the Executive for whatever reason and whether by notice or in any other manner whatsoever, the Executive agrees that the Executive will not at any time after such termination represent the Executive as still having any connection with the Company or any Group Company save as a former employee for the purpose of communicating with prospective employers or complying with any applicable statutory requirements. |
| 23.4 |
In the event that the Executive is incapacitated by ill health, accident or any other cause from performing the Executive’s duties under this Agreement for a period of 26 weeks or more (whether consecutive or not) in any continuous period of 2 years, then the Company may terminate this Agreement by giving to the Executive six months notice, in writing expiring at any time (whether or not the Executive remains incapacitated from performing the Executive’s duties under this Agreement) provided always that the Executive shall receive all benefits lawfully due to the Executive under this Agreement calculated up to the effective date of termination of employment. |
| 23.5 |
Without prejudice to the provisions of Clauses 23.1 and 23.2, the Company may at any time, in its absolute discretion, lawfully terminate this Agreement with immediate effect without prior notice by notifying the Executive in writing that the Company is exercising its right under this clause 23.5 and that it will make within 28 days a payment to the Executive in lieu of notice (“Payment in Lieu”) equal to the basic salary only to which the Executive would have been entitled during the period of notice referred to in clause 1.2 at the rate applying at the date of termination (less deductions for income tax and national insurance contributions and any other deductions the Company is required by law to make). Payment in Lieu will not include any payment of benefits or bonus or any holiday entitlement that would have accrued had the Executive worked for the Company during the notice period for which the Payment in Lieu is made. Any payment by the Company in lieu of any unexpired period of notice will be made as soon as practicable and, in any event, completed within 2.5 months following the later of the end of the calendar year or the Company fiscal year that occurs immediately following the Company’s exercise of its discretion to make such payment in lieu of the unexpired period of notice. |
| 23.6 |
As a condition to making the payments and providing the benefits stated in Clause 22.5, or in Clauses 23.5 or 23.6, the Company may require the Executive to execute and deliver a general release in which he (i) releases all claims that he may have in respect of his employment against any Group Company and any of their respective past or present officers, directors or employees other than his rights under Clauses 22.5, 23.5 and 23.6 of this Agreement or another agreement into which he and the Company subsequently enter and (ii) covenants that he has not filed and will not file any civil action, suit, arbitration, administrative charge, or legal proceeding against any of the released parties in respect of the released claims. |
| 24 |
Return of Property |
| 24.1 |
Immediately on request and in any event upon the termination of the Executive’s employment with the Company for whatsoever cause, the Executive shall immediately deliver up to the Company or its authorised representative any property of the Company or any other Group Company which may be in the Executive’s possession, custody or under |
17
| the Executive’s control, including, without limitation and where relevant, the car, the car keys, laptop, mobile telephone, electronic organiser, wireless devices, minutes, memoranda, correspondence, notes, records, reports, sketches, plans or other documents or writing (which shall include information recorded or stored in writing or on magnetic tape or disk or otherwise recorded or stored for reproduction whether by mechanical or electronic means and whether or not such reproduction will result in a permanent record being made) and any copies thereof, whether or not the property was originally supplied to the Executive by the Company or any other Group Company. |
| 24.2 |
If so requested, the Executive shall provide to the Company a signed statement confirming that the Executive has fully complied with Clause 24.1. |
| 25 |
Disciplinary and Grievance Procedure |
| 25.1 |
The Executive’s employment is subject to the disciplinary and grievance rules and procedures of the Company from time to time. The Company’s disciplinary and grievance procedures do not form part of the Executive’s contractual terms and conditions of employment. |
| 26 |
Data Protection |
| 26.1 |
The Executive consents to the Company and any other Group Company holding and processing, both electronically and manually, the data it collects in relation to the Executive, in the course of the Executive’s employment, for the purposes of the Company’s administration and management of its employees and its business and for compliance with applicable procedures, laws and regulations and to the transfer, storage and processing by the Company or any other agent of such data outside, to and in, the European Economic Area, and in particular to and in the United States and any other country in which the Company or any other Group Company has offices. |
| 27 |
Notices |
| 27.1 |
Any notice to be given under this Agreement shall be given in writing and may be sent, addressed in the case of the Company to its registered office for the time being and in the case of the Executive to the Executive at the Executive’s last known place of residence or given personally and any notice sent by post shall be deemed to have been served at the expiration of 48 hours after the same was posted. |
| 28 |
Assignment |
| 28.1 |
The benefit of each agreement and obligation of the Executive under this Agreement may be assigned to and enforced by all successors or assigns for the time being carrying on the Business and such agreements and obligations shall operate and remain binding notwithstanding the termination of the employment of the Executive. |
| 29 |
Third Party Rights |
To the extent permitted by law, no person other than the parties to this agreement and any Group Company shall have the right to enforce any term of this agreement under the Contracts (Rights of Third Parties) Act 1999. For the avoidance of doubt, save as expressly provided in this clause the application of the Contracts (Rights of Third Parties) Act 1999 is specifically excluded from this Agreement, although this does not affect any other right or remedy of any third party which exists or is available other than under this Act.
18
| 30 |
Law and Jurisdiction |
| 30.1 |
English law |
This Agreement shall be governed by, and construed in accordance with, English law.
| 30.2 |
Jurisdiction |
In relation to any legal action or proceedings arising out of or in connection with this Agreement (“Proceedings”), each of the parties irrevocably submits to the exclusive jurisdiction of the English courts and waives any objection to Proceedings in such courts on the grounds of venue or on the grounds that Proceedings have been brought in an inappropriate forum.
| 31 |
Prior Agreements and other employment-related conditions |
| 31.1 |
Without prejudice to the terms of the offer letter from Chair of the Board Deanna Oppenheimer to the Executive setting out the principal terms of the Executive’s Employment, such terms being incorporated by reference herein, this Agreement shall be in substitution for any other subsisting offer letter, agreement, service agreement or contract of employment (oral or otherwise) made between the Company and the Executive or between any other Group Company and the Executive and where any inconsistency exists between this Agreement and any other document, the terms of this Agreement shall prevail. |
| 31.2 |
The Executive’s employment is subject to the Company’s non-contractual rules, policies and procedures which apply for the Executive’s location. If there is any conflict between the non-contractual rules, policies and procedures from time to time and the Executive’s contractual terms and conditions, the contractual terms and conditions shall prevail. |
| 31.3 |
The Executive warrants and agrees that the Executive is not entering into this Agreement in reliance on any representation not expressly set out in this Agreement. |
| 32 |
Collective Agreements |
| 32.1 |
There are no collective agreements currently in force which affect directly or indirectly the terms and conditions of the Executive’s employment. |
| 33 |
Severability and Amendments |
| 33.1 |
If any provision of this Agreement or of a clause hereof, or of any part of Schedule 1 is determined to be illegal or unenforceable by any court of law or any competent governmental or other authority, but would be valid if part of their wording were deleted, such clause shall be severable and enforceable and will apply with such deletion as may be necessary to make it valid or effective. The parties shall negotiate in good faith to replace any such illegal or unenforceable provisions with suitable substitute provisions which will maintain as far as possible the purposes and the effect of this Agreement. |
| 33.2 |
This Agreement may only be modified by the written agreement of the parties. |
| 34 |
Miscellaneous |
| 34.1 |
The Company may withhold from any amounts payable under this Agreement any applicable withholding in respect of any applicable taxes and/or social security as appropriate. |
19
| 34.2 |
To the extent any reimbursements or in-kind benefits due to the Executive under this Agreement constitute “deferred compensation” under section 409A of the Internal Revenue Code of 1986, as amended, any such reimbursements or in-kind benefits are intended to be paid to the Executive in a manner consistent with (U.S.) Treasury Regulation section 1.409A-3(i)(1)(iv). Further, if any payment made as a direct result of this Agreement is deemed to constitute “deferred compensation” under section 409A and is payable upon “separation from service” (as defined in section 409A), it is intended that such payment(s) will be delayed for six (6) months if the Executive is a “specified employee” (as defined in section 409A) at the time of “separation from service”. The payment of salary in lieu of notice under Clause 23 of this Agreement, or during any Garden Leave Period under Clause 22 of this Agreement, is intended to be made within the short-term deferral period exemption under section 409A. Any payments that result from any plan or arrangement that is separately subject to the terms of section 409A will be made in accordance with the applicable terms of such plan or arrangement, except to the extent explicitly modified by this Agreement. |
| 35 |
Interpretation |
| 35.1 |
In this Agreement: |
“Affiliate” means, in respect of any company, a company which is its subsidiary, subsidiary undertaking or holding company, or a company which is a subsidiary or subsidiary undertaking of that holding company.
“the Board” means the Board of Directors of IHG (or Six Continents Limited as the context may require) or the Directors present at a duly convened meeting of the Directors at which a quorum is present and acting throughout or a duly authorised committee of the Board or any person designated by the Board for the purpose or for general employment matters.
“the Business” means (taken together) the business of IHG and the business of any other Group Company with which the Executive is required by the Board under Clause 2 to be concerned.
“Confidential Information” means confidential information (which may include commercially sensitive information) relating to the business of the Company or any Group Company or any of their respective customers or their affairs and which includes but is not limited to Trade Secrets, ideas, inventions, business methods, business practices and processes, finances, prices, costs, financial marketing/development/ manpower plans, strategy documents or intentions, products/product specifications, confidential emails/letters/memos, marketing and promotion of products, packages or offers, names and addresses and other details of suppliers, customers, agents of the Company or any Group Company, computer systems and software, information relating to employees, know-how or other matters connected with the products or services manufactured, marketed, provided or obtained by the Company or any Group Company or their respective customers.
“Employment” means the employment governed by this Agreement;
“Group” means the Company and any Affiliate of the Company and “Group Company” shall be construed accordingly.
“IHG” means InterContinental Hotels Group PLC.
20
“month” means a calendar month.
“Trade Secrets” means trade secrets, and information of such a highly confidential nature as to require the same treatment as trade secrets, of IHG or any Group Company or any supplier, customer, or agent of the Company or any Group Company.
| 35.2 |
In this Agreement, where the context admits: |
| (a) |
words and phrases the definitions of which are contained or referred to in the Companies Act 2006 shall be construed as having the meanings so attributed to them; |
| (b) |
references to any statute or statutory provisions include a reference to those provisions as amended or re-enacted or as their application is modified by other provisions from time to time and any reference to a statutory provision shall include any subordinate legislation made from time to time under that provision; |
| (c) |
references to a “person” include any individual, company, body corporate, corporation sole or aggregate, government, state or agency of a state, firm, partnership, joint venture, association, organisation or trust (in each case, whether or not having separate legal personality and irrespective of the jurisdiction in or under the law of which it was incorporated or exists) and a reference to any of them shall include a reference to the others; |
| (d) |
any reference to “writing” shall include typewriting, printing, lithography, photography, telex, facsimile and the printed out version of a communication by electronic mail and other modes of representing or reproducing words in a legible form; |
| (e) |
words denoting the singular shall include the plural and vice versa; |
| (f) |
the employment of the Executive are references to the employment by the Company whether or not during the continuance of this Agreement; and |
| (g) |
the masculine gender shall be deemed to include the feminine gender. |
| 35.3 |
Headings are inserted for convenience only and shall not affect the construction of this Agreement. |
21
IN WITNESS whereof this Agreement has been entered into the day and year first above written.
| SIGNED by |
) |
/s/ Nicolette Henfrey |
||||
| for and on behalf of |
) |
|||||
| the Company |
) |
|||||
| in the presence of: |
) |
|||||
| Signature: |
/s/ Kelly Wise |
K. Wise as witness |
||||
| Name: Nicolette Henfrey |
||||||
| Address: 1 Windsor Dials, Arthur Road, Windsor, Berkshire SL4 1RS |
||||||
| Occupation: EVP, General Counsel & Company Secretary |
||||||
| SIGNED AS A DEED |
) |
|||||
| and DELIVERED |
) |
|||||
| by the Executive in the |
) |
|||||
| presence of: |
) |
/s/ Kelly Wise |
K. Wise as witness |
|||
| Signature: |
/s/ Elie Maalouf |
| Name: |
Elie Maalouf |
Address: [Address redacted]
22
SCHEDULE 1
| 1. |
1.1 In this Schedule 1 the expressions below have the meaning ascribed to them respectively below: |
“Competing Enterprise” shall mean (a) any person, corporation, partnership, venture or other entity (“entity”) which engages either (i) in the business of managing, franchising, running, leasing, owning or joint venturing at least 50 hotels, or (ii) in the business of any online booking agency in respect of hotel rooms (“hotel booking”) and in the case of (i) and (ii) the entity’s shares are publicly traded and such entity has a market capitalisation of not less than one billion pounds sterling (for these purposes “market capitalisation” shall be the aggregate market value of the ordinary shares of the entity) and (b) any Competitor;
“Competitor” shall mean any of the following companies and/or any of their holding companies or subsidiaries from time to time (both as defined in the Companies Act 2006):
| (i) |
Accor SA |
| (ii) |
Hilton Worldwide Holdings Inc. |
| (iii) |
Marriott International, Inc. |
| (iv) |
Hyatt Hotels Corporation |
| (v) |
Choice Hotels International, Inc. |
| (vi) |
Wyndham Hotels and Resorts Inc. |
| (vii) |
Four Seasons Holdings, Inc. |
| (viii) |
Jin Jiang International Holdings Co., Ltd. |
| (ix) |
Shangri-La International Hotel Management, Ltd. |
| (x) |
Whitbread PLC |
| (xi) |
Expedia, Inc. |
| (xii) |
AirBnB, Inc. |
| (xiii) |
Booking Holdings Inc. |
“Garden Leave Period” has the meaning given in Clause 22 of the Agreement above;
“Key Person” shall mean any person who was a band 4 level or above employee of the Company or any other Group Company (including for this purpose any General Manager of any hotel owned or managed by the Company or any other Group Company) and with whom the Executive had material contact or dealings in performing the duties of the Employment at any time during the period of 12 months ending on the Termination Date;
“Prohibited Area” shall mean all territories in which the Company and any Group Company carries out business;
“Relevant Period” shall mean the period of twelve months beginning with the Termination Date but reduced by one day for each day of a Garden Leave Period;
23
“Restricted Activities” shall mean executive, managerial, directorial, administrative, strategic, business development or supervisory responsibilities and activities relating to any or all aspects of hotel ownership, hotel management, hotel franchising, hotel running, hotel leasing, hotel joint-venturing or hotel booking;
“Termination Date” shall mean the date on which the Employment terminates.
1.2 The Executive agrees that during the Relevant Period the Executive will not without the prior written consent of the Company:
| (i) |
become associated with or engage in any Restricted Activities within the Prohibited Area in respect of any Competing Enterprise, whether as officer, director, employee, principal, partner, agent, executive, independent contractor or shareholder (other than as a holder of not in excess of 5% of the outstanding voting shares of any publicly traded company) in competition with any business of the Company or any other Group Company being carried on by the Company or any other Group Company at the Termination Date but excluding (a) any association or engagement which solely relates to Restricted Activities which the Executive had undertaken or had been involved in to a material extent in the course of the Employment at any time during the period of 12 months ending on the Termination Date, or (b) the Executive’s employment by a unit of a Competing Enterprise which unit is not itself engaged in hotel ownership, hotel management, hotel franchising, hotel running, hotel leasing, hotel joint-venturing or hotel booking (as defined above), so long as the Executive’s duties and responsibilities with respect to such employment are limited to the business of such unit, or (c) the Executive’s employment by an entity which includes a Competing Enterprise where such Competing Enterprise produces revenues that account for less than 5% of the gross revenues of the entity and performing services for such Competing Enterprise is not a material part of the Executive’s responsibilities; and |
| (ii) |
either on his own behalf or for or with any other person, whether directly or indirectly, solicit or induce or attempt to solicit or induce any Key Person to leave the employ of the Company or any other Group Company whether or not such person would commit any breach of his contract of employment by leaving the service of the Company or any other Group Company; and |
| (iii) |
either on his own behalf or for or with any other person, whether directly or indirectly, interfere with or try to terminate or reduce the level of supplies (whether of products and/or services) by a supplier to the Company or any other Group Company within the Prohibited Area provided the Executive was concerned or involved to a material extent with the supply of products or services by that supplier to the Company or a Group Company in the course of the Employment at any time during the 12 months period ending on the Termination Date. |
1.3 The Executive agrees that each of the paragraphs contained in sub-clause 1.2 of this Schedule 1 constitute an entirely separate and independent covenant on the Executive’s part and the validity of one paragraph shall not be affected by the validity or unenforceability of another.
24
1.4 The Executive agrees that the Executive will at the request and cost of the Company enter into a direct agreement or undertaking with any Group Company whereby the Executive will accept restrictions and provisions corresponding to the restrictions and provisions contained in sub-clauses 1.2 of this Schedule 1 (or such of them as may be reasonable and appropriate in the circumstances) in relation to such activities and such areas and for such a period as such company may reasonably require for the protection of its legitimate interests but provided that the duration of such restrictions and provisions are no greater than the Relevant Period.
1.5 The Executive agrees that having regard to the facts and matters set out above the restrictive covenants contained in this Schedule 1 are necessary for the protection of the business and confidential information of the Company and other Group Companies.
1.6 The Executive and the Company agree that while the restrictions imposed in this Schedule 1 are considered necessary for the protection of the Company and other Group Companies it is agreed that if any one or more of such restrictions shall either taken by itself or themselves together be adjudged to go beyond what is reasonable in all the circumstances for the protection of the Company’s or any Group Company’s legitimate interest but would be adjudged reasonable if any particular restriction or restrictions were deleted or if any part or parts of the wording thereof were deleted, restricted or limited in a particular manner then the said restrictions shall apply with such deletions, restrictions or limitations as the case may be.
1.7 Any termination of the Employment or of this Agreement (or breach of this Agreement by the Executive or the Company) shall have no effect on the continuing operation of this Schedule 1.
1.8 The parties hereto acknowledge that the potential restrictions on the Executive’s future employment imposed by this Schedule 1 are reasonable in both duration and geographic scope and in all other respects.
1.9 The parties agree that this Agreement would not have been entered into and the benefits described in the Agreement would not have been promised in the absence of the Executive’s promises under this Schedule 1.
25
Exhibit 4(c)(v)
RULES
OF THE
INTERCONTINENTAL HOTELS GROUP PLC
DEFERRED AWARD PLAN
| Board Adoption: |
23rd March 2023 |
|
| Shareholders’ Approval: |
5th May 2023 |
|
| Effective Date |
5th May 2023 |
|
| Expiry Date: |
5th May 2033 |
|
As amended by the Remuneration Committee on 18 October 2023
Table of Contents
| 1. |
Meaning of words used |
3 | ||||
| 2. |
Granting Awards |
5 | ||||
| 3. |
Participant limits |
7 | ||||
| 4. |
Share dilution limits |
8 | ||||
| 5. |
Vesting and exercise of Awards |
8 | ||||
| 6. |
Lapsing |
9 | ||||
| 7. |
Settlement of Awards |
9 | ||||
| 8. |
Investigations |
10 | ||||
| 9. |
Dealing Restrictions |
11 | ||||
| 10. |
Holding Period |
11 | ||||
| 11. |
Leaving |
12 | ||||
| 12. |
Mobile Participants |
13 | ||||
| 13. |
Takeovers and other corporate events |
14 | ||||
| 14. |
Exchange of Awards |
15 | ||||
| 15. |
Variations in share capital |
16 | ||||
| 16. |
Tax |
16 | ||||
| 17. |
Terms of employment |
17 | ||||
| 18. |
General |
17 | ||||
| 19. |
Administration |
19 | ||||
| 20. |
Changing the Plan and termination |
20 | ||||
| 21. |
Governing law and jurisdiction |
21 | ||||
InterContinental Hotels Group PLC Deferred Award Plan
(Page 2 of 28)
InterContinental Hotels Group PLC Deferred Award Plan
| 1. |
Meaning of words used |
| 1.1 |
General |
In these rules:
“Award” means a Conditional Award, a Forfeitable Award, an Option or a Phantom Award;
“Award Date” means the date specified under rule 2.4 (Terms of Awards);
“Business Day” means a day on which the London Stock Exchange (or, if the Committee decides, any other stock exchange on which the Shares are traded) is open for the transaction of business;
“Committee” means the board of directors of the Company or another committee duly authorised by it;
“Company” means InterContinental Hotels Group PLC;
“Conditional Award” means a conditional right to acquire Shares granted under the Plan;
“Conditions” means any performance or other conditions imposed under rule 2.4 (Terms of Awards);
“Control” means the power of a person to secure by means of the holding of shares or the possession of voting power or by virtue of any powers conferred by any articles of association (or other document), that the affairs of a body corporate are conducted in accordance with the wishes of that person;
“Dealing Restrictions” means any internal or external restrictions on dealings or transactions in securities;
“Dividend Equivalent” means a right to receive an additional amount, as set out in rule 7.3 (Dividend Equivalents);
“Employee” means any person directly employed by the Company (including an employed executive director) or any Member of the Group and, for the purposes of rule 17 (Terms of employment), it includes a former employee;
“Executive Director” means an executive director of the Company;
“Exercise Period” means the period during which an Option may be exercised, starting when the Option Vests and ending on the 10th anniversary of the Award Date unless the Committee decides that a shorter period will apply under rule 2.4 (Terms of Awards);
“Forfeitable Award” means an award of Shares subject to forfeiture provisions under the Plan;
“Good Leaver Reason” means:
| (i) |
death; |
| (ii) |
injury, ill health or disability (evidenced to the satisfaction of the Committee); |
| (iii) |
the Participant’s employing company ceasing to be a Member of the Group; |
| (iv) |
the business or part of the business that employs the Participant being transferred outside of the Group; or |
| (v) |
any other reason, at the discretion of the Committee; |
InterContinental Hotels Group PLC Deferred Award Plan
(Page 3 of 28)
“Group” means the Company and any company that is a subsidiary of the Company (within the meaning of section 1159 of the Companies Act 2006) and, for the purposes of rule 11 (Leaving), it includes associated companies nominated for this purpose by the Committee, and “Member of the Group” will be understood accordingly;
“Holding Period” will be as described in rule 10 (Holding Period);
“Leaves” means ceasing to be an employee (and ceasing to be a director) of all Members of the Group and “Leaving” will be understood accordingly;
“Malus and Clawback Policy” means such policy or policies in place for the purposes of adjusting and/or recovering remuneration, including the InterContinental Hotels Group PLC Malus and Clawback Policy (as amended from time to time), and any provisions or policies adopted to comply with the requirements of applicable law (including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act), and “Malus” and “Clawback” will have the meanings given in the Malus and Clawback Policy;
“Market Value” on any day means:
| (i) |
when Shares are listed on the London Stock Exchange (or, if the Committee decides, any other stock exchange on which the Shares are traded): |
| (a) |
the price shown in the Stock Exchange Daily Official List (or the relevant foreign exchange list that performs a similar function) for the previous Business Day as the closing price for the Shares on that day (or if two closing prices are shown, the lower price plus one-half of the difference between those two figures); or |
| (b) |
if the Committee decides, the average of the price determined under (a) above over up to 5 consecutive Business Days, or up to such number of consecutive Business Days as determined by the Committee, ending on the previous Business Day; |
| (ii) |
otherwise, the market value of a Share as determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992; or |
| (iii) |
such value as the Committee may decide; |
“Option” means a right in the form of an option to acquire Shares granted under, and exercisable in accordance with, the Plan;
“Participant” means a person holding or who has held an Award or, after death, that person’s personal representatives;
“Performance Conditions” means any performance conditions imposed under rule 2.4 (Terms of Awards);
“Performance Period” means the period in respect of which any Performance Conditions are to be satisfied;
“Phantom Award” means a conditional right granted under the Plan to receive a cash sum linked to the value of a number of notional Shares;
“Plan” means the plan constituted by these rules and its schedules known as the InterContinental Hotels Group PLC Deferred Award Plan, as amended from time to time;
“Remuneration Policy” means the Company’s prevailing Directors’ Remuneration Policy;
“Share” means a fully paid ordinary share in the capital of the Company; “Tax” means any tax and social security charges (and/or any similar charges or levies, including, interest), wherever arising, in respect of a Participant’s Award or otherwise arising in connection with that Participant’s participation in the Plan;
InterContinental Hotels Group PLC Deferred Award Plan
(Page 4 of 28)
“Vesting” means:
| (i) |
in relation to a Conditional Award, a Participant becoming entitled to the Shares; |
| (ii) |
in relation to a Forfeitable Award, the forfeiture provisions (in the form of Performance Conditions and/or other Conditions) applicable to the Shares ceasing to apply other than in connection with the Malus and Clawback Policy and rule 5.4 (Overriding discretion); |
| (iii) |
in relation to an Option, the Option becoming exercisable; and |
| (iv) |
in relation to a Phantom Award, a Participant becoming entitled to the cash sum, |
and “Vest”, “Vested” and “Unvested” will be understood accordingly; and
“Vesting Date” means the date specified at the Award Date on which an Award is expected to Vest.
| 1.2 |
Interpretation |
In this Plan, the singular includes the plural and the plural includes the singular. References to any enactment or statutory requirement will be understood as references to that enactment or requirement as amended or re-enacted and they include any subordinate legislation made under it.
| 1.3 |
Award tranches |
Where an Award is made up of different tranches with different Vesting Dates, each tranche will be considered a separate Award for the purposes of interpreting and administering this Plan, except for the purposes of rule 5.6 (Option tranches).
| 2. |
Granting Awards |
| 2.1 |
Eligibility |
The Committee may only grant an Award to someone who is an Employee at the Award Date.
| 2.2 |
Timing of grant |
Awards may only be granted within 42 days starting on any of the following:
| 2.2.1 |
the day on which the Company’s shareholders approve the Plan; |
| 2.2.2 |
the Business Day following the day on which the Company’s results are announced or, where not announced, are published for any period; |
| 2.2.3 |
any day on which changes to the legislation or regulations affecting share plans are announced or take effect; |
| 2.2.4 |
any day on which the Committee resolves that exceptional circumstances exist which justify the grant of Awards; and |
| 2.2.5 |
the day Dealing Restrictions, which prevented the granting of Awards during the periods specified above, are lifted. |
No Awards may be granted after the termination of the Plan.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 5 of 28)
| 2.3 |
Making an Award |
Awards will be granted by deed or in any way which ensures the Awards are contractually enforceable.
Participants will be notified of the terms of their Awards as soon as practicable.
The Committee may require Participants to accept Awards or specific terms and may provide for Awards to lapse if they are not accepted within the time specified.
The Committee may allow Participants to disclaim all or part of an Award within a specified period. If an Award is disclaimed, it will be deemed never to have been granted.
| 2.4 |
Terms of Awards |
Awards are subject to the rules of the Plan.
The Committee will approve the terms of an Award, including:
| 2.4.1 |
the Award Date; |
| 2.4.2 |
the Award type; |
| 2.4.3 |
the number of Shares subject to the Award or the basis for calculating the number of Shares; |
| 2.4.4 |
the Vesting Date; |
| 2.4.5 |
in the case of an Option, the Exercise Period, any amount payable to exercise the Option and any Conditions on exercise; |
| 2.4.6 |
if the Award is subject to any Performance Conditions, details of those Performance Conditions and the applicable Performance Period; |
| 2.4.7 |
details of any other Conditions; |
| 2.4.8 |
whether Dividend Equivalents will apply (other than in relation to a Forfeitable Award); |
| 2.4.9 |
in the case of a Forfeitable Award, whether the Participant is required to waive their rights to dividends and/or vote in respect of the Shares subject to the Award; |
| 2.4.10 |
whether the Malus and Clawback Policy will apply; |
| 2.4.11 |
details of any Holding Period; and |
| 2.4.12 |
whether the Participant may be required to enter into any election for a particular tax and/or social security treatment in respect of an Award and/or any Shares and any consequences of failing to make the election. |
| 2.5 |
Forfeitable Awards |
A Forfeitable Award will be subject to forfeiture provisions in the form of Performance Conditions and/or other Conditions.
| 2.6 |
Performance Conditions |
The Committee may make Vesting conditional on the satisfaction of one or more performance conditions.
For Executive Directors, the application of Performance Conditions and the Performance Period will be consistent with the Remuneration Policy.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 6 of 28)
The Committee may change a Performance Condition in accordance with its terms or if anything happens that causes the Committee to reasonably consider it appropriate to do so. A changed Performance Condition will not be materially less or more difficult to satisfy than the original condition was intended to be at the Award Date.
The Committee will notify any relevant Participant as soon as practicable after any change.
| 2.7 |
Other Conditions |
The Committee may impose other Conditions on Vesting or exercise. The Committee may change those Conditions in accordance with their terms or if anything happens which causes the Committee to reasonably consider it appropriate to do so.
For Executive Directors, the requirement for Conditions on Vesting, and the period over which they will be measured, will be consistent with the Remuneration Policy.
The Committee will notify any relevant Participant as soon as practicable after any change.
| 2.8 |
Malus and Clawback |
If there is any discrepancy between the Malus and Clawback Policy and the Plan, the Malus and Clawback Policy will prevail.
| 2.9 |
Administrative errors |
If the Committee grants an Award:
| 2.9.1 |
in error, or with error, it will be deemed never to have been granted and/or will immediately lapse; and/or |
| 2.9.2 |
which is inconsistent with any provisions in this Plan, it will take effect only to the extent permissible under the Plan and will otherwise be deemed never to have been granted and/or will immediately lapse. |
| 2.10 |
Phantom Awards |
A Phantom Award will not confer any right to receive Shares or any interest in Shares. The Plan will be interpreted and applied to reflect the fact that Phantom Awards are granted in respect of notional Shares only and are settled in cash rather than Shares.
| 2.11 |
Shareholding Policy |
Where a Participant is subject to the Shareholding Policy, the Shareholding Policy will apply to the Participant’s Awards and any Shares acquired pursuant to those Awards. For these purposes, “Shareholding Policy” means any policy of InterContinental Hotels Group PLC in relation to shareholding that requires a minimum shareholding by certain individuals, as in force from time to time.
| 3. |
Participant limits |
Awards to Executive Directors may only be granted in accordance with the limits set out in the Remuneration Policy.
Awards to any other Employees may not be granted in excess of the limits which apply to Executive Directors, unless otherwise determined by the Committee.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 7 of 28)
| 4. |
Share dilution limits |
| 4.1 |
Share limits |
An Award may not be granted that would cause:
| 4.1.1 |
the total number of Shares that have been Allocated in the previous 10 years (or could still be Allocated by virtue of rights granted) under the Plan and under any other employee share plans operated by the Company to exceed 10% of the ordinary share capital of the Company in issue; or |
| 4.1.2 |
the total number of Shares that have been Allocated in the previous 10 years (or could still be Allocated by virtue of rights granted) under the Plan and under any other discretionary employee share plans operated by the Company to exceed 5% of the ordinary share capital of the Company in issue. |
| 4.2 |
Calculating the number of Shares |
For the purposes of this rule 4 (Share dilution limits):
| 4.2.1 |
Shares are considered to be “Allocated” when allotted and issued as new shares, or transferred from treasury. However, if relevant institutional investor guidelines cease to require treasury shares to be taken into account for these purposes, then treasury Shares will not count towards these Share limits; |
| 4.2.2 |
where there has been a variation in the share capital of the Company as described in rule 15 (Variations in share capital), the number of Shares taken into account for the purposes of the Share limits will be adjusted as the Committee considers appropriate to take account of the variation. |
| 5. |
Vesting and exercise of Awards |
| 5.1 |
Timing of Vesting |
An Award will Vest on the latest of:
| 5.1.1 |
the Vesting Date; and |
| 5.1.2 |
the date it is decided that any Performance Conditions and/or other Conditions are satisfied, unless otherwise determined by the Committee. |
| 5.2 |
Extent of Vesting |
An Award will Vest to the extent that the Committee decides that any Performance Conditions and/or other Conditions are satisfied.
| 5.3 |
Fractions |
Where an Award would otherwise Vest over a fraction of a Share, the Shares that will Vest will be rounded down to the nearest whole Share, unless otherwise determined by the Committee.
| 5.4 |
Overriding discretion |
The Committee may adjust the extent to which an Award will Vest if it considers the extent of Vesting would otherwise not be appropriate, including when considering:
| 5.4.1 |
the wider performance of the Group; |
| 5.4.2 |
the conduct, capability or performance of the Participant; |
InterContinental Hotels Group PLC Deferred Award Plan
(Page 8 of 28)
| 5.4.3 |
the experience of stakeholders; |
| 5.4.4 |
any windfall gains; |
| 5.4.5 |
the total value that would otherwise be received by the Participant compared to the maximum value that the Award was intended to deliver; or |
| 5.4.6 |
any other reason at the discretion of the Committee. |
| 5.5 |
Process for exercise of Options |
A Participant may exercise an Option by giving notice at any time during the Exercise Period in the manner decided by the Committee.
The exercise of an Option is effective on the date of receipt of the notice (and the exercise price, if required).
If notice to exercise is given but any Exercise Conditions are not met at the time of receipt of notice, such exercise will be processed as soon as practicable following determination by the Committee that such Exercise Conditions have been met.
An Option may be exercised in full or in part.
| 5.6 |
Option tranches |
The Committee may decide that if
| 5.6.1 |
an Option is made up of different tranches; and |
| 5.6.2 |
the Option is exercised, |
all tranches of that Option that are then capable of exercise will be exercised on that occasion.
| 6. |
Lapsing |
An Award will lapse to the extent any part of it is no longer capable of Vesting (or of being exercised).
To the extent an Award lapses, it cannot Vest, or be exercised, under any other provision of the Plan. This means that, to the extent the Award lapses, the Participant has no right to receive the Shares or cash comprised in the Award.
In the case of a Forfeitable Award, the beneficial and legal title to the Shares will immediately transfer to the Company or such other person and on such terms as the Committee specifies, and the Participant will enter into such documents and take all actions that the Company requires to effect or facilitate the transfer.
| 7. |
Settlement of Awards |
| 7.1 |
Delivery of Shares or cash |
If an Award Vests, the Committee will arrange for the delivery of Shares or cash to the Participant as soon as practicable after Vesting or, in the case of an Option, exercise.
In the case of a Forfeitable Award, if it is not already held by the Participant, the legal interest in the Shares will be transferred to the Participant or otherwise in accordance with the Participant’s instructions.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 9 of 28)
| 7.2 |
Phantom Award payment |
In the case of a Phantom Award, the cash sum will be equal to the aggregate Market Value of the notional Shares which have Vested.
| 7.3 |
Dividend Equivalents |
Where a Conditional Award, an Option or a Phantom Award includes Dividend Equivalents, the Participant will receive:
| 7.3.1 |
an amount equal to the dividends, the record date for which falls between the Award Date and Vesting, multiplied by the number of Shares in respect of which the Award Vests; or |
| 7.3.2 |
if the Committee so decides in the case of Options, an amount equal to the dividends, the record date for which falls between the Award Date and exercise, multiplied by the number of shares of Shares in respect of which the Award is exercised. |
Dividend Equivalents will be calculated on such basis as the Committee decides. Special dividends will not be included, unless the Committee decides otherwise.
Any Dividend Equivalents may be paid in cash or in such whole number of shares of Shares (rounded down) that have an aggregate Market Value at Vesting (or where rule 7.3.2 applies, exercise), which is closest to that amount.
Dividend Equivalents will be paid as soon as reasonably practicable following Vesting or, in the case of Options, exercise, as applicable, of the related Award and on the same terms as the related Award.
| 7.4 |
Nominee |
Shares may be delivered to and held by a nominee on behalf of the Participant and on such terms as the Committee may determine at the Award Date.
| 7.5 |
Shareholder rights |
Shares issued in connection with this Plan will rank equally in all respects with the Shares in issue on that date.
Participants will only be entitled to rights attaching to Shares from the date of the allotment or transfer to them.
| 7.6 |
Cash alternative |
The Committee may choose to settle any Award partly or fully in cash. The Participant will have no right to acquire the Shares in respect of which an Award has been settled in cash.
| 7.7 |
Share transfer tax |
The Committee will arrange payment of any share transfer taxes that arise on grant or settlement.
| 8. |
Investigations |
| 8.1 |
Relevant investigation |
This rule applies where an investigation is ongoing that might lead to Malus and/or Clawback being triggered in relation to a Participant’s Award.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 10 of 28)
| 8.2 |
Impact of investigation |
If an investigation is ongoing then, unless the Committee decides otherwise:
| 8.2.1 |
the Participant’s Award will not Vest; |
| 8.2.2 |
if it is an Option, exercise will be suspended; and |
| 8.2.3 |
where relevant, the Participant’s Award will not be settled, |
until the investigation is concluded and then any Award will only Vest, be exercisable or be settled as determined by the Committee. If the Exercise Period of an Option would otherwise have ended, the Committee can decide to extend the period and “Exercise Period” will be understood accordingly.
| 9. |
Dealing Restrictions |
| 9.1 |
Application of rule |
This rule 9 (Dealing Restrictions) applies if Dealing Restrictions would prohibit the exercise of an Option, delivering or arranging delivery of Shares or cash to settle an Award, and/or the Participant from selling Shares, including if required to discharge Tax.
| 9.2 |
Impact of Dealing Restrictions |
If Dealing Restrictions apply, then:
| 9.2.1 |
an Unvested Award will not Vest until the Dealing Restrictions cease to apply; |
| 9.2.2 |
any exercise will take effect as soon as practicable after the Dealing Restrictions cease to apply; |
| 9.2.3 |
if an Exercise Period would otherwise end before the Dealing Restrictions cease to apply, it will be extended to end 30 days after the Dealing Restrictions cease to apply and “Exercise Period” will be understood accordingly; and |
| 9.2.4 |
the delivery of Shares or cash to settle an Award will not occur until the Dealing Restrictions cease to apply, |
unless the Committee decides otherwise.
| 10. |
Holding Period |
| 10.1 |
Application of rule |
An Award granted to an Executive Director will be subject to a Holding Period if required under the Remuneration Policy or any other policy approved by the Committee.
An Award granted to any other Employee may be subject to a Holding Period, as set out in rule 2.4 (Terms of Awards), unless the Committee decides otherwise.
| 10.2 |
Impact of Holding Period |
If a Holding Period applies, the Shares acquired on Vesting or exercise may not be transferred, assigned or otherwise disposed of during the Holding Period other than a transfer:
| 10.2.1 |
to the Participant’s personal representatives on death; |
| 10.2.2 |
to a nominee in accordance with rule 10.3 (Nominee); |
| 10.2.3 |
in accordance with rule 16.1 (Withholding); |
InterContinental Hotels Group PLC Deferred Award Plan
(Page 11 of 28)
| 10.2.4 |
under the Malus and Clawback Policy; |
| 10.2.5 |
in connection with an event described in rule 13 (Takeovers and other corporate events) or rule 15.1 (Adjustments to Awards); or |
| 10.2.6 |
otherwise with the agreement of the Committee, |
and any such attempted action will be invalid and ineffective.
| 10.3 |
Nominee |
Following Vest, or exercise, as applicable, the Committee may decide that Shares will be delivered to and held by a nominee on behalf of the Participant until the expiry of the Holding Period on such terms as the Committee may decide.
At the end of the Holding Period, the Participant may direct that the Shares are transferred from the nominee arrangement.
| 10.4 |
Phantom and cash-settled Awards |
The Committee will decide if and how any Holding Period will operate in relation to cash and will communicate this to the Participant.
| 10.5 |
Proof of ownership |
If the Committee requires, a Participant must provide proof of continued beneficial ownership of the Shares during and at the end of the Holding Period.
| 11. |
Leaving |
| 11.1 |
Leaving – before Vesting |
Where a Participant Leaves before Vesting, the Award will lapse on the date the Participant Leaves, unless other provisions of this rule 11 (Leaving) apply.
If a Participant Leaves for a Good Leaver Reason before Vesting, the Award will:
| 11.1.1 |
if the reason is death, Vest on the date of death, or as soon as practicable following such date; |
| 11.1.2 |
otherwise continue until the normal date of Vesting, unless the Committee determines otherwise; and |
| 11.1.3 |
Vest, and, for an Option, become exercisable only to the extent prescribed by rule 11.4 (Good leavers – Vesting and exercise). |
| 11.2 |
Leaving – after Vesting |
If a Participant Leaves after Vesting, the Award will:
| 11.2.1 |
continue in accordance with the Plan; and |
| 11.2.2 |
in the case of an Option, be exercisable for a period of 6 months (12 months in the case of the Participant’s death) from the date the Participant Leaves (or such longer period as the Committee decides) and will then lapse, unless otherwise determined by the Committee. |
InterContinental Hotels Group PLC Deferred Award Plan
(Page 12 of 28)
| 11.3 |
Summary dismissal |
If, at any time, a Participant is summarily dismissed or Leaves in circumstances where the Participant’s employer would have been entitled to summarily dismiss the Participant (in the opinion of the Committee) then that Participant’s Awards will immediately lapse.
| 11.4 |
Good leavers – Vesting and exercise |
If this rule 11.4 (Good leavers – Vesting and exercise) applies:
| 11.4.1 |
An Award will only Vest: |
| (i) |
to the extent that the Committee decides any Performance Conditions and/or other Conditions have been satisfied, unless the Committee decides otherwise; |
| (ii) |
in accordance with any adjustment under rule 5.4 (Overriding discretion); and |
| (iii) |
pro-rata to reflect the period from the Award Date until the date the Participant Leaves, as a proportion of the period from the Award Date until the Vesting Date unless the Committee decides otherwise, |
and, to the extent the Participant’s Award does not Vest, it will then lapse; and
| 11.4.2 |
Options will be exercisable for a period of 6 months (12 months in the case of the Participant’s death) from Vesting (or such longer period as the Committee decides) and will then lapse. This will not extend any Exercise Period that would otherwise apply to an Award. |
| 11.5 |
Leaving - Holding Period |
Where a Participant Leaves, any Holding Period will continue to apply unless the Committee decides otherwise, except on death, where any Holding Period will cease to apply.
| 11.6 |
Changing role and/or responsibilities |
Where a Participant’s role and/or responsibilities within the Group significantly change, but the Participant does not Leave, the Committee may decide to treat that Participant as Leaving for the purposes of any Awards which have not Vested, in which case the Participant will be treated in respect of those Awards as Leaving for a Good Leaver Reason, unless the Committee decides otherwise.
| 12. |
Mobile Participants |
| 12.1 |
Application of rule |
If a Participant moves from one jurisdiction to another or becomes tax resident in a different jurisdiction and, as a result, there may be adverse legal, regulatory, tax or administrative consequences for the Participant and/or a Member of the Group in connection with an Award then the Committee may adjust that Participant’s Award so that the Award is on such terms, subject to such conditions and over such Shares (or other type of securities or cash) as the Committee may consider appropriate.
| 12.2 |
Cancellation |
If the Committee decides that the adjustment of an Award under rule 12.1 (Application of rule) is not practicable or appropriate, the Committee may decide that the Award will lapse.
| 12.3 |
Notifying Participants |
The Committee will notify affected Participants of any adjustment or decision made under this rule 12 (Mobile Participants) as soon as practicable.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 13 of 28)
| 13. |
Takeovers and other corporate events |
| 13.1 |
Takeovers |
For the purposes of this rule 13 (Takeovers and other corporate events), a takeover occurs when:
| 13.1.1 |
a general offer to acquire Shares made by a person (or a group of persons acting in concert) becomes wholly unconditional; |
| 13.1.2 |
under Section 895 of the Companies Act 2006 or equivalent procedure under local legislation, a court sanctions a compromise or arrangement in connection with the acquisition of Shares; or |
| 13.1.3 |
a person (or a group of persons acting in concert) obtains Control of the Company in any other way. |
| 13.2 |
Other corporate events |
If the Company is or may be affected by:
| 13.2.1 |
any demerger, delisting, distribution (other than an ordinary dividend) or other transaction which, in the opinion of the Committee, might affect the current or future value of any Award; or |
| 13.2.2 |
any reverse takeover (not within rule 13.2.1 above), merger by way of a dual listed company or other significant corporate event, as determined by the Committee, |
the Committee may decide that, for the purposes of this this rule 13 (Takeovers and other corporate events), such event should be treated as if it were a takeover event within rule 13.1 (Takeovers).
| 13.3 |
Time of Vesting |
Where one of the events set out in rule 13.1 (Takeovers) occurs or the Committee decides pursuant to rule 13.2 (Other corporate events) that an event should be treated in the same way as a takeover, Awards will Vest to the extent provided in rule 13.5 (Extent of Vesting) on the date of such event, unless rule 14 (Exchange of Awards) applies or the Committee decides otherwise.
| 13.4 |
Winding up |
If notice is given of a resolution for the voluntary winding up of the Company, Awards will Vest on the date the notice is given in accordance with rule 13.5 (Extent of Vesting).
| 13.5 |
Extent of Vesting |
If this rule 13.5 (Extent of Vesting) applies:
| 13.5.1 |
an Award will Vest: |
| (i) |
to the extent that the Committee decides any Performance Conditions and/or other Conditions have been satisfied, unless the Committee determines otherwise; |
| (ii) |
pro-rata to reflect the period from the Award Date until the date of Vesting, as a proportion of the period from the Award Date until the Vesting Date unless the Committee decides otherwise; and |
InterContinental Hotels Group PLC Deferred Award Plan
(Page 14 of 28)
| (iii) |
in accordance with any adjustment under rule 5.4 (Overriding discretion), and to the extent the Participant’s Award does not Vest, it will then lapse. |
| 13.5.2 |
Where an Option Vests pursuant to this rule 13 (Takeovers and other corporate events) or was already Vested, it will be exercisable for a period of 1 month from the date of the relevant event, or within such other period as the Committee decides, and then will lapse. This will not extend any Exercise Period that would otherwise apply to an Award. |
| 13.6 |
Malus and Clawback |
If this rule 13 (Takeovers and other corporate events) applies to an Award, the Committee may determine that Malus and Clawback will no longer apply to the Award or will be varied in its application to the Award.
In relation to any cash or Shares acquired prior to the relevant event, Malus and Clawback will continue to apply, with such amendments as the Committee determines.
| 13.7 |
Holding Period |
If this rule 13 (Takeovers and other corporate events) applies to an Award, any applicable Holding Period will cease to apply to an Award unless the Committee determines that it should continue to apply until its expiry in accordance with the Plan and the terms of the Award.
| 14. |
Exchange of Awards |
| 14.1 |
Meaning of “Acquirer” |
For the purposes of this rule 14 (Exchange of Awards), “Acquirer” means a person that obtains Control of the Company.
| 14.2 |
Application of rule |
Where any event within rule 13.1 (Takeovers), is expected to or does apply, including where the Committee decides pursuant to rule 13.2 (Other corporate events) that an event should be treated in the same way as a takeover:
| 14.2.1 |
if the relevant event constitutes a corporate reorganisation of the Company where substantially all the shareholders of the Company immediately before the reorganisation will continue to have Control immediately afterwards, Awards will not Vest under rule 13 (Takeovers and other corporate events) but will instead, along with Vested Awards, be exchanged for new awards, unless the Committee decides otherwise; and |
| 14.2.2 |
in any other case, the Committee may, with the consent of the Acquirer, decide that Awards will not Vest under rule 13 (Takeovers and other corporate events) but will instead, along with Vested Awards, be exchanged for new awards. |
| 14.3 |
Timing of exchange |
Any such exchange will take place on (or as soon as practicable after) the relevant event under rule 13 (Takeovers and other corporate events).
| 14.4 |
Exchange terms |
Any new award will be granted on such terms and over such shares (or other types of securities) as the Committee decides. Participants will enter into such arrangements and/or documents as the Committee requires in order to give effect to the terms of the new award.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 15 of 28)
| 14.5 |
Interpretation following exchange |
Unless the Committee decides otherwise, any new award that is subject to the Plan will be interpreted as if references to Shares are references to the shares (or other securities) over which the new award is granted and references to the Company are to such company as the Committee decides.
| 15. |
Variations in share capital |
| 15.1 |
Adjustments to Awards |
If there is:
| 15.1.1 |
a variation in the issued share capital of the Company, including a capitalisation or rights issue, open offer, sub-division, consolidation or reduction of share capital; |
| 15.1.2 |
a demerger (in whatever form); |
| 15.1.3 |
a special dividend or distribution; or |
| 15.1.4 |
any other transaction which the Committee decides will materially affect the value of the Shares, |
and where the Committee has not decided pursuant to rule 13.2 (Other corporate events) that such event will be treated as a takeover, the Committee may adjust the Award so that the Award is on such terms and over such number or class of Shares as the Committee considers appropriate.
| 15.2 |
Notice of Adjustments |
The Committee will notify Participants of any adjustment made under rule 15.1 (Adjustments to Awards) as soon as practicable.
| 16. |
Tax |
| 16.1 |
Withholding |
Any Member of the Group, any employing company, the trustee of any relevant employee benefit trust or any third-party provider nominated by the Committee may:
| 16.1.1 |
withhold such amounts from a Participant (including deducting such amounts from any cash payment owed to the Participant) and retain some or all of it; |
| 16.1.2 |
sell some or all of the Shares to which the Participant is entitled under the Plan on behalf of the Participant; |
| 16.1.3 |
reduce some of the Shares to which the Participant is entitled under the Plan on behalf of the Participant (in accordance with rule 7.6 (Cash alternative)); or |
| 16.1.4 |
make such other withholding arrangements as it considers necessary or desirable, |
to meet any liability for Taxation, collect any outstanding exercise price and to meet any applicable dealing and/or currency exchange costs and other associated costs.
| 16.2 |
Participant indemnity |
A Participant indemnifies the Group for that Participant’s liability for Tax.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 16 of 28)
| 17. |
Terms of employment |
| 17.1 |
Application |
This rule 17 (Terms of employment) applies during an Employee’s employment and after the termination of an Employee’s employment, whether or not the termination is lawful.
| 17.2 |
Not part of employment contract |
Nothing in the rules of the Plan or the operation of the Plan forms part of an Employee’s contract of employment or alters it. The rights and obligations arising from the employment or former employment relationship between the Employee and the relevant Member of the Group are separate from, and are not affected by, the Plan. Participation in the Plan does not create any right to, or expectation of, employment (continued or otherwise).
| 17.3 |
No future expectation |
No Employee has a right to participate in the Plan. Participation in the Plan or the grant of an Award on a particular basis in any year does not create any right to or expectation of participation in the Plan or the grant of an Award on the same, or any other, basis (or at all) in the future.
| 17.4 |
Decisions and discretion |
The terms of the Plan do not entitle the Employee to the exercise of any discretion in the Employee’s favour. The Employee will have no claim or right of action in respect of any decision, omission or discretion which may operate to the disadvantage of the Employee.
| 17.5 |
No compensation |
No Employee has any right to compensation or damages for any loss (actual or potential) in relation to the Plan, including any loss in relation to:
| 17.5.1 |
any loss or reduction of rights or expectations under the Plan in any circumstances (including lawful or unlawful termination of employment); |
| 17.5.2 |
any exercise of a discretion or a decision taken in relation to an Award or to the Plan, or any failure or delay to exercise a discretion or take a decision; and |
| 17.5.3 |
the operation, suspension, termination or amendment of the Plan. |
| 17.6 |
Waiver |
By participating in the Plan, an Employee agrees to waive all rights which might otherwise arise under the Plan, other than the right to acquire Shares or cash (as appropriate) subject to and in accordance with the explicit rules of the Plan, in consideration for and as a condition of the grant of an Award.
| 18. |
General |
| 18.1 |
Data protection |
Participation in the Plan will be subject to:
| 18.1.1 |
any data protection policies applicable to any relevant Member of the Group; |
| 18.1.2 |
any applicable privacy notices; and |
| 18.1.3 |
where requested, any applicable consents. |
InterContinental Hotels Group PLC Deferred Award Plan
(Page 17 of 28)
| 18.2 |
Consents and filings |
All allotments, issues and transfers of Shares or cash payments will be subject to the Company’s articles of association and any necessary consents or filings required in any relevant jurisdiction. The Participant will be responsible for complying with any requirements needed in order to obtain, or to avoid the necessity for, any such consents or filings.
| 18.3 |
Source of Shares |
Awards may be settled using newly issued Shares, Shares transferred from treasury and Shares purchased in the market.
| 18.4 |
Listing |
If, and for as long as the Shares are listed on the London Stock Exchange (or, if the Committee decides, any other stock exchange on which the Shares are traded), the Company will apply as soon as practicable for the listing and admission to trading on such exchange of any Shares issued in connection with the Plan.
| 18.5 |
Notices |
Any notice or other communication required under this Plan will be given in writing, which may include electronic means.
Any notice or other communication to be given to an Employee or Participant may be delivered by electronic means (including by email, through the Group’s intranet or a share plan portal), personally delivered or sent by ordinary post to such address as the Committee reasonably considers appropriate.
Any notice or other communication to be given to the Company or its agents may be delivered or sent to its registered office or such other place and by such means as the Committee or the Company’s agents may specify and notify to Employees and/or Participants, as relevant.
Notices or other communications:
| 18.5.1 |
sent electronically will be deemed to have been received immediately (if sent during usual business hours) or at the opening of business on the next Business Day (if sent outside usual business hours); |
| 18.5.2 |
that are personally delivered will be deemed to have been received when left at the relevant address (if left during usual business hours) or at the opening of business on the next Business Day (if left outside usual business hours); and |
| 18.5.3 |
sent by post will be deemed to have been received 24 hours after posting to a UK address or 3 days after posting to an address outside the UK, |
unless there is evidence to the contrary.
All notices or communications to be given to Employees or Participants are given and sent at the risk of the addressee. No Member of the Group has any liability in respect of any notice or communication given or sent, nor need they be concerned to see that the addressee actually receives it.
| 18.6 |
Third party rights |
Except as otherwise expressly stated to the contrary, nothing in the Plan confers any benefit, right or expectation on any person other than an Employee, Participant or Member of the Group. No third party has any rights under the Contracts (Rights of Third Parties) Act 1999 (or any similar legislation in an overseas jurisdiction) to enforce any rule of this Plan.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 18 of 28)
| 18.7 |
Bankruptcy |
A Participant’s Award will lapse if the Participant becomes bankrupt or enters into a compromise (or any overseas equivalent) with the Participant’s creditors generally, other than where the compromise (or overseas equivalent) is entered into by the Participant voluntarily and at the Participant’s complete discretion.
| 18.8 |
Not pensionable |
None of the benefits that may be received under the Plan are pensionable.
| 18.9 |
Not transferable |
A Participant’s Award will lapse if the Participant transfers, assigns, charges or otherwise disposes of the Award or any of the rights in respect of it, whether voluntarily or involuntarily (other than to that Participant’s personal representatives on death).
| 18.10 |
Currency conversions |
Any conversion of money into different currencies (whether notional or actual) will be done at a time and rate of exchange that the Committee decides.
No Member of the Group will be liable for any loss due to movements in currency exchange rates or conversion or money transfer charges.
| 19. |
Administration |
| 19.1 |
Administration of the Plan |
The Plan will be administered by the Committee, which has authority to make such rules and regulations for the administration of the Plan as it considers necessary or desirable. The Committee may delegate any and all of its rights and powers under the Plan.
| 19.2 |
Committee decisions |
All decisions of the Committee in connection with the Plan and its interpretation and the terms of any Awards (including in any dispute) will be final and conclusive.
The Committee will decide whether and how to exercise any discretion in the Plan.
| 19.3 |
Severance of rules |
If any provision of the Plan is held to be invalid, illegal or unenforceable for any reason by any court with jurisdiction then, for the purposes of that jurisdiction only:
| 19.3.1 |
such provision will be deleted; and |
| 19.3.2 |
the remaining provisions will continue in full force and effect, |
unless the Committee decides otherwise.
| 19.4 |
Language |
Where there is any conflict between the terms of the English version of the Plan, the Awards and/or any ancillary documents and a version in any other language, the English language version will prevail.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 19 of 28)
| 20. |
Changing the Plan and termination |
| 20.1 |
General power |
Except as otherwise provided by rule 20.2 (Shareholder approval), the Committee may change the Plan in any way and at any time.
| 20.2 |
Shareholder approval |
The Committee will obtain prior approval of shareholders by ordinary resolution for any change to the Plan which is to the advantage of present or future Participants and which relates to any of the following:
| 20.2.1 |
the persons who may receive Shares or cash under the Plan; |
| 20.2.2 |
the total number or amount of Shares or cash which may be delivered or paid under the Plan; |
| 20.2.3 |
the maximum entitlement for any Participant; |
| 20.2.4 |
the basis for determining a Participant’s entitlement to, and the terms of, Shares or cash provided under the Plan and the rights of a Participant in the event of a variation made under rule 15.1.1; and |
| 20.2.5 |
this rule 20.2 (Shareholder approval). |
| 20.3 |
Shareholder approval – minor changes exception |
The Committee need not obtain shareholder approval for any minor changes to the Plan which are to:
| 20.3.1 |
benefit the administration of the Plan; |
| 20.3.2 |
comply with or take account of a change in legislation; and/or |
| 20.3.3 |
obtain or maintain favourable tax, exchange control or regulatory treatment of any Member of the Group or any present or future Participant. |
| 20.4 |
Participant consent |
If a proposed change would be to the material disadvantage of one or more Participants in respect of existing rights under the Plan, then the Committee must obtain the written consent of the affected Participant(s).
The Committee need not obtain Participant consent for any minor changes which are to:
| 20.4.1 |
benefit the administration of the Plan; |
| 20.4.2 |
comply with or take account of a change in legislation; and/or |
| 20.4.3 |
obtain or maintain favourable tax, exchange control or regulatory treatment of any Member of the Group or any present or future Participant. |
| 20.5 |
Notice of change |
The Committee will give written notice of changes to Participants whose Awards are materially affected.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 20 of 28)
| 20.6 |
International variations |
The Committee may establish plans or schedules based on the Plan, but modified to take account of any local tax, exchange control or securities laws in other jurisdictions.
| 20.7 |
Termination of the Plan |
The Plan will terminate on 5th May 2033 (or on such earlier date as the Committee decides). Termination will not affect existing rights under the Plan.
| 21. |
Governing law and jurisdiction |
The laws of England and Wales govern the Plan and all Awards. The courts of England and Wales have exclusive jurisdiction in respect of any disputes arising in connection with the Plan or any Award.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 21 of 28)
Appendix 1
Awards granted to US taxpayers (409A exempt)
The purpose of this Appendix is to make certain variations to the terms of the Plan in the case of its operation for Participants who are US Taxpayers. In the event that a Participant becomes a US Taxpayer after the Award Date, then the Participant’s Awards will immediately be modified in a manner consistent with the provisions of this Appendix 1, if the Committee so determines. References in this Appendix to Awards granted to US Taxpayers shall include Awards held by a Participant who becomes a US Taxpayer subsequent to the Award Date.
| 1. |
Meaning of words used |
“Award Short-Term Deferral Period” means the period commencing on the date that a Conditional Award is no longer subject to a “substantial risk of forfeiture” for the purposes of Section 409A and ending upon the 15th day of the third month following the end of the Taxable Year in which such Award first is no longer subject to the substantial risk of forfeiture;
“Section 409A” means Section 409A of the US Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated and other official guidance issued under it, collectively, and “Treasury Regulations” will be understood accordingly;
“Short-Term Deferral Period” means the Award Short-Term Deferral Period;
“Taxable Year” means the calendar year or, if later, the end of the taxable year of the Member of the Group that employs the US Taxpayer; and
“US Taxpayer” means a Participant who is subject to US federal income taxation on the Award Date, or who is expected to become subject to US federal income taxation following the Award Date, or who becomes subject to US federal income taxation following the Award Date but prior to the date upon which the Award Vests.
| 2. |
Grant of Awards |
If a Participant becomes subject to any US tax or social security contributions liability in connection with an Award after the Award Date, any Unvested Option that they hold at that time will be treated as if it had been granted as a Conditional Award without any further action on the part of the Participant or the Company. Such Conditional Award, if determined by the Company, will be governed by the terms of this Appendix 1.
| 3. |
Settlement of Awards |
| 3.1 |
Timing for payment |
Notwithstanding any of the rules of the Plan and except as otherwise permitted by paragraph 3.2 (Permissible delay) of this Appendix, an Award granted to a US Taxpayer must be settled under rule 7 (Settlement of Awards) no later than the end of the Award Short-Term Deferral Period
| 3.2 |
Permissible delay |
In the event that an Award granted to a US Taxpayer has not been settled by the end of the Award Short-Term Deferral Period because settlement would have violated applicable law, then to the extent permissible under Section 1.409A-1(b)(4)(ii) of the proposed Treasury Regulations, such settlement may be delayed so long as the Award is then settled at the earliest date at which it is reasonably anticipated that such law no longer prevents such settlement.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 22 of 28)
| 3.3 |
Leavers |
If a US Taxpayer Leaves and, in accordance with paragraph 3.1 (Timing for payment) above and an Award is satisfied before the Vesting Date, then the Shares or cash (as applicable) acquired by the US Taxpayer may not be transferred, assigned or otherwise disposed of by or on behalf of the US Taxpayer before the Vesting Date other than:
| 3.3.1 |
to the US Taxpayer’s personal representatives in the event of the US Taxpayer’s subsequent death; |
| 3.3.2 |
to a nominee on behalf of the US Taxpayer; |
| 3.3.3 |
in accordance with rule 16.1 (Withholding) to fund any liability for Tax (as well as any applicable dealing and/or currency exchange costs and other associated costs); |
| 3.3.4 |
due to any Malus and/or Clawback being triggered; or |
| 3.3.5 |
if the Committee decides otherwise. |
| 4. |
Dividend Equivalents |
Any Dividend Equivalents in respect of an Award granted to a US Taxpayer shall be paid under rule 7.3 (Dividend Equivalents) no later than the end of the Award Short-Term Deferral Period (for Dividend Equivalents on Awards other than Options), or such later date permitted by paragraph 3 (Settlement of Awards) of this Appendix.
| 5. |
No extension of Short-Term Deferral Period |
| 5.1 |
Delay for investigations |
The application of rule 8 (Investigations) to an Award granted to a US Taxpayer will not impose an additional, or extend the existing, substantial risk of forfeiture applicable to the Award for the purposes of Section 409A, and will not extend the deadline for settlement under paragraph 3 (Settlement of Awards) or payment under paragraph 4 (Dividend Equivalents) of this Appendix.
| 5.2 |
Dealing Restrictions |
The application of Dealing Restrictions to an Award granted to a US Taxpayer will not impose an additional, or extend the existing, substantial risk of forfeiture applicable to the Award for the purposes of Section 409A, and will not extend the deadline for settlement under paragraph 3 (Settlement of Awards) or payment under paragraph 4 (Dividend Equivalents) of this Appendix.
| 5.3 |
Holding Period |
For the avoidance of doubt, any Holding Period imposed by the Company with respect to an Award granted to a US Taxpayer will not impose an additional or extend the existing substantial risk of forfeiture applicable to such Award for the purposes of Section 409A.
| 6. |
Changes to Awards |
| 6.1 |
Conditions |
Any Performance Conditions or other Conditions applicable to an outstanding Award granted to a US Taxpayer may not be altered if and to the extent that the alteration would result in the Short-Term Deferral Period ending earlier, except where the condition is waived.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 23 of 28)
| 6.2 |
Adjustments |
Where there is to be an adjustment of an Award granted to a US Taxpayer pursuant to rule 12 (Mobile Participants), the Committee will attempt to structure the terms of the adjustment so that it does not violate Section 409A.
| 6.3 |
Takeovers and restructurings |
Where there is to be an adjustment of an Award granted to a US Taxpayer pursuant to rule 13 (Takeovers and other corporate events), the Committee shall attempt to structure the terms of the adjustment of the Award such that the adjustment does not violate Section 409A.
| 6.4 |
Exchange of Awards |
Where there is to be an exchange of an Award granted to a US Taxpayer pursuant to rule 14 (Exchange of Awards), the Committee shall attempt to structure the terms of the exchange and the new award under rule 14 (Exchange of Awards) such that neither the exchange nor the new award violate Section 409A.
| 6.5 |
Changing the Plan or Awards |
Notwithstanding rule 20 (Changing the Plan and termination), any amendment to the Plan (including any Appendix to the Plan) or an Award will only be effective with respect to an Award granted to a US Taxpayer to the extent that it does not cause the Award to violate Section 409A.
| 7. |
General |
| 7.1 |
Intention |
Awards granted to US Taxpayers, and any Dividend Equivalents in respect of such Awards, under this Appendix are intended to be exempt from the requirements of Section 409A under the short-term deferral exception described in Section 1.409A-1(b)(4) of the Treasury Regulations, and the Plan (including this Appendix) will be interpreted and administered consistent with this intention with respect to Awards granted to US Taxpayers and any Dividend Equivalents in respect of such Awards.
| 7.2 |
No guarantee |
Notwithstanding any other provision of the Plan (including any Appendix to the Plan) or any Award, no Member of the Group guarantees or warrants to any person that an Award granted to a US Taxpayer is exempt from Section 409A. Each US Taxpayer is solely responsible and liable for the satisfaction of all taxes, penalties and interest that may be imposed on the US Taxpayer in connection with the Plan (including any Appendix to the Plan) or any Award, including any taxes, penalty or interest under Section 409A. No Member of the Group shall have any obligation to indemnify or otherwise hold a US Taxpayer harmless from any or all of such taxes, penalty or interest.
| 7.3 |
Conflict |
In the event of any conflict between a provision of the main rules of the Plan and a provision of this Appendix, with respect to an Award granted to a US Taxpayer under this Appendix, the provisions of this Appendix will take precedence.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 24 of 28)
Appendix 2
Awards granted to US taxpayers (409A compliant)
The purpose of this Appendix is to make certain variations to the terms of the Plan in the case of its operation for Participants who are US Taxpayers. In the event that a Participant becomes a US Taxpayer after the Award Date, then the Participant’s Conditional Awards will immediately be modified in a manner consistent with the provisions of this Appendix 2, if the Committee so determines. Conditional Awards subject to this Appendix are intended to comply with Section 409A. Where there is any conflict between the rules of the Plan and this Appendix, the terms of this Appendix will prevail.
| 1. |
Meaning of words used |
“Change in Control Event” means an event described in rule 13 (Takeovers and other corporate events) that also qualifies as a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, in accordance with Section 1.409A-3(i)(5) of the Treasury Regulations;
“Section 409A” means Section 409A of the US Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated and other official guidance issued under it, collectively, and “Treasury Regulations” will be understood accordingly; and
“US Taxpayer” means a Participant who is subject to US federal income taxation on the Award Date, or who is expected to become subject to US federal income taxation following the Award Date, or who becomes subject to US federal income taxation following the Award Date but prior to the date upon which the Award Vests.
| 2. |
Grant of Awards |
If a Participant becomes subject to any US tax or social security contributions liability in connection with an Award after the Award Date, any Unvested Option that they hold at that time will be treated as if it had been granted as a Conditional Award without any further action on the part of the Participant or the Company. Such Conditional Award, if determined by the Company, will be governed by the terms of this Appendix 2.
| 3. |
Conditions |
Any Performance Conditions and/or other Conditions imposed on an Award may only be imposed to such extent they are consistent with Section 409A.
| 4. |
Dividend Equivalents |
Any Dividend Equivalents in respect of an Award granted to a US Taxpayer shall be paid under rule 7.3 (Dividend Equivalents) in accordance with Section 409A.
| 5. |
Vesting of Award |
The Vesting of an Award, and the delivery of the Shares or cash, may only be delayed beyond the Vesting Date as a result of Dealing Restrictions, Investigations or otherwise to the extent permissible under Section 1.409A-2(b)(7)(ii) of the Treasury Regulations where the delivery of Shares or cash in respect of the Award would violate applicable law, in which event, the Award will Vest at the earliest date at which it is reasonably anticipated that such law no longer prevents such delivery of Shares or cash.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 25 of 28)
| 6. |
Settlement of Awards |
| 6.1 |
Delivery of Shares or cash |
Except as otherwise provided by rule 13 (Takeovers and other corporate events), where a Conditional Award has Vested, the number of Shares in respect of which the Conditional Award has Vested, or cash where applicable, together with any additional Shares or cash to which a Participant becomes entitled under rule 7.3 (Dividend Equivalents) will be delivered or paid (as applicable) to the Participant or the Participant’s nominee as soon as practicable after the Vesting Date (but in any event no later than 31 December of the calendar year of the Normal Release Date, or if later, the 15 day of the third month following the Vesting Date).
| 6.2 |
Delivery - Nominee |
Shares may be delivered to and held by a nominee on behalf of the Participant and on such terms as the Committee may determine at the Award Date to the extent it would not result in a violation of Section 409A.
| 7. |
Leaving |
If a Participant Leaves for a Good Leaver Reason before Vesting, the Award will:
| 7.1.1 |
if the reason is death, Vest on the date of death, or as soon as practicable following such date (but in any event no later than 31 December of the calendar year following the calendar year of the date of death); |
| 7.1.2 |
otherwise continue until the normal date of Vesting; and |
| 7.1.3 |
Vest only to the extent prescribed by rule 11.4 (Good leavers – Vesting and exercise). |
| 8. |
Takeovers and other corporate events |
| 8.1 |
Corporate events |
Where one of the events set out in rule 13 (Takeovers and other corporate events) occurs, the Awards will Vest on the date such event occurs, unless the relevant event does not qualify as a Change in Control Event and to the extent that the Committee determines that rule 14 (Exchange of Awards) should apply.
| 8.2 |
Timing of Vesting |
If the relevant event qualifies as a Change in Control Event, then the Award will Vest and the number of Shares in respect of which the Award has been Released together with any additional Shares or cash to which a Participant becomes entitled under rule 7.3 (Dividend Equivalents) will be, delivered or paid (as applicable) to the Participant or the Participant’s nominee as soon as practicable after the relevant event (but in any event no later than 31 December of the calendar year of the relevant event, or if later, the 15 day of the third month following the relevant event).
If the relevant event does not qualify as a Change in Control Event, then the Award will Vest and the number of Shares in respect of which the Award has been Released together with any additional Shares or cash to which a Participant becomes entitled under rule 7.3 (Dividend Equivalents) will be, delivered or paid (as applicable) to the Participant or the Participant’s nominee as soon as practicable after the Vesting Date (but in any event no later than 31 December of the calendar year of the Vesting Date, or if later, the 15 day of the third month following the Vesting Date) or such earlier date permitted by Section 409A.”
InterContinental Hotels Group PLC Deferred Award Plan
(Page 26 of 28)
| 9. |
Exchange of Awards |
Where any event within rule 13.1 (Takeovers) or 13.2 (Other corporate events), is expected to or does apply, and the relevant event does not qualify as a Change in Control Event, the Committee may decide that Awards will be exchanged for new awards on (or as soon as practicable after) the relevant event. Any new award will be granted on such terms and over such shares as the Committee decides, providing the exchange and the new award does not violate Section 409A.
| 10. |
Adjustments |
Where any event within 15.1 occurs, the Committee may adjust the Award so that the Award is on such terms and over such number or class of Shares as the Committee considers appropriate, provided such adjustment does not violate Section 409A.
| 11. |
Tax |
In the event that a Participant becomes subject to tax on an Award (or a portion of an Award) prior to the Vesting Date, then to the extent permissible under Section 1.409A-3(j)(4)(vi) or Section 1.409A- 3(j)(4)(xi) of the Treasury Regulations, the Committee may to the extent so permitted accelerate the Vest of a portion of the Award and the delivery of the Shares or cash in respect of which the Award has Vested and any additional Shares or cash to which a Participant becomes entitled under rule 7.3 (Dividend Equivalents).
| 12. |
Changing the Plan and termination |
| 12.1 |
Participant consent |
If, at any time, the Company determines that the terms of an Award may violate Section 409A, the Company shall have the authority, but shall not be required, to enter into an amendment of such Award without the consent of the Participant that is designed to avoid the imposition of any additional tax, interest or penalties on the Participant under Section 409A.
| 12.2 |
Section 409A |
Any amendment will only be effective to the extent that it complies with Section 409A.
| 13. |
General |
| 13.1 |
Intention |
Conditional Awards granted to US Taxpayers, under this Appendix, and any additional Shares or cash to which a Participant becomes entitled under rule 7.3 (Dividend Equivalents) are intended to comply with the requirements of Section 409A, and the Plan (including this Appendix) will be interpreted and administered consistent with this intention with respect to such Conditional Awards.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 27 of 28)
| 13.2 |
No guarantee |
Notwithstanding any other provision of the Plan (including this Appendix) or any Conditional Award, no Member of the Group guarantees or warrants to any person that a Conditional Award complies with Section 409A. Each US Taxpayer is solely responsible and liable for the satisfaction of all taxes, penalties and interest that may be imposed on the US Taxpayer in connection with the Plan and/or this Appendix or any Conditional Award, including any taxes, penalties or interest under Section 409A. No Member of the Group shall have any obligation to indemnify or otherwise hold a US Taxpayer harmless from any or all of such taxes, penalties or interest.
| 13.3 |
Conflict |
In the event of any conflict between a provision of the main rules of the Plan and a provision of this Appendix, with respect to an Award granted to a US Taxpayer under this Appendix, the provisions of this Appendix will take precedence.
InterContinental Hotels Group PLC Deferred Award Plan
(Page 28 of 28)
Exhibit 12(a)
I, Elie Maalouf, certify that:
1. I have reviewed this Annual Report on Form 20-F of InterContinental Hotels Group PLC;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: February 29, 2024
/s/ Elie Maalouf
Elie Maalouf
Chief Executive Officer
Exhibit 12(b)
I, Michael Glover, certify that:
1. I have reviewed this Annual Report on Form 20-F of InterContinental Hotels Group PLC;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: February 29, 2024
/s/ Michael Glover
Michael Glover
Chief Financial Officer
Exhibit 13(a)
906 Certification
The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended December 31, 2023 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
Elie Maalouf, the Chief Executive Officer, and Michael Glover, the Chief Financial Officer of InterContinental Hotels Group PLC, each certifies that, to the best of his knowledge:
| 1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and |
| 2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of InterContinental Hotels Group PLC. |
Date: February 29, 2024
| By: | /s/ Elie Maalouf |
|||
| Name: | Elie Maalouf | |||
| Title: | Chief Executive Officer | |||
| By: | /s/ Michael Glover |
|||
| Name: | Michael Glover | |||
| Title: | Chief Financial Officer | |||
Exhibit 15(a)
Consent of independent registered public accounting firm
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-271687, 333-267963, 333-254081, 333-197846, 333-181334, 333-126139, 333-104691, 333-99785 and 333-89508) of InterContinental Hotels Group PLC of our report dated 19 February 2024 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
/s/PricewaterhouseCoopers LLP
London, United Kingdom
29 February 2024
Exhibit 97
InterContinental Hotels Group PLC
Incentive-Based Compensation Recovery Policy
| 1. |
Definitions |
The following expressions shall have the following meanings for the purposes of this Policy:
“Accounting Restatement” means an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or would result in a material misstatement if the error were not corrected in the current period or left uncorrected in the current period;
“Committee” means the Remuneration Committee of the Board of Directors of the Company or such other committee to which responsibility has been delegated for overseeing the operation of this Policy;
“Company” means InterContinental Hotels Group PLC, with company number 05134420 or such successor body corporate as may be established from time to time;
“Effective Date” means the date this Policy is approved, which shall be no later than 60 days following the effective date of the New York Stock Exchange Listed Companies Manual Section 303A.14;
“Erroneously Awarded Compensation” means the amount of Incentive-Based Compensation Received that exceeds the amount that otherwise would have been Received had it been determined based on the restated amounts, computed without regard to any taxes paid:
| • |
during the applicable Recovery Period; |
| • |
on or after the date the Effective Date; |
| • |
after the Executive Officer began service as an Executive Officer; and |
| • |
while the Company has a class of securities listed on a national securities exchange or a national securities association; |
“Executive Officer” means an individual who served as the Company’s president, principal financial officer, principal accounting officer, any vice-president of the Company in charge of a principal business unit, division or function and any other officer who performs a policy making function (and the Committee shall have full discretion to determine who shall be considered an “Executive Officer” for the purposes of this Policy) at any time during the applicable performance period for the affected Incentive-Based Compensation, and includes both current and former Executive Officers;
“Financial Reporting Measure” means a measure determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measures. Such measure need not be presented within the Company’s financial statements or included in a filing with the Securities and Exchange Commission;
“Incentive-Based Compensation” means any compensation that is granted, earned or vested based wholly or in part upon the attainment of any Financial Reporting Measure (and does not include exclusive conditions of time periods without any performance condition, and compensation that is based on subjective goals);
“Policy” means the policy constituted by these provisions, as amended from time to time;
“Received” means when Incentive-Based Compensation is deemed received, being the Company’s fiscal period during which the Financial Reporting Measure specified is attained, even if the payment or grant occurs after the end of that period; “Recovery Period” means the three completed fiscal years of the Company immediately preceding the earlier of:
| • |
the date that the Board of Directors of the Company (“Board”), a committee the Board, or the officer(s) of the Company authorised to take such action if Board action is not required, concludes or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement, and |
| • |
the date a court, regulator or other legally authorised body directs the Company to prepare an Accounting Restatement, |
and any transition period (that results from a change in the Company’s fiscal year) of less than nine months within or immediately following those three completed fiscal years; and
“Recovery Rules” means Section 10D of the Securities Exchange Act of 1934 Exchange Act and any applicable rules or standards adopted by the Securities and Exchange Commission and Section 303A.14 of the NYSE Listed Company Manual.
| 2. |
General |
| 2.1 |
This Policy, and the terms herein, will be incorporated into the terms and conditions of any new and existing Incentive-Based Compensation caught by this Policy. |
| 2.2 |
In the event of any disparity between this Policy, any other clawback policy and the rules of the relevant incentive plan or arrangement under which Incentive-Based Compensation is granted, the terms of the Policy take precedence. |
| 2.3 |
A copy of this Policy will be made available to the Executive Officers to whom Policy Incentive-Based Compensation is offered. Executive Officers will either expressly accept the terms of this Policy or, by participating in any incentive arrangement offering Incentive-Based Compensation, will be deemed to have accepted the terms of this Policy. |
| 2.4 |
An Executive Officer will provide all information, documents and/or undertakings as the Committee may reasonably request in order to carry out the terms of this Policy. |
| 2.5 |
In applying this Policy, the Committee shall determine the relevant currency exchange rate to apply where appropriate. The Company will not be liable for any loss due to movements in currency exchange rates or due to any charges imposed by a bank in relation to the conversion or transfer of monies. |
| 2.6 |
The Company’s obligation to enforce this Policy is not dependent on whether or when the restated financial statements are filed. In addition, the recovery of Erroneously Awarded Compensation is required without regard to whether any misconduct occurred or an Executive Officer’s responsibility for the erroneous financial statements. |
| 3. |
Recovery |
| 3.1 |
In the event of an Accounting Restatement, the Committee will reasonably promptly recover the amount of any Erroneously Awarded Compensation Received by each covered Executive Officer during the Recovery Period. |
| 3.2 |
The Committee will provide each covered Executive Officer with a notice stating the amount of Erroneously Awarded Compensation, requesting repayment or return. |
| 3.3 |
Each Executive Officer must comply with any request for repayment or return promptly (and no later than any date specified in the request). In the event of a failure to repay, the Company shall take all actions reasonable and appropriate to recover such Erroneously Awarded Compensation, and the Executive Officer shall be required to reimburse the Company for any and all expenses reasonably incurred (including legal fees) in seeking to recover such compensation. |
| 3.4 |
The Committee shall have broad discretion to determine the appropriate means of recovery based on all applicable facts and circumstances. |
| 4. |
Determination |
| 4.1 |
The amount of Erroneously Award Compensation shall be determined by the Committee based on the particular facts and circumstances and consistent with the principles of the Recovery Rules. The Committee may engage any third-party advisers it deems necessary in order to perform any calculations contemplated by this Policy. |
| 4.2 |
For Incentive-Based Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in the Accounting Restatement: |
| 4.2.1 |
the amount must be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the incentive-based compensation was Received; and, |
| 4.2.2 |
the Company must maintain documentation of the determination of that reasonable estimate and provide such documentation to the New York Stock Exchange as required by the Recovery Rules and/or applicable Securities and Exchange Commission rules. |
| 5. |
Exemption |
| 5.1 |
Notwithstanding Section 3, recovery of Erroneously Awarded Compensation shall not be required to the extent that the Committee determines that recovery would be impracticable because of any of the following conditions: |
| 5.1.1 |
the direct expense paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered. Before concluding that it would be impracticable to recover any amount based on expense of enforcement, the Company must make a reasonable attempt to recover such compensation, document such reasonable attempt(s) to recover, and provide that documentation to the New York Stock Exchange. |
| 5.1.2 |
recovery would violate home country law where that law was adopted prior to November 28, 2022. Before concluding it would be impracticable to recover based on violation of home country law, the Company must obtain an opinion of home country counsel, acceptable to the New York Stock Exchange, that recovery would result in such violation, and must provide such opinion to the New York Stock Exchange. |
| 5.1.3 |
recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of Sections 401(a)(13) or 411(a) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder. |
| 6. |
Indemnification |
| 6.1 |
The Company and its subsidiaries are prohibited from: |
| 6.1.1 |
indemnifying any Executive Officer against the loss of Erroneously Award Compensation pursuant to this Policy or any claims relating to the Company’s enforcement of its rights under this Policy; and |
| 6.1.2 |
paying or reimbursing the premiums on any insurance policy protecting against the recovery of Erroneously Awarded Compensation. |
| 6.2 |
The Company and/or its subsidiaries will not enter into any agreement that exempts any Incentive-Based Compensation from the application of this Policy or that waives the Company’s rights to recover Erroneously Awarded Compensation, and this Policy shall supersede any such agreement (whether entered into before, on or after the Effective Date). |
| 7. |
Reporting and Disclosure |
The Company shall file all disclosures with respect to this Policy in accordance with the requirements of the federal securities laws, including the disclosure required by applicable Securities and Exchange Commission rules.
| 8. |
Administration |
| 8.1 |
This Policy shall be administered by the Committee in accordance with the Recovery Rules. |
| 8.2 |
The Committee is authorised to interpret and construe this Policy and to make all determinations necessary, appropriate or advisable for the administration of this Policy. |
| 8.3 |
Any determinations made by the Committee shall be binding on all persons. |
| 8.4 |
In the event any provision of this Policy is determined to be unenforceable or invalid under applicable law, such provision shall be applied to the maximum extent permitted by applicable law and shall automatically be deemed amended. |
| 9. |
Amendment |
| 9.1 |
The Committee may amend this Policy from time to time as it deems necessary, including as and when it determines that it is legally required by any federal securities laws, Securities and Exchange Commission rules, or the rules of any national securities exchange or association on which the Company’s securities are listed, provided such amendment would not cause the Company to violate any such laws. |
| 9.2 |
Unless otherwise determined by the Committee, this Policy shall automatically be deemed amended in a manner necessary to comply with any change in the Recovery Rules. |
| 9.3 |
The Committee may terminate this Policy at any time. |
| 10. |
Recovery Rights |
| 10.1 |
Executive Officers shall be deemed to have accepted continuing employment on terms that include compliance with this Policy and to be contractually bound by its enforcement provisions. |
| 10.2 |
Executive Officers who cease employment or service with the Company and its subsidiaries shall continue to be bound by the terms of this Policy. |
| 10.3 |
To the extent that the application of this Policy would provide for recovery of Incentive-Based Compensation that the Company recovers pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 or other recovery obligations or policies, the amount that the relevant Executive Officer has already reimbursed the company will be credited to the required recovery under this Policy. |
| 10.4 |
Nothing in this Policy precludes the Company from implementing any additional clawback, recovery or recoupment policies with respect to Executive Officers or other individuals, and the right of recovery under this Policy is in addition to, and not in lieu or, any other remedies or rights of recovery that may be available to the Company. |
Approved: 18 October 2023
Our commitment is emphasised through, and is backed up by our 2023 DE&I Progress Report, which you can find on our website:
Benefits
Pension benefit
Annual Performance Plan (APP)
Long Term Incentive Plan (LTIP) 
Shareholding
