The Intercontinental Group Corporate Governance and Financial Position Report

Extract

[...] Gearing ratio The gearing or leverage ratio shows the proportion of debt to equity that the business is operating on. It reveals the percentage of debt in the business relative to the amount of equity funds owned by the owners/investors. This ratio provides a perspective on how stable the business is the business is considering that debt is not a property of the business. Technically, a business that has a leverage ratio of 50% and above is considered to be highly leveraged or lower regarded to be at a low-risk level whereas one with between 25% - 50% is regarded to have a leverage ratio that is optimal and at a safety zone. [...]

[...] The board has made certain that the corporate and Board culture is maintained, as well as priority given to stakeholder engagement and sustainability issues. Conclusion The financial tools and techniques discussed are very important in helping management make critical decisions with minimal error, and make it easier for leadership and management to succeed in their positions. Proper account recording and keeping ensures that financial statements reflect the true financial position of the company, which in turn enables correct policy implementations based on the information. [...]

[...] Also, Consumer tastes and preferences keep changing and this is especially so for the hospitality sector. The organization turnover rate as a result of some of the factors mentioned is also high, which is also worrying; more over the workforce is not diversified enough for skill difference and efficiency. The Company is also still at a level where it rents out a large proportions of its space, leading to increased expenses. The management also addressed the contingency plans regarding Brexit, where there were suggestions to appoint a special team to closely monitor how the Brexit is affecting the business and any proactive measures that can be employed to counter negative effects (IHG, 2019) Capital investment decisions and techniques Capital budgeting, also referred to as investment appraisal is a technique or process of evaluating and deciding whether and which long term capital intensive projects are viable to invest in both financially and time wise. [...]

[...] In an interconnected manner, the short term goals and objectives of the organization are determined and ways of realizing those objectives and goals are also identified (Kotler, Berger & Bickhoff 2018) The functions and duties of operational planning are often performed by the middle level management. These functions include organizing business related short term activities and tasks. Within and under this process, the company is categorized into different departments, units and departments under which these tasks are undertaken at an individual level. These thus align with strategic planning to reach and realize the vision of the company (Leo 2019). The following are unique features of operational planning - Clearly laid out and defined objectives. - Achievement of desired/expected result. [...]

[...] The intercontinental group has had major capital intensive projects in the recent past and also has some ongoing. One of the most recent major projects was the Intercontinental hotel in Singapore with 225 rooms that cost about $22million in 2014. Current projects are focused on the Indian mid segment market that has been informed by the increasingly low fares, expanding population and conducive hospitality environment. A number of financial techniques are used to evaluate whether such massive projects are worth it and are value for money in the long run, such techniques include the Net present value the payback period, the IRR and the accounting rate of return (ARR). [...]