Intercontinental Hotels Group's CEO Discusses Q4 2013 Results - Earnings Call Transcript

| About: InterContinental Hotels (IHG)

Intercontinental Hotels Group (NYSE:IHG)

Q4 2013 Earnings Conference Call

February 18, 2014 04:00 ET


Richard Solomons – CEO

Paul Edgecliff Johnson – CFO


Jamie Rollo – Morgan Stanley

Simon Larkin – Bank of America Merrill Lynch

Tim Barrett – Nomura

Ian Rennardson – Jefferies

James Ainley – Citi


Richard Solomons

Good morning everyone. Thank you for joining us today. Welcome to our 2013 Full Year Results Presentation. In a moment Paul Edgecliff-Johnson will take you through the financial results in detail but first let me cover some highlights. The 2013 (indiscernible) 10th anniversary as a standalone company and was another year of strong performance for the business. Growing preference for our brands combined with solid net rooms expansion fueled increasingly from developing markets drove good growth in fees. Our focus on cost efficiencies combined with our success in leveraging our scale has allowed us to reinvest in the business whilst growing our margins, an achievement we have repeated now for a number of years. We have once again demonstrated IHG’s ability to drive powerful cash flows and to deliver against our commitment to reduce the capital intensity of the business releasing some $444 million cash from disposals in the year. And I’m delighted today to announce the disposal of InterContinental Mark Hopkins, San Francisco for a $120 million. This follows our agreement to dispose of 80% of its InterContinental New York Barclay in December with both the deals highlighting the enduring appeal of the InterContinental brand.

IHG’s to reliably recycle capital provide this with the flexibility to invest behind our brands and our technology platforms at the same time as being able to generate significant and consistent shareholder returns. The $638 million of capital we returned in 2013 by a special dividend and share buyback together with the 9% growth in the 2013 total dividend announced today demonstrates both an ongoing commitment to our longstanding strategy and the confidence we have in our ability to drive strong performance into the future.

I just want to say a few words about Paul before I hand over to him. Paul joined IHG almost 10 years ago and during that time he has held a number of senior finance positions across the group most recently heading up finance for our Europe and our Asia, Middle-East and Africa regions. He has also allowed hotel development in Europe, Middle-East and Africa as well as taking on the role of Interim Chief Executive for that region during 2011.

So you can see Paul has a wealth of financial operational experience and he and I have worked together closely throughout his time at IHG and I’m delighted to have him as our CFO. So I will now hand over to Paul who will talk in more detail about the financial progress IHG has achieved in 2013 and I will return later to discuss our strategy with a particular focus on the progress our brands have made during the year. Paul?

Paul Edgecliff Johnson

So thank you Richard and good morning everyone. It's been some years since I last stood up here. Good to see some familiar faces and I look forward to reconnecting with you in the coming months. We’re pleased to report another year of strong results in which we have delivered growth in all of our core financial metrics. Increases in both rooms under our brand and in revenue per available room or RevPAR drove a 4% increase in fee revenue.

Reported profit growth of 10% included three large liquidated damages receipt totaling $46 million in the year. Without the benefit of these and excluding results from managed lease hotels and the owned revenue from InterContinental Hotel London Park Lane which we sold in May. We grew underlying profit by 8% on a constant currency basis.

Interest was $19 million higher as $73 million reflecting average debt that was little higher as we have executed on our capital returns program. Our effective tax rate increased by 2 percentage points to 29%. Our expectation remains but our tax rate will rise to the low 30s in 2014. After these higher tax and interest cost, an 8% reduction in weighted average shares earnings per share increased to $158.3 up 14% year-on-year.

We had another year of strong cash generation with free cash flow of $502 million up 11% on last year. I will go into more detail on this a little later on. Our focus remains on driving our three levers of growth to deliver long term sustainable performance. Royalty rate is the metric that is most stable as we operate long term contract almost all of which now have a minimum 20 year duration. So we don’t expect to see significant movement’s year-on-year.

Comparable RevPAR growth of 3.8% was driven by rate up 1.8% and a 130 basis point increase in average occupancy which is now at 67.1% a highest we have seen since 2007.

We opened 35,000 new rooms in the year and removed 25,000. On an underlying basis adjusting for the 4000 rooms that exited in relation to the significant liquidated damages I mentioned earlier net rooms increased 2.3%.

4.3% fee growth across the business added $49 million in absolute terms, taking total fees to nearly $1.2 billion, give some more context as to where and how we drove this. I will now talk you through the performance of each of our regions in a little more detail. $39 million of our fee growth was generated in the Americas, our largest region. This is driven primarily by 4.3% of comparable RevPAR growth with average rate up 2.6% and a 110 basis point increase in average occupancy which now stands at 66.4%, 30 basis points above the 2007 prior peak.

We were pleased with the performance of each of our brands during the year and in particular with the 130 basis point RevPAR growth outperformance that our higher price point hotels of Crowne Plaza and InterContinental both achieved against our industry competitors.

Focusing in for a moment on the mid-price segment, Holiday Inn and Holiday Inn Express maintained a sizeable rates premium to their competitors. They grew RevPAR slightly more slowly in 2013. This is unsurprising given that significantly superior RevPAR performance throughout the cycle proving to be much more robust during the downturn and recovering back to prior peak levels almost 12 months sooner than the wider U.S. industry.

Back now to the region as a whole, we opened 20,000 high quality rooms and removed 18,000 from our system as part of our continued focus on quality and driving the long term performance of our brand. On an underlying basis revenue and profit were both up 7% in the Americas. This is driven by good growth at our franchise business and a strong performance from our own owned and leased hotels where 6% RevPAR growth and strong drop through drove operating profit up 25%. In 2013 we signed significantly more hotels in the Americas than in any year since 2008. This is a strong indicator of the success of our continued focus on quality and brand strength and sets us up well for the future.

Moving on now to Europe which drove $4 million of our fee revenue growth. After a slow start with tough competitors in Germany, an increased supply growth in the UK. Comparable RevPAR grew 1.7% across the year. In the third quarter we achieved 5% growth although it's benefited from the timing of certain exhibition and events in the quarter so it not fully represents to of underlying economic conditions. We opened 3500 rooms during the year and also removed 3500 of our lowest quality rooms including 1300 rooms for which we received significant liquidated damages. Solid fee revenue progression reflected strong growth in franchise fees up 7%.

This in conjunction with a $3 million property tax recovery InterContinental Le Grand drove underlying profit up 10%. 2013 was a good year for signings in Europe with 50 hotels added taking the pipeline to 110 hotels or 18000 rooms. Seven signings in London alone will expand the footprint of each of our six brands already operating in the capital. We also saw strength in Russia one of our key focus markets where we signed five hotels.

Moving now to look at our Asia, Middle-East and Africa region where we delivered a strong underlying performance we saw fee revenues fall by almost $4 million. Having previously held the CFO role in this region I know just how diverse it can be with different dynamics driving each of our key markets, 6.1% comparable RevPAR growth was led by South-East Asia and Japan both up almost 10%. In the Middle-East more modest RevPAR growth reflected strong trading in the United Arab Emirates offset by continued geo-political unrest elsewhere in the region. We opened 4000 rooms and removed 2000 in the year with almost all of the net room’s growth coming from developing market locations such as India, Indonesia and Thailand.

Despite this strong growth in our key business drivers underlying profit was down 8%. This reflects the combination of our continued investment to deliver long term growth in the region and a $10 million reduction in revenues from a small number of legacy contracts that have come up for renewal. Some of these have been renewed on current market terms as we indicated half year results and some have been removed for quality reasons.

Excluding this $10 million impact fee revenue would have been up 4%. Asia, Middle-East and Africa will be a key market for our future growth. We have 32,000 rooms in the pipeline with a strong mix of developing market locations. Around half of the pipeline is under construction today and over half of it is for our Holiday Inn brand family.

Moving on now to greater China where we increased fee revenue by $3 million. Our ability to continue to grow RevPAR in 2013 while the industry was experiencing significant declines effects our scale and the strength of our competitive position. We opened 8000 rooms in the year almost half of which were in the fourth quarter. This took year-end system size up 11%, our 8th consecutive year of double digit growth.

Now given we have achieved 1% RevPAR growth and 11% net system growth in 2013, a 3.3% increase in fee revenue does seem rather modest. However there are several factors contributing to this including our waiting of rooms opening to the fourth quarter, the macroeconomic conditions in the region and unveiling industry wide reduction in spending on conferences and meetings.

This resulted in 7% growth in fees from rooms being partly offset by a 1% decline in fees from food and beverage. We already have an established scale position in Greater China. We have well recognized brands and from this space we’re expanding and investing to build a strong domestic business across the entire country. This continued expansion of our portfolio does however have an impact on our fee revenue growth and I will provide some more color on this a little later.

What this does mean though is that we have brands across multiple price points and hotels in 70 cities. This in conjunction with our experienced team and our well-established operations and infrastructure places us very well to trade resiliently in China. This also means we’re not overly reliant on any one segment. In 2013 we took measures which drove transient business up 10% and our Holiday Inn Express brand drove RevPAR up almost 5%. Despite the macroeconomic headwinds in the year we still signed 15000 new rooms in Greater China up 15% demonstrating the confidence we have on IHG and the great prospects for our business there.

This takes our Greater China pipeline to 55,000 rooms of which almost 70% in under construction and we continue to have the industry’s leading system and pipeline in the region. I think it will helpful to include some additional information at this point to illustrate the developing markets dynamic a little better. It's a monthly, we will be repeating this data quarter-to-quarter as we don’t expect the dynamics to change too much.

You receive our announcement this morning that we have disclosed total RevPAR growth for our AMEA and Greater China regions. This differs from comparable RevPAR and that it includes rooms that have opened or exited in the last two years and so it reflects our change in mix which means it has a more linear relationship with fee revenue growth.

As Richard will tell you later our key market strategy focuses our efforts on not just the largest markets but also those which are the fastest growing. This often means that we’re adding hotels at the same time as the demand drivers in developing markets are being built which inevitably means lower absolute levels of RevPAR especially in the early years. This is especially so in Asia, Middle-East and Africa and Greater China where we’re significantly ahead of the competition when it comes to growing our business to ensure that it is aligned with future demand. The faster we expand in developing markets in these regions the more we will see this dynamic in our fee revenue growth.

But these fees are incremental to those we received in established markets well of course we’re still growing. So this will continue to be positive for IHG’s top line. It's not surprising then that our business mix will change quite considerably overtime as we open new rooms. In Greater China almost 60% of our comparable rooms are outside established markets but this increases to 86% for the pipeline. Likewise in Asia, Middle-East and Africa around a third of the comparable rooms today are in developing markets but this increases to 77% for the pipeline.

As we have said before new hotels opening in developing markets have an initial RevPAR on average around 30% of the level achieved by mature hotel in that region. Even after 3 to 5 years when these hotels are fully ramped up they are only expected to achieve around 70% of the absolute RevPAR level of a similar hotel in a primary market in the same way as elsewhere in the world.

You must have seen from our release this morning there are number of one off items we have highlighted that will impact 2014. We have included a summary of these in the Appendices of this presentation in addition to our usual slides showing performance of the company by business model in 2013.

We have again delivered sustainable fee margin progression in 2013 with higher than expected increase of 1.3 percentage points. This was the result of our continued focus on scale markets and productivity improvements balanced with further investment for growth together with a $7 million benefit from increased central revenue. Sustainable fee margin progression over the medium term remains a key focus for us and since 2004 we have delivered an 11 percentage point increase. Some years will of course be better than others and last year we have seen above average margin growth. This will be at a more normal level in 2014 as we continue to invest in brand development and in local infrastructure in developing markets to drive longer term fee growth and market share.

You will probably be familiar with this slide which illustrates how we use our capital to drive growth and maximize value for shareholders. I wound linger too much on this but we will reiterate that we continue to be committed to keeping an appropriately strong balance sheet and an investment grade credit rating. In line of our strategy to reduce the assets intensity of our business we completed the disposal of InterContinental London Park Lane in May with total gross proceeds of $469 million. We have retained the brand over this hotel with a 60 year management contract which as I already mentioned the great deals that we have agreed for InterContinental Mark Hopkins, San Francisco which we signed at 2:30 this morning and InterContinental New York Barclay. The Barclay was a complicated transaction and having led the negotiations for the final six months I was particularly pleased to see it reach a successful conclusion including a commitment by the newly formed joined venture to invest approximately $175 million in a major renovation and repositioning program.

Free cash flow generated by the business of $502 million was 11% in the year driven by a 10% increase in operating profit and strong cash conversion with 2/3rds of EBITDA converting to free cash flow. Net debt of $1.15 billion was slightly up on 2012 due to high levels of CapEx and return to funds to shareholders partly offset by disposal receipts. Moving on now to the capital expenditure in a bit more detail. Recycled capital more than funded our $129 million of growth CapEx in 2013. This spend included $72 million to acquire three owned Even Hotels just on the half the amount we have committed to launch the brand. Maintenance, capital expenditure of $140 million was in-line with prior guidance. Around the third of this was spent on maintaining our owned hotels and 2/3rds on supporting our core infrastructure.

Our medium term CapEx guidance of upto $350 million a year is unchanged. This will be invested behind maintaining the strength of our technology platforms to ensure we remain competitive in the evolving digital world and strategic investments to drive the growth of our brands. We will continue to fund growth capital through asset recycling wherever possible.

In addition to this we will be contributing 20% of the cost of the refurbishments of the Barclay in-line with our joint venture share which we currently expect to be invested across 2014 and 2015.

In 2013 we continued our strong history of returning surplus funds to shareholders. For the second year in a row we distributed over $600 million in additional returns over and above the ordinary dividend. We’re now 4/5ths through our buyback program with just over $100 million of it still to be completed. Over the last 10 years the strong fee cash flow generated by a robust fee based business model combined with $6.2 billion generated from disposals has enabled us to return some $9.6 billion to shareholders whilst also selectively investing behind growing our business to optimally position it for the long term.

As Richard mentioned 9% growth in the ordinary dividend reflects our confidence in our long term strategic position, although we remain mindful of the short term external headwinds still impacting some markets around the world. Richard will now provide you with more details on how we’re ensuring we retain our competitive position for the future with a focus on our brands.

Richard Solomons

Thank you Paul. So many of you would be familiar with this slide which I showed on our educational event in November. It shows the major tailwinds that we believe will continue to drive up demand for hotel rooms over the next few decades. Growing GDP, globalization of trade in Asian populations mean that companies will require more travel and individuals will have more disposable income both key drivers of hotel demand especially for mid-market brands.

Growing outbound travel flows for both business and leisure will in particular favor IHG given our geographic footprint and broad portfolio of brands which we have positioned to meet a wide range of guest needs. So we know that there are some solid drivers that will ensure that demand for hotel rooms will grow for some time into the future.

Looking now to where that growth will be, IHG has hotels in some 100 countries and territories around the world, we’re primarily focusing our efforts on just 10 markets.

These are the largest of fastest growing markets in the industry in which IHG has scaled a strong existing brand presence in which we’re aligned to our business model. We have calculated that by 2020 these 10 markets alone will account for more than three quarters of industry growth which means that combined they will achieve some 4.6% compound annual growth in industry room’s revenue.

IHG has the industry leading system and pipeline position in these 10 markets today and they make up more than 85% of our combined open and pipeline rooms. Having this focus is essential and is a key part of our strategy. It allows us to direct the bulk of our resources and efforts where most of the demand growth will be. Markets elsewhere is also important to us but we think about our business in these places in a more targeted fashion and we will add hotels in a more selective way.

It's not straight forward to continuously win in an ever changing marketplace but IHG has the right strategy to deliver high quality growth into the future. Our targeted portfolio combined with our winning model underpinned by disciplined execution will continue to drive superior returns for IHG shareholders. In order to operationalize this strategy we have made it into something that that all colleagues can buy into and understand and we did this through our three clearly stated priorities of brands, people and delivery.

I’ve talked about recently about our two innovative new brands Even hotels and HUALUXE Hotels and Resorts and we’re making great progress to these and are looking forward to the first hotels opening.

Today though I would like to focus specifically on our established brands and how we’re evolving them to drive increased preference amongst our current and future guests. Hotel brands are a promise of a consistent, relevant and differentiated hotel experience. IHG’s latest annual trends report that we published last month suggest that to continue to win and maintain guest loyalty into the future hotels need to deliver global, local and personalized appeal for their guests. By delivering this our brands will become truly three dimensional which will build the trust and emotional connection we need to sustain lasting relationships with guests and to outperform into the future.

Each year at IHG we look after some 34 million unique guests staying more than 160 million nights from whom we receive regular feedback. Guest satisfaction is obviously hugely important and we now and can quantify that improvement in this metric drives both the guest likelihood to return and their likelihood to recommend our brands to others.

At the start of 2011 we introduced a new survey system across all our brands and regions that we call guest heartbeat. This requests online guest feedback via a third party it's completely independent of their hotels and is standardized for all of our brands globally. The state of the art system gives us huge insight into our guest views with feedback that also helps us to make instant operational improvements of the hotel level. And in 2013 we have produced some really good results. We drove increased guest satisfaction of every single one of our brands as a result of many of the initiatives which are informed by our guest heartbeat system. These include training for our general managers to ensure the strongest possible connection between what each brand stands for and the delivery of the brand experience of the frontline as well as more effective processes for the handling of problems at the hotel level.

Improving the aggregate quality of the hotels in our system remains a top priority for us and you’ve heard from Paul that we exited a number of hotels in 2013. These were hotels which just weren’t living upto our brand promise. In fact those hotels that we remove from the system had on average guest satisfaction scores more than five points lower than the estate as a whole and were almost twice as old.

Looking forward we will continue to manage the quality of our system for the long term removing hotels where necessary. So our brands are delivering superior and consistent experiences which in turn drives RevPAR premiums and delivers better return on investments for us and for our owners. Third party independent recognition is also an important endorser of our success. This is why we’re so proud of the awards our brands, hotels and corporate offices win. Just a sample of the more than 400 awards we won in 2013 are listed here on this slide.

So our brands are performing well, we’re improving guest satisfaction and we are gaining significant amounts for external recognition for the great work we’re doing but that doesn’t mean we’re standing still. We are evolving our brands to ensure they remain relevant to guests and their needs. Back in November I told you about the major research studies we have undertaken which look at the universe of guest needs and occasions and their relative groupings in the hotel market. From this we identified nine global relevant and differentiated needs based segments. The names of these and were our brand sit within them are shown on this slide. This unique and deep insight allows us to better differentiate our hotel experiences and will be a key driver of our ability to continue to grow ahead of the market.

So let me tell you now about how we are using some of these insights to strengthen our established brands starting with InterContinental. InterContinental hotels and resorts is off course our international luxury brand which we have grown to be more than twice the size of any other luxury brand with the largest pipeline. In fact InterContinental today is almost three times the size of Four Seasons, more than double the size of each of Ritz Carlton, JW Marriott, Fairmont and Shangri-La.

The brands ethos is to empower guest by providing diverse, enriching and local experiences what we call the InterContinental Life. It's core global segments are mixing business with pleasure and short break experiences. We’re focused on adding hotels in iconic locations and in 2013 we opened nine new hotels in key market such as Shanghai, Osaka, Lagos, Marseilles and Davos. Here are images of some of these hotels which I hope show you a fantastic quality of these new additions. We also signed further 14 hotels into the pipeline including the third for London, the O2 Arena and a second for both Washington DC and Sydney, Australia.

In fact 2013 was our best year for InterContinental signings since 2008 and our best for opening since 2010 demonstrating the strength of the brand and its appeal to owners around the world. The work we’re doing and the key locations we’re adding is driving just guest likelihood to return and the brand continues to receive numerous external accolades. In 2013 it was voted the world’s leading hotel brand for the 5th consecutive year at the World Travel Awards, the Oscars of the industry. So looking into 2014 we’re focusing on developing our brand proposition to appeal more to our target guests. This will include leveraging social media and digital channels to distribute content from our InterContinental Concierge Service, one of the brands core hallmarks.

In recognition of the changing travel habits of today’s InterContinental guests, this year we will roll out our first global menu for the brand for children, viral linkup with Annabel Karmel one of the UK’s most trusted experts on children families and we will be running parlors [ph] in Asia and the Middle-East to explore how we refine our club InterContinental offering a private social space which offers bespoke services to guests.

Moving on now to Hotel Indigo, the industry’s first global branded boutique. This combines the modern design and intimate services associated with the boutique hotel with the peace of mind and ease of staying with one of the world’s largest hotel companies. Each Hotel Indigo reflects the local culture, character and history of its surrounding neighborhood hence the tagline Refreshingly Local. With this brand we are targeting a number of guest segments including romantic getaway and short break experience. Since we took the brand global in 2008 we have seen great traction with 55 hotels now open and a further 51 in the pipeline. 2013 was a great year for the brand, six openings included the first Hotel Indigo properties in each of Israel, Spain and Hong Kong really demonstrating our success in securing prime urban locations photos of which you can see here.

We’ve run some great consumer campaigns in 2013 to highlight Hotel Indigo’s neighborhood focus. In Europe we joined forces with iconic shoemaker Superga to create limited edition sightseeing shoes which replaced slippers in the hotel rooms to encourage guests to explore the local neighborhood in style.

Meanwhile in Hong Kong in December we celebrated both the three year anniversary of the brand in Greater China and the opening of Hotel Indigo, Hong Kong by branding two Hong Kong tram cars with the neighborhood stories from our five Hotel Indigo properties opened in the region.

The neighborhood focus will continue be an important marketing theme for the brand into 2014 when we launch a consumer campaign to support the roll out of local digital guides to all of our hotels in the Americas. We’re also looking forward to further country debuts for the brand in France and Russia. Holiday Inn continues to be an extremely successful brand in IHG’s engine for growth. It's the largest hotel brand family in the world with the largest pipeline and it enjoys a significant RevPAR premium to its industry segment. This is a remarkable achievement for a brand that is more than 60 years old and demonstrates a strength of its core values and the effective work we have been doing in recent years using consumer insights to keep it relevant for consumers and owners in the 21st century.

The brand had another strong year in 2013 opening some 150 hotels including country debuts for the Holiday Inn core brand in Ecuador, the Cayman Islands and Mauritius. We signed a further 280 hotels into the pipeline which makes it our most successful year for brand family signings since 2008. Our brand segmentation study helped us better differentiate between our contemporary traveler target guest for Holiday Inn and our smart traveler target guest for Holiday Inn Express.

In 2013 we ran a number of successful marketing campaigns for both brands across the world. For Holiday Inn Express there was our first ever TV campaign in Europe and we bought back our award winning stay smart campaign in the U.S. In 2014 we will continue to innovate to enhance the propositions for our target guest across the brand family. In Greater China the Kids Stay & Eat Free roll out will be accompanied by marketing campaign which is aimed at the growing family time segment in the region.

In Europe we will roll out the Open Lobby concept to more properties including locations in the UK, Russia, Germany, France and Spain and in the Americas we’re adding more healthy items to our Holiday Inn Express breakfast offering. These pictures give you an idea of what these innovations will look like.

I have talked on many occasions about the importance of the Crowne Plaza brand to IHG with nearly 400 hotels open and almost 100 in the pipeline of which more than half are in Greater China it has a powerful footprint and a great potential for future growth. We’re on a journey to improve the quality and consistency of the brand primarily in the U.S. and we’re really encouraged by the results so far. In 2013 our Crowne Plaza in the U.S. meaningful outperformed the upscale segment and in North America we improved our J.D. Power survey overall satisfaction index by some 15 points a big step up and on a global basis we have driven up guest likelihood to return by some 140 basis points. These are all strong indications of the brands growing appeal to guests.

Crowne Plaza now has a clear relevant brand proposition which we call traveling for success. We have aligned the brand, the business productivity and building business interaction segments. The insights have led to a number of guest experience enhancements which piloted during 2013 with encouraging results. In Greater China where the Crowne Plaza brand continues to be extremely successful, we have investing in media campaigns to drive further improvements in brand awareness and preference. The most recent of these was Crowne Your Dream to success highlighting how the brand can help guest achieve their goals.

In 2014 we will start the roll out with the new guest experience enhancements starting with our Americas and Europe regions. We will also continue to remove substandard hotels from the system and as you’re aware we will use IHG’s capital if necessary to make sure we add and retain representative Crowne Hotels in the right locations to build awareness and showcase the brand properly.

Turning now to our extended stay brands and starting with Staybridge Suites, a brand which IHG used its own capital to launch back in 1997 and since which has been released in full. Today we have almost 200 hotels open with 80 in the pipeline and it will be the first extended stay brand to launch in the UK in 2008.

In 2013 we opened 7 Staybridge Suites Hotels including the first for Lebanon in Beirut and we signed a further 32 hotels into the pipeline including great new locations in Saudi Arabia and London. Those who are not familiar with extended stay hotels this is one of the fastest growing segments in the U.S. These brands are focused on providing a home away from home for guest to spend prolonged periods on the road.

Staybridge Suites has some very loyal guests from the highest guest satisfaction of all IHG’s brands. We have been doing a lot to improve this even further working with our owners to renovate a number of our U.S. hotels over the past couple of years which has driven excellent results. We have also been focused on brand innovations, the evening social is a key hallmark of the brand providing a welcoming environment where guests can interact. Our new food and beverage menu has helped to drive strong increases in attendance of these events thereby driving deeper engagement with the brand. Further guest experience innovations will be our focus for Staybridge Suites in 2014. This will include upgrades to the gym as well as leveraging the brand’s first ever video campaign to showcase the (indiscernible) guest experience at Staybridge Suites brand offers.

Candlewood Suites is our second extended stay brand focused solely on the U.S. and Canada. Whilst it also looks to provide a home away from home it has a slightly different target guest well who is more self-sufficient and looking for a more casual experience. We acquired this brand in 2003 when we had a combined system size in pipeline of just 136 hotels and we have grown to this almost three times that number today. Almost 20% of the estate has been refurbished over the past two years driving great results. In response to our guest insights we also introduced the lending lockup a place where guest can borrow common household items during their stay.

This is built on the success of the Candlewood Cupboard, one of the brands core hallmark’s which operates on our system and by expanding the notion of trust of the lending locker we’re treating our guest like trusted members of the family and this links to the core values of the brand. In 2014 we will offer guest new pillow choices and leverage Candlewood Suites first ever video advertising campaign called make it your home base. Now moving on to food and beverage, an area which is important to all of our brands but one we have not talked to you much about before. This is an important element to the guest experience and something we have been increasing our focus on as a result of our guest insights work.

Non-rooms revenue the majority of which is from food and beverage contributed around 15% of IHG’s total gross revenues in 2013 and more than 40% in our Greater China and AMEA regions. From a fees perspective this area is very important to us as we earn both base and incentive management fees on F&B for our managed hotels. This doesn’t currently form part of our fee stream for franchised hotels.

Our brands around the world operates in 5400 restaurant and bars making IHG the largest casual dining chain in the world. Food and beverage is therefore an integral part of our business and there is a significant opportunity to make this a truly differentiating factor for our brands. We have taken a number of actions to ensure we maximize the opportunities in this area. We have added dedicated resource in each of our regions who have real experience in this field. In AMEA and Greater China where we operate most of our managed F&B outlets. We have also set up additional support for our hotels on the ground.

To win in the F&B space we are also investing in training for hotel based teams. As such in 2013 we piloted an online food and beverage training tool with bespoke brand standards. This would be rolled out this year with initial focus on breakfast where we have identified the biggest opportunities lie to improve the guest experience. We have also used our knowledge and insights to develop a framework for developing F&B concepts. Examples shown on this page include chart our modern take on traditional steakhouse, we have one of these opened in the further seven in the pipeline.

Cai Feng Lou is a fine dining, Chinese restaurant with a modern twist and we have almost 50 of these in the pipeline. Currently both these concepts are only being developed in Greater China but we see potential for both to be rolled out globally. Chaobella is a brand we’ve developed specifically to the Indian market. Now this serves both Italian and Chinese dishes which are the most popular foreign cuisines in India and appeals to the Indian culture of communal sharing of food as a family.

We’re delighted that Chaobella was listed last year as one of the Top 500 restaurants in Asia by Miele Guide, widely recognized as the Most Authoritative Dining guide in the region. Everything I have talked about so far is important because brands are the promise that we make to customers but all of these great brands need to be supported by strong delivery systems. The guest experience is evolving all along the travel journey. Today customers are often connected 24/7 through multiple devices and several themes are emerging that influence customer behaviors and expectations.

Social media has led to a huge number of experienced travelers posting online about their experiences in our hotels which help shape consumer sentiment and behavior. So we’re focused on how we can best serve our guest in this changing landscape and meet wide array of needs throughout the entire guest journey leveraging our systems, technology, customer data and innovation to do so. This will help us build trust with our guests and strengthen our proposition to owners and is what has led us to re-launch our royalty program in July 2013 with a new name, IHG Rewards Club. IHG Rewards Club clearly communicates to consumers but all of our brands are part of the same IHG brand family and we have also added new benefits including being the first hotel company to offer free internet to all members in all our hotels globally.

Since the re-launch we have driven up the awareness of IHG as a brand family by 10 percentage points and we have seen early increases in the number of different brands used by members. These are significant results in a short period of time and show delivery against the objectives of the relaunch by making our loyalty program more effective we will grow IHG share of our guest wallets there by driving up hotel revenues.

Direct web channels remain at the heart of IHG’s distribution strategy and we continue to invest heavily in custom facing enhancements to improve the guest experience and attract more revenue thought this low cost channel. Today our website’s across 13 languages support our strong online presence. These are being accessed by 90 million potential customers annually and have driven up web revenue over 30% in just three year’s. Mobile has quickly become a dominant touch point. IHG’s mobile revenue’s last year were over $600 million up 85% from 2012 and they continue to grow strongly.

To support the relaunch of IHG’s Rewards Club we made a number of enhancements to our consumer facing websites, mobile sites and mobile apps all of which helped drive the great results I talked about earlier. In 2012 IHG was one of the first hotel companies to launch guest ratings and reviews on our branded websites giving our guest the opportunity to read authentic customer feedback while booking their stays. Over 320,000 guest reviews are live globally with an average hotel rating of 4.2 out of 5 stars.

In fact in 2013 we have collected more reviews on our sites for our hotels than TripAdvisor has for all IHG hotels. This highlights the greater relevance for guests and potential guests of reading reviews from experienced and brand loyal travelers. IHG has been a leader in many areas of the digital revolution. This is a difficult area in which to measure success so we’re pleased that our hard work has been widely recognized extremely. IHG has the highest rated mobile apps in the industry and in the U.S. in 2013 the digital think tank L2 rated IHG as having the highest average digital IQ in the industry beating all of our major competitors and in Greater China the China Chief Marketing Officer Executive Council named IHG’s WeChat service account the best in China across all industries.

So to sum up, this an industry that has compelling long term demand drivers in which IHG is well positioned to outperform. We have a clearly defined strategy which will deliver industry outperformance and high quality growth into the future. At the heart of this is our brands which is some of the biggest and best in the world. InterContinental Hotels and Resorts and the Holiday Inn brand family are by far the largest brands in their price segments and they are set for strong future growth with 2013 marking the best year for signings for both brands since 2008. We’re continuing to strengthen and add to our brands through our industry leading insights and this is clearly working, driving up guest satisfaction scores and winning us over 400 industry awards. We’re not standing still though, we are continuing to innovate to ensure our brands remain fresh and preferred into the future. Food and beverage is a key part of the guest experience and our insights in this area are allowing us to develop innovative concepts that are closely aligned to our guest needs. IHG has a history of technology first in the industry including the first ever reservations website and being the first to have mobile apps across all platforms. This pioneering approach which is meant that we have best in class revenue delivery systems providing the highest quality revenues to IHG hotels at the lowest possible cost.

We will continue to invest behind our brands and technology. It's vital that we innovate as we have done in the past to meet changing consumer behaviors and sustain this industry leading position. We have once again demonstrated our commitment to returning funds to shareholders and we’re focused on continuing to do so into the future. Looking into 2014, although economic conditions in some markets remain uncertain forward booking stage is encouraging and we’re confident that we will deliver another year of growth. Thank you. So with that Paul and I will be happy to take your questions. For those of you listening on the webcast you also have the opportunity to send your questions in online.

Question-and-Answer Session

Jamie Rollo – Morgan Stanley

Good morning, Jamie Rollo from Morgan Stanley. Yes three questions please. First on central cost, your gross central cost were flat last year. Is there any sort of phasing impact that could affect cost guidance for this year at the gross level please? And secondly is there any guidance you can give us on your expected removals this year which obviously stepped up quite a lot last year and similarly on expected openings given the signings and the (indiscernible) is strong and then finally I think you normally give us the percent of rooms sort of delivered through your central system something of the high 60%, could you please give us that figure and how it moved year-on-year? Thank you.

Richard Solomons

So will just talk about removals, signings, openings and that question. So before the removal of those few hotels which we got well over $40 million liquidated damages we had a 2.3% system size growth in 2013 and these are hard one to give specific guidance on year-by-year given the fact that almost all of these hotels with their owners. So I think our focus continues absolutely very much on signing quality hotels and driving quality. So the removal is almost all of the removals are about improving the quality of the portfolio and now talk through the benefits that we have seen from a heartbeat perspective on that.

So we sit here today with about 5% of the world’s rooms and about 12% of the active pipeline. So our ability to continue to drive growth in our share of supply is very much there and that we will continue pushing that so I wouldn’t give you firm guidance but I think you can see from the signings, from the activity and from the quality focus that will continue to drive our system size but it is very much about quality not just about size.

Paul Edgecliff Johnson

So in terms of the gross central cost Jamie, I think you’re referring to that rather than net after the central revenues which came in, the central revenues are a little higher than in previous years up 7 million due to some additional receipts from technology fees that we charge our owners. The central cost, we’re not saying anything around phasing that would particularly have an impact on 2014. Just sort of looking more in the round with that and the margin which we increased by 1.3 percentage points, it's a bit more than in previous years. I think couple of years we have increased it more than the average so the average over the last 10 years is at 1.1%, this year at 1.3% so there might be some catch up.

In terms of the percentage of rooms through the systems and has that changed, not materially it does move around a little bit but it's not nothing particular to say there, so I will bring it down. I just talked about it in November. So nothing significant, no.

Unidentified Analyst

Three for me please. The first one is on China, one of your competitors in the U.S. did Q4 RevPAR of 3.5% guided so that being at similar rate for full year ’14, I think you did 2.4% in Q4, is that a good proxy for where we should see ’14 on an underlying basis and given the extensive new openings particularly in Tier 2 cities should the real number be sort of about 2 percentage points below that. The second one is on the CapEx I think you’re guiding obviously up towards 350 or indeed above that with the Barclay, can you gives a split of that maintenance and investment please? And the final one is on the IHG sorry the InterContinental Le Grand, did you consider disposing that prior to refurb like you’ve for the Barclay? Thanks.

Richard Solomons

In terms of China it's such a big country and the dynamics in different cities are different but it's difficult to get these reed across. I think when you look at our performance against the market you know it's really significant outperformed there, which is down to the scale of our business. But we’re more geographically spread because we have been there longer and we’re much bigger than our competitor. So someone who is just in the Tier 1 markets, we will have a slightly different mix in their business and we didn’t guide on the 2014 RevPAR and individual region so I think there is a lot more we can see in terms of that. In terms of the CapEx we said that we think we gave you the top end of our normal guidance of 250 to 350 this year and yes the share of our investment behind the Barclay will be on top of that, so 20% of the $175 million is going into that which will spent across 2014 and 2015 and we don’t split that out because it does differ a little bit so on year-by-year between maintenance and growth but we give regular updates as to how that’s coming through and in terms of Le Grand the refurbishment we’re doing there is particularly of the (indiscernible) there which is a national monument in France, fabulous room if you’ve ever being. It does need some structure work done to the ceiling and so we really don’t have an option we have to do that under the requirements of French law and because we don’t have bad [ph] room available to sell I know it would be some disruptions to some of the rooms above it then we’re going to do some of the room product at the same time. So I wouldn’t read anything into that.

Simon Larkin – Bank of America Merrill Lynch

Good morning. It's Simon Larkin from Bank of America Merrill Lynch. Few questions from me please, on fee based margins pre your central revenues essential cost they were up around 55 bps with your developed market sort of U.S. and Europe up around 50 to 100 bps and you’re developing markets as you guided being down more like sort of a 150 to 200 bps. Whilst I know you’re reticent to give a specific fee based margin guidance going forward. I’m guessing from what I’ve heard this morning the broad shape of that mix is likely to be similar in 2014 ever 2015 and I guess my sort of question relates to A that but also B, is this going to continue to maybe 2-3 more years? Is this investment cycle like to be sort of persistent for the next 2 or 3 years or was this in the sort of 12 to 24 months and we can start seeing some of these margins and then just turn around the other way.

Richard Solomons

I think we have grown our margins in wholesale of about 11 percentage points for the 10 years which considering the growth of the business and the investment we have put in particularly in the emerging markets but also areas like technology and so on. We think that’s a pretty solid performance and it's what is we set out to do as we get the benefits of scale not just in individual markets but across the company. So we have talked before that, we will continue to grow our margin overall as a business and I think again that’s appropriate given the size of the business but we are not managing margins year-by-year or quarter-by-quarter, region by region and the reality is that we’re investing as and when we need to do. So whether it's as we have done in China before or to create a big business in India given 12 hotels opened and 48 in the pipeline you’ve to invest behind that.

So I think our intent is to continue to grow margins overall broadly this sort of level that we have been growing but I don’t think it makes sense frankly to guide specifically buying any particular region. I think you really need to look at it across the piece and indeed as we drive efficiencies in one market we may take those and invest in other market which will clearly alter the margins region by region.

Paul Edgecliff Johnson

I think you covered very well Richard and we’re going to continue to grow margins that’s core of our strategy and the sense is to where we’re putting cost, we have got our 10 key markets and we know that we continue to grow in those markets in particular, it will be profitable growth while we’re just expanding everywhere in the world but we can’t do on a year-by-year basis getting into specific granularity of market by market.

Simon Larkin – Bank of America Merrill Lynch

Can you give us any sort of indication of what performance incentive fees directionally did 2013 over 2012 in your managed business of course?

Richard Solomons

I think we had a few more that we’re paying but it wasn’t any major move and I think across the geographical breakdown again there wasn’t much of a move there so I think particular to that.

Unidentified Analyst

Just firstly you talked about short term external headwinds in your outlook commentary, just curious to know what you see those as being which key regions? And then in terms of RevPAR you’re ahead of peak occupancy now in the U.S. I guess how much further do you see that going? Is it going to be all around about rate growth in this point forward? And within that obviously you talked about Holiday Inn and had a slightly different shape in terms of the cycle slightly more resilient and in light of that, in light of slightly higher supplier growth generally coming through for that of midscale segment. Is there any comment that you can give around sort of your expected U.S. RevPAR growth outlook vis-à-vis the hotel industry?

Richard Solomons

I don’t think I used the word headwinds, just talked about some economic uncertainties and I don’t think we see anything more than you see. So when we look at some of the markets that we’re in Europe obviously still big question mark so return to real GDP growth in Europe and in GDP is the best correlate to hotel revenues. In the short term you’ve got corporate profits, you’ve got disposable income and you’ve got confidence which drives business travels. I think we’re frankly in the same environment than any other global businesses so we have seen good performance in the U.S., very good performance in our AMEA region as Paul talked about but headwinds in Europe and some headwinds in parts of the Middle East as well still and you know news today about more violence in Thailand and that’s a small bit of our business but I think that’s the nature of a global company like ourselves. So overall we’re confident that we will see growth but still some headwinds in economic conditions in certain markets.

Paul Edgecliff Johnson

I think when you get to this point in the cycle and you’re at the occupancies that we’re at then typically more of the growth is through rate and so I think that be what we expect in the North American market. There is still growth in occupancy coming through in other parts of our business where some of the hotels are still growing up through the system. So particularly out in Asia, Middle-East, Greater China. And in terms of the shape of Holiday Inn and how resilient that is through the cycle. We just wanted to pull that out, I suspect you’re all aware of that but we thought it's just worth pointing out that this is a brand, the Holiday Inn brand family as a whole that is much more resilient so just had a different shape through the cycle.

Unidentified Analyst

So in that context would you expect but mostly likely be underperforming at this lesser end of the cycle.

Paul Edgecliff Johnson

I’m not sure if there is underperforming but I think it's when you look at the absolute level of RevPAR that it's achieving a significantly higher than its competition it's got an ADR that’s $5 higher and it's got an occupancy that’s higher. So I think it's continuing to outperform so does that mean that the growth will be a little different? Possibly but I think the one that matters to our owners is how well the hotel brand is delivering to them.

Richard Solomons

I think that’s a key point that the volatility you see in the weaker brands are indeed in upscale and luxury is very different to what you see in this midmarket. So there is only particular points in time whether we have quarter or year. You might say growth has been lower but we don’t see there is underperformance nor do our owners. Actually that resilience, that sustainability is a very important factor when you’re choosing a brand.

Tim Barrett – Nomura

Tim Barrett from Nomura. Can I ask two things, firstly on growth CapEx, you have called a 129 million in the year and it sounds like a couple of 100 million this year. Can you give some guidance on how that’s split between acquisitions for even refurbishments and other expenditure and then on excess Jamie’s question slightly differently can you say how many rooms were associated with the liquidated damages that you’ve already booked or are booking for this quarter? Thank you.

Richard Solomons

In terms of the growth CapEx for 2013 $72 million of that was for the three Even’s that we bought and in terms of going forward how the 250 to 350 (indiscernible) between maintenance and CapEx same answer to Jamie, well we’re going to split it out exactly it will differ year-by-year currently. In terms of exists and how many rooms relate to the liquidated damages receipt that we got in, that we will get in the first quarter this year it's actually only a few rooms it's a small hotel that’s leading in the North America market.

In terms of (indiscernible) last year I think we pulled that one out about 4000 rooms that drove the $46 million of liquidated damages that we received last year.

Tim Barrett – Nomura

And are you expecting to add or invest in Even Hotels this year within your growth guidance?

Richard Solomons

We said that we will spend a $150 million behind launching the Even brand, put out $72 million so far in buying those hotels. We will put some into refurbishing them and getting them open. I would say they probably will be some more coming out in 2014, yes.

Paul Edgecliff Johnson

Even’s we have signed about half (indiscernible) management contracts. So we will invest where we need to as across our brands to get the right locations, right places to recycle that capital. So it's no different there and I think we have been the level of interest is high. We haven't rolled it out on as mass basis at this point so we clearly want to get the first few open and test the proposition.

Unidentified Analyst

Just in terms of the resetting of these long term contracts in the Middle-East is that reassessed now largely over or might that be an ongoing feature?

Richard Solomons

So these are some contracts that we have held for very many long time. We have been in the Middle-East for decades and they came out for renewal some of them were put on to more normal current fee terms and some we have decided to part company with really for quality reasons. That’s what we will see probably for few years so there will be cycle through, there is always some that will come out but we just saw more of a spike coming through in the last of the year, 18 months.

Unidentified Analyst

So slightly abnormal last year?

Richard Solomons


Ian Rennardson – Jefferies

Ian Rennardson from Jefferies. I’m just curious as to the timing of why no special dividend? Why no share buyback at this point? Given you’ve sold the Barclay, given you’ve sold the one in San Fran and given that you’re just over one times net debt to EBITDA? Do you’ve anything you can tell us about your thought on that, please?

Richard Solomons

So the answer I usually give is, we have had incredible track record of returning funds of over $9 billion in the 10 years that we have been an independent company. We still have over $100 million left to go on the buyback. So I think we have got a good record. We will continue to balance the investment into the business, in our brands, in technology, and in growth versus returning to shareholders. I think we’ve got a good record there and we will get through the remaining buyback.

James Ainley – Citi

James Ainley from Citi. On slide 6, you talked about the three growth drivers RevPAR rooms and royalty rate. If you grow some of the RevPAR and the rooms rate you’re coming out to kind of more over 5% fee growth but you reported 4.3%, so it sort of implies royalty rates were under pressure in some way, why is that kind of can you bridge the gap and so what’s driving that difference?

Richard Solomons

We can work on bridging that, we can have another chat outside but the royalty rate continued to go up. We have seen no diminishing in that and this year and it's gone up a little bit over the last 10 years, we see a small incremental increases but as most of our contracts are a 20 year contracts and all the ones we are assigning now you don’t see much of movement year-by-year but as to why the math doesn’t work we can talk about that.

Paul Edgecliff Johnson

It does work.

Richard Solomons

Sorry it does work, you just multiply them together I can’t see why you’re saying it, it doesn’t look…

Unidentified Analyst

Richard going to what you said food and beverage, does it have any material implication for owners [ph], is it like a repositioning of one of the Holiday Inn brands they would have to spend a lot of capital to adopt the new food and beverage proposals or is it more of the edges?

Richard Solomons

No it's not like another big relaunches that we did before I think the reason we just thought it was appropriate to talk about is we haven't talked about it before and it is a very big piece in the business particularly in China and AMEA. It's been, there is no question that food and beverage is at the core of the guest experience, frankly whether it is the free breakfast in Holiday Inn Express or whether it's more of a full service restaurant offering in a Holiday Inn and it is something we have focused on for many years, it's just where we’re ramping it up sort of today. So it's one of those ongoing efforts and it's from our only perspective it's about what is the best offering for your asset, what is the best menu you can offer, can we actually help you buy that more efficiently and certainly as you’re looking to refurbish a hotel or refresh a hotel then we have offerings that you can take. So it's not a massive change it's simply of that service and the status is today. But it does become more and more important, I think as you grow the managed business and as you target your offerings more clearly. So the restaurant the food generally whether it's restaurant, whether it's banqueting or whether it's room service is a very important piece of the overall experience and having that expertise is really important.

Unidentified Analyst

One thing I didn’t quite understand particularly that IHG Rewards was a way of I think promoting you might have said all of the brands but IHG isn't one of the brands, so is there an implication that IHG will get attached to the brands in some way or how does it work because it's a promotional tool when it's not itself trading brand of the business.

Richard Solomons

It's highly unlikely to attach IHG to the brand, it's not similar to the way (indiscernible) prefer but what you’ve got I think again the more you understand the different needs, the different occasions that guests use hotels for which is what we have been very focused on. Clear it is how you help them use different brands in the family so I think if I think about myself (indiscernible) over next day in airport Holiday Inn Express is fine, a romantic week away with your partner in a nice resort but you’re the same person, same demographics. So with the Rewards Club it's a loyalty program so it's almost a relationship program. So you’re trying to build a relationship with guest and helping them understand that we got an Holiday Inn Express here, few InterContinental here and Indigo there and so that is that awareness that the brands are part of the family we have been driving which is a key enabler of driving share of guest wallet which is what we think about.

Unidentified Analyst

Two questions, one is sort of general industry question on supply. How concerned are you about the supply growth starting to increase in the U.S. particularly in midscale and also in the New York area where there seems to be an awful lot of supply coming on. Is that of any concern to you and what’s your view on that?

Richard Solomons

I think look at it in different ways but frankly as a brand owner what’s most important to us is that we have more than our share of that supply that’s coming through because ultimately we’re well over 80% of our income stream is share of revenues. So we’re very keen to make sure that our individual owners do well and we drive the return on investment to their assets but clearly a supply growth is grown more on share so with 5% of the world’s rooms, 12% of the active pipeline we’re very much in the position of growing our supply share and when you look at, we talk about supply, we talk about RevPAR ultimately it's revenues that matter which is why we report revenues and we talk about that because that’s how we make our money. So actually I like new supply because we grow share through new supply.

Unidentified Analyst

And then the other question I had was just on the significant one-offs and the sort of headwinds that you’re going into for next year and if my calculation is right you got 41 million or so liquidated damages which don’t repeat, you’ve got about 20 million of EBIT from disposed hotels and then the refurbishment is another 40 million, so it's 88 million of headwind. I guess offsetting that you’ve got managed income on the hotels that you’ve sold but also you’ve got lost EBIT on the hotels you had liquidated damages for. I mean net-net what do you think this sort of overall headwind is.

Paul Edgecliff Johnson

Yeah I think that we try and give as much information as we can and you will see in the release time we have talked about some of the 2014 impact that you will see coming through both the positives, the liquidated damage will get in Americas in the first quarter and then the impact of refurbishment of Le Grand [ph] the impact of the refurbishment of some of the Asia, Middle East and Africa managed hotels. So you should be out of put a lot of information through, we always look at the trading performance on an underlying basis so looking at 2013 the liquidated damages receipts we had stripped out we looked about as a one-off and again when we look at 2014 there will be an impact of 2015 there won't be an impact from those so hopefully we will give an enough information for you to look at through.

Richard Solomons

Time for one more I think.

Unidentified Analyst

Can you talk about the incentive fees that have come through this year and how they compare to last year and also maybe compared to ’07 in terms of whether it's number of hotels or whatever as a percentage of these coming through in terms of incentive fees? I just want a sort of an idea of where we’re through the cycle the way sort of a year of it's away from the top pool or five year still.

Paul Edgecliff Johnson

It hasn’t change materially from last year when we looked at it, it's not something that does actually for us change that much year-by-year so it's not something that we give a sort of running total back to against prior years and on this without going back and looking I couldn’t tell you how it's compared to 2007 because it is pretty stable and robust through the period.

Richard Solomons

I think it's worthy pointing that as I said well over 80% or 85% now our income stream is shared revenues because we’re franchising because the way our contract is structure and a lot of our contracts in Middle-East and Asia are quite simple in terms of share revenue, share of profits. So we don’t have the extreme volatility around incentive fees that I know some of our U.S. competitors have because they have the different mix and different sorts of contracts. So I think it's one of the key drivers.

Okay. Well thank you very much. We appreciate you being here. Thank you.

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