Financial Reporting Introduction Intercontinental Hotels Group Plc (IHG) is a British multinational company in the hotel industry. It is headquartered in Denham, UK, and it is the largest hotels company globally operating seven brands. It has over 4,500 hotels in over 100 countries…
InterContinental Hotels primarily listed on the London Stock exchange and is a constituent of the FTSE 100 Index. It is secondary listed on the New York Stock Exchange. This report is concerned with the performance of the group in the last Accounting period, 2011. Therefore, performance analysis will compare results of 2011 with those of 2010. We will also analyze segmental information of the group by comparing 2011 results with 2010 results. 1.1 Analysis of segmental information In this analysis, we will consider two segments in IHG which are the business segments and the geographical segments (IHG Annual report 2011). Geographical segments include America, Europe, great China, AMEA and Central. You find that IHGs target market is in the developed markets and the emerging markets. As discussed earlier, IHG has four business segments with regard to the percentage of control. They include the Franchised, managed, owned and leased and central parts of the business. a. Revenue Looking at the 2011 financial report, there was no significant change in the percentage of revenue contribution by each business segment. The percentage of revenue contribution by franchised part of the business remained the same at 34% compared with year 2010. For the owned and leased segment, revenue contribution dropped by 2% from 35% in 2010 to 33% in 2011. ...
From the analysis, most of the revenue has been realized in the franchised part of the business. This is because it majority of the hotels have been franchised, approximately over 3900 hotels. In the case of the geographical segments, the percentage of revenue contribution in America dropped by 3%, that is from 50 percent in 2010 to 47 percent in 2011. In Europe, there was 23 percent revenue contribution and 20 percent in 2010. There was no significant change in AMEA as the percentage of revenue contribution declined by one percent. In 2011, there was 12% revenue contribution and 13% in 2010. The same applies to china as there was little change in revenue contribution percentage. It only increased by 1%, from 11 percent in 2010 to 12 percent in 2011. The central region experienced no changes at all in revenue contribution percentage as it remained at 6 percent. America contributes the highest percentage of revenue since it has over 3.4 million rooms of which 1.3 million rooms are branded and has a market share of 64% in the industry. Other geographical segments such as AMEA lie in between. China on the contrary indicates growth opportunity as it seems that the market has not been fully tapped, and no barriers of entry exist (IHG Annual report 2011). In addition, there is a strong economic growth in china. b. Operating profits margin including Exceptional Items In the geographical segment, America has the best performance, then AMEA and Great China. Europe has the lowest performance with regard to operating profits including exceptional items. In 2011, , there was a 9%, 10% and 3% increase in operating profit including exceptional items in America, AMEA and Great China respectively. Europe experienced a drop by 6% that is from 22 percent in 2010 to 16 percent in ...
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Thus financial reporting framework helps to reduce the information asymmetry that exists between the management and the shareholders. It narrows down the financial knowledge to a level that the shareholders can interpret. Financial reporting is an interpretation which generally applies to transactions, management team uses its knowledge to develop and implement an accounting policy which results in information that is relevant and reliable to be used in making financial decisions by management themselves, shareholders and potential investors.
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The disclosure of financial statements is secondary information given for review of the stakeholders of the company, its partners and external readers in support of any published financial information. The financial reporting and disclosure by organizations help the outsiders to take decisions on investment.
External Reporting to investors, government authorities and other outside parties on the organisation's finance position, operations and related activities. This information is also used by regulatory bodies like Internal Revenue Service. Sometimes the managers in other organization also use such information in their decision making.
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