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 InterContinental Hotels Reports a 2nd Qtr 2009 Net Loss of $56 million
 Compared with a Net Income of $101 million in the Year-earlier Period;
Total Revenue Off 27.2%, Global RevPAR Declined 18.6% 

.

August 11, 2009 - London

InterContinental Hotels Group PLC

Half Year Results to 30 June 2009

Financial results

2009

2008

% change

% change CER

 

 

 

Total

Excluding LDs1

Total

Excluding LDs1

Revenue 2

$726m

$974m

(25)%

(24)%

(21)%

(20)%

Adjusted operating profit 2

$179m

$291m

(38)%

(35)%

(41)%

(38)%

Total adjusted EPS 2

41.5¢

58.1¢

(29)%

 

 

 

Total basic EPS 3

(10.2)¢

56.0¢

(118)%

 

 

 

Interim DPS

12.2¢

12.2¢

-

 

 

 

Net debt

$1,328m

$1,623m

 

 

 

 

All figures are before exceptional items unless otherwise noted.  See appendices 3 and 4 for analysis of financial headlines.  Constant exchange rate comparatives shown in appendix 5.  (% CER)  = change in constant currency.

1 – excluding $3m of significant liquidated damages (LDs) receipts in the first half 2009 and $22m in the first half 2008.

2 – hotels previously accounted for as discontinued operations have been re-presented as continuing operations and the relevant comparatives restated.

3 – total basic EPS after exceptional items.

 

Business headlines

·

Global constant currency first half RevPAR decline of 16.2%, with a second quarter decline of 18.6%. IHG’s brands outperformed the industry in each of its three regions.

·

9,849 net rooms (117 hotels) added in the first half, taking system size to 629,700 rooms (4,303 hotels), up 5% year on year.

·

26,956 rooms (229 hotels) added to the system, 17,107 rooms (112 hotels) removed in line with our quality growth strategy.  

·

22,754 rooms (159 hotels) signed, taking the pipeline to 226,248 rooms (1,599 hotels).

·

On track to exceed 2009 targeted cost reductions with first half reported regional and central costs $51m below 2008 levels.

·

Net debt of $1.3bn held broadly flat on the position at 31 December 2008.

·

Interim dividend maintained at 12.2¢, equivalent to 7.3p at the closing exchange rate on 7 August 2009.

·

Exceptional operating charges of $201m include $162m of non-cash asset impairment charges.

 

 

Recent trading

·

July global constant currency RevPAR decline of 14.4%; -14.2% Americas, -15.1% EMEA and -14.5% Asia Pacific.

·

Forward bookings data, which provides limited visibility, shows no further deterioration in demand. July benefited from stronger leisure demand

 

Update on priorities

·

Reduce costs.  2009 regional and central costs are now expected to be around $80m below 2008 levels comprising at least $40m of sustainable savings, $20m of currency benefit and $20m of non-sustainable savings.  The drive to improve efficiency continues and by the end of 2010 compared to 2008 levels, IHG expects to achieve sustainable cost savings of between $65m and $70m, representing a c.20% reduction, net of increases such as inflation and investment in growth.  The additional estimated cost to achieve these savings will be c.$25m with a c.$22m cash cost.

·

Open rooms. c.90,000 rooms under construction, c.25,000 of which are scheduled to open in the balance of the year (26,956 rooms opened in the half).  Room removals are still expected to be in the region of 35,000 for both 2009 and 2010.

·

Drive share.  US RevPAR outperformed the market by 2.7 percentage points (IHG US brands H1 RevPAR decline of 16.0% compared to US industry decline of 18.7%).

·

Relaunch Holiday Inn. 1,040 hotels now operating under the new standards. Results from the first relaunched hotels continue to show RevPAR outperformance of more than 5% compared to a control group.

 

Commenting on the results, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:

“Trading was very challenging throughout the first half of the year and we expect the remainder of 2009 to be tough.

“We have made good progress on improving efficiency and reducing costs as we make more effective use of our scale.  We will continue to invest behind our system to drive revenue and grow market share.

“The continued out performance of our brands around the world is encouraging, as is our signings pace which, despite the continued scarcity of financing for developers, is still averaging around one deal a day.  We are on track to open more than 400 hotels this year.  We are making good progress with the global relaunch of Holiday Inn and over 1000 hotels have now completed this process.  Feedback from relaunched hotels continues to be positive and we are still committed to completing the programme by the end of 2010.

“The outlook remains challenging, but we are confident that with our fee based business model, substantially reduced cost base, strong financial position and the renewal and refreshment of our brands supported by our system scale, we will outperform the competition and be well positioned for the upturn.”


 

Americas

Revenue performance

RevPAR declined 15.8% in the first half, with a second quarter decline of 18.0%.  In the US, IHG’s brands outperformed the industry by 2.7 percentage points in the first half, driven by the resilience of the midscale brands which represent 80% of IHG’s rooms in this market.  Revenues declined 25% to $375m.  Excluding one $13m liquidated damages receipt in the first half of 2008, revenues declined 23%.

Operating profit performance

Operating profit declined 40% from $249m to $149m.  Excluding the $13m liquidated damages receipt, operating profit declined 37%.  A 28.6% decline in RevPAR from owned and leased hotels, partially offset by strong cost control at hotel level, drove the drop in these hotels’ operating profit from $26m to $4m.  In the managed business, excluding the $13m liquidated damages receipt in the first half of 2008, a RevPAR decline of 18.4% caused a $34m drop in operating profit to a loss of $9m.  This was primarily due to IHG funding shortfalls to the agreed owner’s priority return on a number of hotels managed for one owner.  This operating profit decline is in line with the disclosed sensitivity that a 1% change in RevPAR has a $7m impact on annual operating profit across the global managed business, of which some $4m relates to the Americas.  Franchised hotels’ operating profit fell by 18% to $177m driven by a 12% decline in royalty fees and an $11m reduction in fees associated with initial franchising, relicensing and termination, partially offset by a 5% increase in room count.

 

EMEA

Revenue performance

RevPAR declined 16.4% in the first half, with a second quarter decline of 20.3% reflecting the impact of the movement of Easter from March to April.  The Middle East and the UK were the most resilient markets with first half RevPAR declines of 8.5% and 10.7% respectively. Revenues declined 31% (20% at constant exchange rates (CER)) to $186m.  Excluding one liquidated damages receipt of $3m in the first half of 2009 and one of $9m in the first half of 2008, revenues declined 30% (18% CER).

Operating profit performance

Operating profit declined 35% (30% CER) from $89m to $58m or 31% (26% CER) excluding the net $6m impact of the two liquidated damages receipts.  Owned and leased operating profit almost halved to $10m, primarily due to tough trading conditions at InterContinental Paris Le Grand.  Managed hotels’ operating profit declined by $23m to $33m, or by $14m excluding the impact of one liquidated damages receipt in the first half of 2008.  Continued growth in fees in the Middle East was offset by the impact of a 25.4% RevPAR decline across the European managed estate and the annualisation of the reduced contribution from a portfolio of hotels in the UK, first reported in the third quarter of 2008.  Excluding the $3m liquidated damages receipt in the first half of 2009, franchised hotels’ operating profit declined $8m to $27m (9% at CER) driven by a RevPAR decline of 17.0% being partially offset by a 7% increase in room count.

 

Asia Pacific

Revenue performance

RevPAR declined 17.9% in the first half, with a second quarter decline of 19.3%.  Greater China was the weakest market with a first half RevPAR decline of 21.7%, significantly better than the industry down 33.3% which continues to be impacted by the recent increases in supply, particularly by international brands. Revenues declined 25% (22% CER) to $106m.

Operating profit performance

Operating profit declined 41% (34% CER) from $29m to $17m.  Operating profit at owned and leased hotels fell by $9m to $11m primarily reflecting a RevPAR decline of 28.1% at the InterContinental Hong Kong.  Managed hotels’ operating profit declined 35% (23% CER) to $17m driven by a 16.5% RevPAR decline.

 

Strong operating system

Revenue delivery to hotel owners through reservation channels and loyalty programmes continued to improve:

·

$4.4bn of rooms revenue or 66% of total rooms revenue, was booked through IHG's channels or by Priority Club Rewards members direct to hotel, up 4 percentage points on the first half of 2008.

·

Priority Club Rewards members of 44m, up from 42m at the end of 2008.

·

Internet revenues increased from 19% to 23% of total rooms revenue, 79% from IHG’s own websites.

 
 

Interest, tax and exceptional items

The interest charge for the period fell $27m to $28m due to a reduction in interest rates and lower average net debt.

Based on the position at the end of the half, the tax charge has been calculated using an estimated annual tax rate of 22% (2008: 28%).  The reported tax rate may continue to vary year-on-year but is expected to increase in the medium to long term.

The $162m exceptional impairment charge comprises (i) $57m write down of goodwill and a $32m intangible asset write off, both relating to the Americas managed operation; and (ii) $73m impairment to hotels including $14m in catch-up depreciation resulting from their re-presentation from held for sale to continuing operations.

 

Cash flow & net debt

$91m of cash was generated from operating activities in the six months to 30 June and $12m of cash was generated from disposals.  Growth capital expenditure in the half was $9m and maintenance capital expenditure was $31m.  Full year maintenance capital expenditure is still expected to be c.$75m.

IHG’s net debt was maintained at $1.3bn at the end of the first half, including the $203m finance lease on the InterContinental Boston.  IHG remains well placed in terms of its banking facilities, with a $1.6bn revolving credit facility expiring May 2013 and a $0.5bn term loan expiring November 2010.

 
 
       
 
 
1: Asset disposal programme detail

 

Number of owned hotels

Proceeds

Net book value

Disposed since April 2003

183

$5.5bn

$5.2bn

Remaining hotels

16

-

$1.6bn

 For a full list please visit www.ihg.com/Investors

 

Appendix 2: Rooms

 

Americas

EMEA

Asia Pacific

Total

Openings

21,072

2,674

3,210

26,956

Removals

(12,414)

(2,036)

(2,657)

(17,107)

Net openings

8,658

638

 553

9,849

Signings

15,004

3,781

3,969

22,754

 

Appendix 3:  First half financial headlines

Six months to 30 June $m

Total

Americas

EMEA

Asia Pacific

Central

 

2009

2008*

2009

2008*

2009

2008

2009

2008

2009

2008

Owned and leased operating profit

25

65

4

26

10

19

11

20

-

-

Managed operating profit

41

120

(9)

38

33

56

17

26

-

-

Franchised operating profit

209

253

177

215

30

35

2

3

-

-

Regional overheads

(51)

(71)

(23)

(30)

(15)

(21)

(13)

(20)

-

-

Operating profit pre central overheads

224

367

149

249

58

89

17

29

-

-

Central overheads

(45)

(76)

-

-

-

-

-

-

(45)

(76)

Operating profit

179

291

149

249

58

89

17

29

(45)

(76)













* 2008 comparatives restated for those owned hotels previously accounted for as discontinued operations, now re-presented as continuing operations.

 

Appendix 4:  Second quarter financial headlines

Three months to 30 June $m

Total

Americas

EMEA

Asia Pacific

Central

 

2009

2008*

2009

2008*

2009

2008

2009

2008

2009

2008

Owned and leased operating profit

18

40

5

16

9

14

4

10

-

-

Managed operating profit

21

62

(5)

15

17

35

9

12

-

-

Franchised operating profit

112

139

97

118

14

20

1

1

-

-

Regional overheads

(24)

(36)

(11)

(15)

(6)

(10)

(7)

(11)

-

-

Operating profit pre central overheads

127

205

86

134

34

59

7

12

-

-

Central overheads

(20)

(41)

-

-

-

-

-

-

(20)

(41)

Operating profit

107

164

86

134

34

59

7

12

(20)

(41)













* 2008 comparatives restated for those owned hotels previously accounted for as discontinued operations, now re-presented as continuing operations.

 

Appendix 5: Constant currency operating profit movement before exceptional items.

 

Americas

EMEA

Asia Pacific

Total***

 

Actual currency*

Constant currency**

Actual currency*

Constant currency**

Actual currency*

Constant

Currency**

Actual currency*

Constant currency**

Growth/ (decline)

(40.2)%

(40.2)%

(34.8)%

(30.3)%

(41.4)%

(34.5)%

(38.5)%

(41.2)%

 

Exchange rates

GBP:USD

EUR: USD

2009

0.67:1

0.75:1

2008

0.51:1

0.65:1

*   US dollar actual currency; ** Translated at constant 2008 exchange rates; *** After Central Overheads

 

Appendix 6: Investor information for 2009 interim dividend

Ex-dividend Date:  26 August 2009

Record Date:  28 August 2009

Payment Date:  2 October 2009

Dividend payment:  Ordinary shares 7.3p per share: ADRs 12.2¢ per ADR

 

For further information, please contact:

Investor Relations (Alex Shorland-Ball; Catherine Dolton):

 +44 (0) 1895 512 176

Media Affairs (Leslie McGibbon; Emma Corcoran):

+44 (0) 1895 512 425

 

+44 (0) 7808 094 471

High resolution images to accompany this announcement are available for the media to download free of charge from www.vismedia.co.uk . This includes profile shots of the key executives.

 

Presentation for Analysts and Shareholders

A presentation with Andrew Cosslett (Chief Executive) and Richard Solomons (Chief Financial Officer and Head of Commercial Development) will commence at 9.30am (London time) on 11 August at Merrill Lynch Financial Centre, 2 King Edward Street, London, EC1A 1HQ.  There will be an opportunity to ask questions.  The presentation will conclude at approximately 10.30am (London time).

 

There will be a live audio webcast of the results presentation on the web address www.ihg.com/interims09.  The archived webcast of the presentation is expected to be on this website later on the day of the results and will remain on it for the foreseeable future.  There will also be a live dial-in facility

International dial-in

+44 (0)203 037 9090

 

US Q&A conference call

There will also be a conference call, primarily for US investors and analysts, at 10.00am (Eastern Standard Time) on 11 August with Andrew Cosslett (Chief Executive) and Richard Solomons  (Chief Financial Officer and Head of Commercial Development).  There will be an opportunity to ask questions.

 

International dial-in

+44 (0)20 7108 6370

US Toll Free

866 692 5726

Conference ID:

HOTEL

 

A recording of the conference call will also be available for 7 days.  To access this please dial the relevant number below and use the access number 5717.

 

International dial-in

+44 (0)207 108 6347

US Toll Free

866 851 6712

 

Website

The full release and supplementary data will be available on our website from 7.00 am (London time) on 11 August. The web address is www.ihg.com/interims09.

To watch a video of Andrew Cosslett reviewing our results visit our YouTube channel at www.youtube.com/ihgplc

 

Notes to Editors:

InterContinental Hotels Group (IHG) [LON:IHG, NYSE:IHG (ADRs)] is the world's largest hotel group by number of rooms.  IHG owns, manages, leases or franchises, through various subsidiaries, over 4,300 hotels and almost 630,000 guest rooms in nearly 100 countries and territories around the world.  The Group owns a portfolio of well recognised and respected hotel brands including InterContinental® Hotels & Resorts, Hotel Indigo®, Crowne Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts, Holiday Inn Express®, Staybridge Suites® and Candlewood Suites®, and also manages the world's largest hotel loyalty programme, Priority Club® Rewards with 44 million members worldwide.

 

IHG has nearly 1,600 hotels in its development pipeline, which will create 140,000 jobs worldwide over the next few years.

 

InterContinental Hotels Group PLC is the Group's holding company and is incorporated in Great Britain and registered in England and Wales.

 

IHG offers information and online reservations for all its hotel brands at www.ihg.com and information for the Priority Club Rewards programme at www.priorityclub.com. For the latest news from IHG, visit our online Press Office at www.ihg.com/media.

 

Cautionary note regarding forward-looking statements

This announcement contains certain forward-looking statements as defined under US law (Section 21E of the Securities Exchange Act of 1934).  These forward-looking statements can be identified by the fact that they do not relate 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.  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.  Factors that could affect the business and the financial results are described in ‘Risk Factors’ in the InterContinental Hotels Group PLC Annual report on Form 20-F filed with the United States Securities and Exchange Commission.


Interim Management Review

 

This Interim Management Review discusses the performance of InterContinental Hotels Group (the Group or IHG) for the six months ended 30 June 2009.

 

GROUP PERFORMANCE

 

 

3 months ended

6 months ended

 

30 June

2009

30 June

2008

 

%

30 June

2009

30 June

2008

 

%

Group Results

$m

$m

change

$m

$m

change

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Americas

196

258

(24.0)

375

499

(24.8)

 

EMEA

99

156

(36.5)

186

271

(31.4)

 

Asia Pacific

50

69

(27.5)

106

141

(24.8)

 

Central

30

32

(6.3)

59

63

(6.3)

 

____

____

____

____

____

____

Total

375

515

(27.2)

726

974

(25.5)

 

____

____

____

____

____

____

Operating profit before exceptional items:

 

 

 

 

 

 

 

Americas

86

134

(35.8)

149

249

(40.2)

 

EMEA

34

59

(42.4)

58

89

(34.8)

 

Asia Pacific

7

12

(41.7)

17

29

(41.4)

 

Central

(20)

(41)

51.2

(45)

(76)

40.8

 

____

____

____

____

____

____

 

107

164

(34.8)

179

291

(38.5)

 

 

 

 

 

 

 

Exceptional operating items

(175)

6

-

(201)

(4)

-

 

____

____

____

____

____

____

 

(68)

170

(140.0)

(22)

287

(107.7)

Net financial expenses

(14)

(25)

44.0

(28)

(55)

49.1

 

____

____

____

____

____

____

(Loss)/profit before tax

(82)

145

(156.6)

(50)

232

(121.6)

 

____

____

____

____

____

____

 

 

 

 

 

 

 

Earnings per ordinary share:

 

 

 

 

 

 

 

Basic

(19.6)¢

34.8¢

(156.3)

(10.2)¢

56.0¢

(118.2)

 

Adjusted

26.0¢

34.5¢

(24.6)

41.5¢

58.1¢

(28.6)

 

 

Revenue decreased by 25.5% to $726m and operating profit before exceptional items decreased by 38.5% to $179m during the six months ended 30 June 2009.  At constant exchange rates, revenue and operating profit before exceptional items decreased 21.5% and 41.2% respectively.  Included in these results is $3m of liquidated damages received by IHG in the first half of 2009 in respect of the settlement of a franchise contract in the EMEA region. In the first half of 2008 $22m of liquidated damages were received relating to the settlement of two management contracts; $13m relating to the Americas region and $9m relating to the EMEA region. Excluding these receipts, revenue and operating profit before exceptional items decreased by 24.1% and 34.6% respectively and at constant exchange rates by 20.0% and 37.5% respectively.

 

In response to the effects of the global economic downturn the Group has taken a number of actions to improve efficiency and reduce costs. This action has resulted in a $51m reduction in regional and central overheads from $147m to $96m during the first half of 2009, including a saving of $10m relating to variable remuneration and a $20m currency benefit.


 

As a result of the declining real estate market the InterContinental Atlanta and Staybridge Suites Denver Cherry Creek no longer meet the criteria for designation as held for sale assets and consequently the results of these hotels are no longer categorised as discontinued operations and comparative figures have been restated accordingly. Depreciation not charged on these assets from initial designation as held for sale assets to 30 June 2009 has been charged as an exceptional item in the period.  

 

Profit before tax decreased by 121.6% to a loss of $50m and adjusted earnings per ordinary share decreased by 28.6% to 41.5¢.

 

The IHG global system (the number of hotels and rooms which are owned, leased, managed or franchised) increased in the first half of 2009 by 117 hotels (9,849 rooms) with openings of 229 hotels (26,956 rooms) and removals of 112 hotels (17,107 rooms) continuing IHG’s strategy to reinvigorate brands through the removal of lower quality, non-brand conforming hotels. This strategy is further supported by the ongoing relaunch of the Holiday Inn brand family, which incorporates the consistent delivery of best in class service and physical quality in all Holiday Inn and Holiday Inn Express hotels. At the period end, 922 hotels were open under the updated signage and brand standards.

 

At 30 June 2009, the IHG pipeline which represents hotels and rooms where a contract has been signed and the appropriate fees paid, totalled 1,599 hotels (226,248 rooms) a decline of 176 hotels (18,837 rooms) since the year end, primarily due to a decrease in signings of 197 hotels (25,528 rooms) compared to the same period last year.

 

THE AMERICAS

 

 

3 months ended

6 months ended

 

30 June

2009

30 June

2008

 

%

30 June

2009

30 June

2008

 

%

Americas Results

$m

$m

change

$m

$m

change

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Owned and leased

57

80

(28.8)

106

154

(31.2)

 

Managed

24

44

(45.5)

55

97

(43.3)

 

Franchised

115

134

(14.2)

214

248

(13.7)

 

____

____

____

____

____

____

Total

196

258

(24.0)

375

499

(24.8)

 

____

____

____

____

____

____

Operating profit before exceptional items:

 

 

 

 

 

 

Owned and leased

5

16

(68.8)

4

26

(84.6)

 

Managed

(5)

15

(133.3)

(9)

38

(123.7)

 

Franchised

97

118

(17.8)

177

215

(17.7)

 

____

____

____

____

____

____

 

 

97

149

(34.9)

172

279

(38.4)

Regional overheads

(11)

(15)

26.7

(23)

(30)

23.3

 

____

____

____

____

____

____

Total

86

134

(35.8)

149

249

(40.2)

 

____

____

____

____

____

____

 

Revenue and operating profit before exceptional items decreased by 24.8% to $375m and 40.2% to $149m respectively during the six months ended 30 June 2009.  IHG’s hotel brands experienced tough trading conditions in the first half of the year leading to a decline in RevPAR of 15.8%, however, overall they continued to outperform the market.  Excluding the receipt of liquidated damages of $13m in the first half of 2008 revenue and operating profit declined by 22.8% and 36.9% respectively.


 

Owned and leased revenue decreased by 31.2% to $106m and operating profit decreased by 84.6% to $4m. RevPAR across the owned and leased estate declined 28.6% year on year. Trading at the InterContinental New York was severely impacted by the collapse of the financial markets, and whilst revenues were down at the InterContinental Boston, cost saving measures implemented at the hotel reduced the negative impact on operating profit. Results were further impacted by the sale of the Holiday Inn Jamaica, which was sold in August 2008, leading to a $12m loss in revenue and $1m loss in operating profit when compared to the first half of 2008. As a result of the declining real estate market the InterContinental Atlanta and Staybridge Suites Denver Cherry Creek no longer meet the criteria for designation as held for sale assets and consequently the results of these hotels are no longer categorised as discontinued operations and comparative figures have been restated accordingly. Depreciation not charged on these assets from initial designation as held for sale assets to 30 June 2009 has been charged as an exceptional item in the period.  

 

Managed revenue decreased by 43.3% to $55m with all managed portfolios being impacted by the global financial downturn. In the first half of the year, RevPAR across the managed estate declined by 18.4%. The year on year revenue variance is further impacted by the receipt of $13m in liquidated damages in the first half of 2008. Excluding this, revenues declined by 34.5% to $55m. Managed operating profit decreased by $47m to $(9)m due to the RevPAR driven decline in revenues and IHG funding owner’s priority return shortfalls on a number of hotels managed by one owner. Excluding the $13m of liquidated damages operating profit was down by $34m.

 

The managed results include $36m (2008 $47m) of revenue and $3m (2008 $5m) of operating profit from four properties that are structured, for legal reasons, as operating leases but with the same characteristics as management contracts.

 

During the first half of 2009, franchised revenue and operating profit decreased by 13.7% to $214m and 17.7% to $177m respectively, compared to the same period in 2008.  This decrease was predominantly driven by a fall in royalty revenues as a consequence of a RevPAR decline of 15.1%. Both rate and occupancy declined compared to the first half of 2008. Revenues were also impacted by a decline in real estate activity leading to lower fees associated with signings of new hotels and conversions. An increase in overall room supply partially offset the decline in revenues.   

 

Regional overheads decreased by $7m, from $30m to $23m, as a result of improvements in efficiencies across the region and organisational restructuring to better align the corporate structure with the changing requirements of our owners and hotels, leading to ongoing cost savings across all overhead functions.

 

 

Hotels

Rooms

 

 

Change over

 

Change over

 

Americas hotel and room count

2009

30 June

2008

31 December

2009

30 June

2008

31 December

Analysed by brand:

 

 

 

 

 

InterContinental

55

-

18,496

(6)

 

Crowne Plaza

197

10

54,611

3,487

 

Holiday Inn

891

(29)

161,196

(7,581)

 

Holiday Inn Express

1,803

81

153,916

7,892

 

Staybridge Suites

164

14

17,899

1,527

 

Candlewood Suites

229

25

22,916

2,275

 

Hotel Indigo

27

6

3,222

584

 

Holiday Inn Club Vacations

6

5

2,892

480

 

____

____

______

_____

Total

3,372

112

435,148

8,658

 

____

____

______

_____

Analysed by ownership type:

 

 

 

 

 

Owned and leased

10

-

3,503

(2)

 

Managed

200

1

41,102

187

 

Franchised

3,162

111

390,543

8,473

 

____

____

______

_____

Total

3,372

112

435,148

8,658

 

____

____

______

_____

 

 

Hotels

Rooms

 

 

Change over

 

Change over

 

Americas pipeline

2009

30 June

2008

31 December

2009

30 June

2008

31 December

Analysed by brand:

 

 

 

 

 

InterContinental

7

-

2,293

-

 

Crowne Plaza

38

(5)

7,962

(1,685)

 

Holiday Inn

246

(17)

31,703

(1,149)

 

Holiday Inn Express

556

(83)

49,861

(6,604)

 

Staybridge Suites

140

(14)

15,040

(1,638)

 

Candlewood Suites

209

(33)

18,668

(3,122)

 

Hotel Indigo

54

(1)

6,950

(82)

 

____

____

______

_____

Total

1,250

(153)

132,477

(14,280)

 

____

____

______

_____

Analysed by ownership type:

 

 

 

 

 

Owned and leased

1

-

210

25

 

Managed

18

(2)

3,910

(298)

 

Franchised

1,231

(151)

128,357

(14,007)

 

____

____

______

_____

Total

1,250

(153)

132,477

(14,280)

 

____

____

______

_____

 

The Americas system increased in the first half of 2009 by 112 hotels (8,658 rooms), with 204 hotels (21,072 rooms) joining the system and 92 hotels (12,414 rooms) leaving the system, as part of the Group’s continued strategy to reinvigorate brands through the removal of lower quality, non-brand conforming hotels.

 

The Americas pipeline at 30 June 2009 totalled 1,250 hotels (132,477 rooms) representing a rooms decline of 9.7% over the pipeline at 31 December 2008 primarily due to a decrease in signings in the first half of 2009 at 130 hotels (15,004 rooms), compared to 294 hotels (32,669 rooms) in the first half of 2008.


 

Europe, Middle East and Africa (EMEA)

 

 

3 months ended

6 months ended

 

30 June

2009

30 June

2008

 

%

30 June

2009

30 June

2008

 

%

EMEA Results

$m

$m

change

$m

$m

change

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Owned and leased

49

68

(27.9)

87

121

(28.1)

 

Managed

31

57

(45.6)

59

97

(39.2)

 

Franchised

19

31

(38.7)

40

53

(24.5)

 

____

____

____

____

____

____

Total

99

156

(36.5)

186

271

(31.4)

 

____

____

____

____

____

____

Operating profit before exceptional items:

 

 

 

 

 

 

Owned and leased

9

14

(35.7)

10

19

(47.4)

 

Managed

17

35

(51.4)

33

56

(41.1)

 

Franchised

14

20

(30.0)

30

35

(14.3)

 

____

____

____

____

____

____

 

 

40

69

(42.0)

73

110

(33.6)

Regional overheads

(6)

(10)

40.0

(15)

(21)

28.6

 

____

____

____

____

____

____

Total

34

59

(42.4)

58

89

(34.8)

 

____

____

____

____

____

____

 

 

 

 

 

 

 

 

Revenue and operating profit before exceptional items decreased by 31.4% to $186m and 34.8% to $58m respectively during the first half of 2009.  At constant currency exchange rates revenue and operating profit before exceptional items decreased by 19.9% and 30.3% respectively. The region received liquidated damages of $9m in the first half of 2008 and $3m in the first half of 2009. Excluding these receipts revenue declined 30.2% and operating profit before exceptional items declined 31.3%, and at constant currency exchange rates by 18.3% and 26.3% respectively.

 

In the owned and leased estate RevPAR declined by 16.8%, resulting in a revenue and operating profit decrease of 28.1% to $87m and by 47.4% to $10m respectively. Trading at the InterContinental Le Grand was adversely impacted by a decline in both business and international leisure travel and declined despite a boost from the biennial air show.

 

Managed revenue decreased by 39.2% to $59m and managed operating profit decreased by 41.1% to $33m.  The managed revenue and operating profit variances are negatively impacted by the receipt of $9m liquidated damages in the first half of 2008. Excluding this, managed revenue and operating profit decreased by 33.0% and 29.8% respectively, driven by the annualisation of the reduced contribution from a portfolio of hotels in the UK and tough trading conditions throughout the European managed estate.

 

Franchised revenue and operating profit decreased by 24.5% to $40m and 14.3% to $30m respectively. The franchised performance was heavily impacted by an unfavourable sterling to dollar foreign exchange movement, and at constant currency exchange rates revenue declined by 11.3% whilst operating profit was in line with the same period last year. Excluding $3m of liquidated damages received relating to the settlement of one franchise contract during the first half of 2009, revenue and operating profit decreased by 30.2% and 22.9% respectively, and by 17.0% and 8.6% at constant currency exchange rates. Overall, RevPAR declined by 17.0% across the region however this was partially offset by an increase in hotel openings.

 

Regional overheads decreased by $6m to $15m compared to the first half of 2008 driven by a favourable movement in foreign exchange of $5m.


 

 

Hotels

Rooms

 

 

Change over

 

Change over

 

 EMEA hotel and room count

2009

30 June

2008

31 December

2009

30 June

2008

31 December

Analysed by brand:

 

 

 

 

 

InterContinental

63

(1)

20,311

(525)

 

Crowne Plaza

92

3

21,593

864

 

Holiday Inn

328

(4)

52,427

(612)

 

Holiday Inn Express

191

5

22,347

783

 

Staybridge Suites

3

1

400

128

 

Hotel Indigo

1

-

64

-

 

Other brands

1

-

203

-

 

____

____

______

_____

Total

679

4

117,345

638

 

____

____

______

_____

Analysed by ownership type:

 

 

 

 

 

Owned and leased

4

-

1,446

-

 

Managed

165

(14)

39,384

(1,801)

 

Franchised

510

18

76,515

2,439

 

____

____

______

_____

Total

679

4

117,345

638

 

____

____

______

_____

 

 

 

Hotels

Rooms

 

 

Change over

 

Change over

 

EMEA pipeline

2009

30 June

2008

31 December

2009

30 June

2008

31 December

Analysed by brand:

 

 

 

 

 

InterContinental

24

(4)

6,546

(516)

 

Crowne Plaza

25

-

7,379

92

 

Holiday Inn

43

(7)

9,858

(346)

 

Holiday Inn Express

47

(10)

6,579

(1,211)

 

Staybridge Suites

7

(5)

859

(572)

 

Hotel Indigo

3

3

141

141

 

Other brands

1

-

90

-

 

____

____

______

_____

Total

150

(23)

31,452

(2,412)

 

____

____

______

_____

Analysed by ownership type:

 

 

 

 

 

Managed

65

(18)

17,999

(1,597)

 

Franchised

85

(5)

13,453

(815)

 

____

____

______

_____

Total

150

(23)

31,452

(2,412)

 

____

____

______

_____

 

 

During the first half of 2009, EMEA added a net 4 hotels (638 rooms) to its portfolio, including openings of 16 hotels (2,674 rooms), offset by removals of 12 hotels (2,036 rooms).

 

The region’s pipeline decreased by 13.3% to 150 hotels (31,452 rooms) at 30 June 2009. Signings during the period decreased by 16 hotels (2,910 rooms) to 16 hotels (3,781 rooms) compared to the first half of 2008.


Asia Pacific

 

 

 

3 months ended

6 months ended

 

30 June

2009

30 June

2008

 

%

30 June

2009

30 June

2008

 

%

Asia Pacific Results

$m

$m

change

$m

$m

change

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Owned and leased

25

37

(32.4)

57

77

(26.0)

 

Managed

22

28

(21.4)

43

56

(23.2)

 

Franchised

3

4

(25.0)

6

8

(25.0)

 

____

____

____

____

____

____

Total

50

69

(27.5)

106

141

(24.8)

 

____

____

____

____

____

____

Operating profit before exceptional items:

 

 

 

 

 

 

Owned and leased

4

10

(60.0)

11

20

(45.0)

 

Managed

9

12

(25.0)

17

26

(34.6)

 

Franchised

1

1

-

2

3

(33.3)

 

____

____

____

____

____

____

 

 

14

23

(39.1)

30

49

(38.8)

Regional overheads

(7)

(11)

36.4

(13)

(20)

35.0

 

____

____

____

____

____

____

Total

7

12

(41.7)

17

29

(41.4)

 

____

____

____

____

____

____

 

 

 

 

 

 

 

 

Revenue decreased by 24.8% to $106m whilst total operating profit before exceptional items decreased by 41.4% to $17m. At constant currency exchange rates revenue and operating profit before exceptional items decreased by 22.0% and 34.5% respectively. RevPAR declined by 17.9% compared to the first half of 2008.

 

In the owned and leased estate, revenue and operating profit decreased by 26.0% to $57m and by 45.0% to $11m respectively, reflecting a RevPAR decline of 28.1% at the InterContinental Hong Kong.

 

Managed revenue decreased by 23.2% to $43m and managed operating profit decreased by 34.6% to $17m. Results in the region were impacted by a continued oversupply of rooms in key Chinese cities, including Beijing and Shanghai, and a reduced contribution from the ANA joint venture in Japan.

 

Franchised revenue decreased by 25.0% to $6m and operating profit fell by 33.3% to $2m, driven by a decline in franchise royalties as a result of the removal of 5 hotels (1,655 rooms) in the region in an effort to protect the quality of our brands.

 

Regional overheads decreased by $7m to $13m. This includes $3m of reduced marketing costs associated with the ANA Crowne Plaza marketing campaign.

 


 

 

 

Hotels

Rooms

 

 

Change over

 

Change over

 

Asia Pacific hotel and room count

2009

30 June

2008

31 December

2009

30 June

2008

31 December

Analysed by brand:

 

 

 

 

 

InterContinental

40

-

15,289

(109)

 

Crowne Plaza

68

2

22,487

958

 

Holiday Inn

100

(1)

27,783

(92)

 

Holiday Inn Express

24

-

6,193

(13)

 

Other brands

20

-

5,455

(191)

 

____

____

______

_____

Total

252

1

77,207

553

 

____

____

______

_____

Analysed by ownership type:

 

 

 

 

 

Owned and leased

2

-

693

-

 

Managed

213

6

68,348

2,208

 

Franchised

37

(5)

8,166

(1,655)

 

____

____

______

_____

Total

252

1

77,207

553

 

____

____

______

_____

 

 

 

Hotels

Rooms

 

 

Change over

 

Change over

 

Asia Pacific pipeline

2009

30 June

2008

31 December

2009

30 June

2008

31 December

Analysed by brand:

 

 

 

 

 

InterContinental

36

-

12,221

(308)

 

Crowne Plaza

58

(7)

21,476

(3,059)

 

Holiday Inn

75

1

21,199

(6)

 

Holiday Inn Express

28

5

7,093

1,078

 

Hotel Indigo

2

1

330

150

 

____

____

______

_____

Total

199

-

62,319

(2,145)

 

____

____

______

_____

Analysed by ownership type:

 

 

 

 

 

Managed

197

-

61,993

(2,144)

 

Franchised

2

-

326

(1)

 

____

____

______

_____

Total

199

-

62,319

(2,145)

 

____

____

______

_____

 

 

Asia Pacific hotel and room count increased by 1 hotel (553 rooms) in the first half of 2009 to 252 hotels (77,207 rooms), including openings of 9 hotels (3,210 rooms), offset by the removal of 8 hotels (2,657 rooms).

 

The pipeline in Asia Pacific remained at 199 hotels but decreased by 2,145 rooms to 62,319 rooms. Signings were down by 17 hotels (4,953 rooms) to 13 hotels (3,969 rooms) compared to the first half of 2008.


 

Central

 

Net central costs decreased by $31m to $45m during the six months ended 30 June 2009 driven by savings relating to variable remuneration and a $14m currency benefit. The cost savings are a result of a number of actions taken to improve efficiency and drive benefits of scale, including the addition of a global procurement function.

 

System Funds

 

In the six months ended 30 June 2009, system fund revenues decreased by 3.5% to $473m primarily as a result of lower assessment fees driven by lower RevPARs across the system.  However, the assessment revenue shortfall was partially offset by other revenues related to system wide promotional programmes targeting consumers and reservation channel promotions.

 

Exceptional Operating Items

 

Exceptional operating items, a charge of $201m in the six months ended 30 June 2009, consisted of:

 

  •  

$14m in relation to the ongoing Holiday Inn relaunch;

  •  

$21m enhanced pension transfers to deferred members of the InterContinental Hotels UK Pension Plan who accepted an offer to receive the enhancement as either a cash lump sum or an additional transfer value to an alternative pension plan provider;

  •  

$162m of non-cash impairment charges reflecting the poorer trading environment in 2009 and included $45m relating to hotels reclassified from held for sale assets; and

  •  

$4m severance costs.

 

Taxation

 

The tax charge on profit before tax, excluding the impact of exceptional items, has been calculated using an estimated rate of 22%.  By also excluding the effect of prior year items, the equivalent effective tax rate would be approximately 39%. This rate is higher than the UK statutory rate of 28% due mainly to certain overseas profits (particularly in the US) being subject to statutory rates higher than the UK statutory rate, unrelieved foreign taxes and disallowable expenses.

 

Taxation within exceptional items totalled a credit of $52m. This represents, primarily, deferred and current tax relief on exceptional costs together with the release of exceptional prior year provisions.

 

Net tax paid in the six months ended 30 June 2009 totalled $43m.

 

Treasury

 

The Group has continued its focus on cash management during the six months ended 30 June 2009. Cash generated from operating activities was $91m, a decrease of $197m over the same period in 2008.

 

Net debt at 30 June 2009 of $1,328m comprised cash and cash equivalents of $109m and loans and other borrowings of $1,437m.  Net financial expenses decreased from $55m to $28m for the six months ended 30 June 2009 due to significantly lower interest rates in the first half of 2009. 

 

Dividends

 

The Board has proposed an interim dividend per share of 12.2¢ (7.3p).


Risks and Uncertainties

 

The principal risks and uncertainties which could affect the Group for the remainder of the financial year remain those set out on pages 26 to 28 of the IHG Annual Report and Financial Statements 2008.

 

In summary, the Group is exposed to risks relating to:

 

  •  

the reputation of its brands and the protection of intellectual property rights;

  •  

identifying, securing and retaining management and franchise agreements;

  •  

political and economic developments;

  •  

managing changes in key personnel and senior management;

  •  

events that adversely impact domestic or international travel;

  •  

reliance upon its proprietary reservations system and exposure to the risk of failures in the system and increased competition in reservations infrastructure;

  •  

technology and systems;

  •  

hotel industry supply and demand cycle;

  •  

a lack of selected development opportunities;

  •  

corporate responsibility;

  •  

litigation;

  •  

difficulties insuring the business;

  •  

the ability to borrow and satisfy debt covenants;

  •  

compliance with data privacy regulations;

  •  

information security; and

  •  

funding in relation to the defined benefits under its pension plans.

 

The current economic environment remains tough and at present it is difficult to see any real signs of improvement in the industry trading outlook. Following the sharp deterioration in trading in the first quarter of 2009, there are some signs that occupancy is stabilising but forward booking visibility is poor and conditions for the rest of the year are likely to remain tough. IHG continues to sign new deals into the pipeline across all brands but the pace of movement through the pipeline is slowing as a result of financing restrictions and trading uncertainties. The Holiday Inn relaunch continues to make good progress and new rooms growth continues to deliver new revenue and 400 hotel openings are still expected in 2009. IHG’s focus on driving revenue share from its strong brands together with a focus on cash management and cost control will help IHG outperform during these times of economic uncertainty.  

 

A copy of the IHG Annual Report and Financial Statements 2008 is available at www.ihgplc.com.


 

Directors' Responsibility Statement

 

The Directors confirm that to the best of their knowledge:

 

  • The condensed set of financial statements has been prepared in accordance with IAS 34;
  • The interim management report includes a fair review of the important events during the first six months and a description of the principal risks and uncertainties for the remaining six months of the year, as required by DTR 4.2.7R; and
  • The interim management report includes a fair review of disclosure of related party transactions and changes therein, as required by DTR 4.2.8R.

 

On behalf of the Board

 

 

 

 

 

 

Andrew Cosslett                     Richard Solomons

Chief Executive                         Chief Financial Officer and

                                                Head of Commercial Development

10 August 2009                         10 August 2009

 

 

 


InterContinental Hotels Group PLC

GROUP INCOME STATEMENT

For the three months ended 30 June 2009

 

 

3 months ended 30 June 2009

3 months ended 30 June 2008

 

Before

exceptional

 items

Exceptional

items

(note 4)

 

 

Total

Before

exceptional

items

Exceptional

items

(note 4)

 

 

Total

 

$m

$m

$m

$m

$m

$m

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue (note 3)

375

-

375

515

-

515

Cost of sales

(176)

-

(176)

(226)

-

(226)

Administrative expenses

(67)

(13)

(80)

(101)

(5)

(106)

Other operating income and expenses

1

-

1

4

12

16

 

____

____

____

____

____

____

 

133

(13)

120

192

7

199

Depreciation and amortisation

(26)

-

(26)

(28)

(1)

(29)

Impairment

-

(162)

(162)

-

-

-

 

_____

_____

____

_____

_____

____

 

 

 

 

 

 

 

Operating profit/(loss) (note 3)

107

(175)

(68)

164

6

170

Financial income

1

-

1

3

-

3

Financial expenses

(15)

-

(15)

(28)

-

(28)

 

____

____

____

____

____

____

 

 

 

 

 

 

 

Profit/(loss) before tax (note 3)

93

(175)

(82)

139

6

145

 

 

 

 

 

 

 

Tax (note 5)

(19)

43

24

(39)

(5)

(44)

 

____

____

____

____

____

____

 

 

 

 

 

 

 

Profit/(loss) for the period from continuing operations

 

74

 

(132)

 

(58)

 

100

 

1

 

101

 

 

 

 

 

 

 

Profit for the period from discontinued operations

 

-

 

2

 

2

 

-

 

-

 

-

 

____

____

____

____

____

____

Profit/(loss) for the period attributable to the equity holders of the parent

 

74

 

(130)

 

(56)

 

100

 

1

 

101

 

====

====

====

====

====

====

Earnings per ordinary share

(note 6)

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

Basic

 

 

(20.4)¢

 

 

34.8¢

 

Diluted

 

 

(19.9)¢

 

 

34.1¢

 

Adjusted

26.0¢

 

 

34.5¢

 

 

 

Adjusted diluted

25.4¢

 

 

33.8¢

 

 

Total operations:

 

 

 

 

 

 

 

Basic

 

 

(19.6)¢

 

 

34.8¢

 

Diluted

 

 

(19.2)¢

 

 

34.1¢

 

Adjusted

26.0¢

 

 

34.5¢

 

 

 

Adjusted diluted

25.4¢

 

 

33.8¢

 

 

 

====

 

====

====

 

====

 


InterContinental Hotels Group PLC

GROUP INCOME STATEMENT

For the six months ended 30 June 2009

 

 

6 months ended 30 June 2009

6 months ended 30 June 2008

 

Before

exceptional

items

Exceptional

items

(note 4)

 

 

Total

Before

exceptional

items

Exceptional

items

(note 4)

 

 

Total

 

$m

$m

$m

$m

$m

$m

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue (note 3)

726

-

726

974

-

974

Cost of sales

(358)

-

(358)

(439)

-

(439)

Administrative expenses

(140)

(39)

(179)

(192)

(14)

(206)

Other operating income and expenses

2

-

2

5

12

17

 

_____

____

____

_____

____

____

 

230

(39)

191

348

(2)

346

Depreciation and amortisation

(51)

-

(51)

(57)

(2)

(59)

Impairment

-

(162)

(162)

-

-

-

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Operating profit/(loss) (note 3)

179

(201)

(22)

291

(4)

287

Financial income

2

-

2

6

-

6

Financial expenses

(30)

-

(30)

(61)

-

(61)

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Profit/(loss) before tax (note 3)

151

(201)

(50)

236

(4)

232

 

 

 

 

 

 

 

Tax (note 5)

(33)

48

15

(67)

(2)

(69)

 

_____

____

____

_____

____

____

Profit/(loss) for the period from continuing operations

 

118

 

(153)

 

(35)

 

169

 

(6)

 

163

 

 

 

 

 

 

 

Profit for the period from discontinued operations

 

-

 

6

 

6

 

-

 

-

 

-

 

_____

____

____

_____

____

____

Profit/(loss) for the period attributable to the equity holders of the parent

 

118

 

(147)

 

(29)

 

169

 

(6)

 

163

 

====

====

====

====

====

====

Earnings per ordinary share

(note 6)

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

Basic

 

 

(12.3)¢

 

 

56.0¢

 

Diluted

 

 

(12.1)¢

 

 

54.9¢

 

Adjusted

41.5¢

 

 

58.1¢

 

 

 

Adjusted diluted

40.7¢

 

 

56.9¢

 

 

Total operations:

 

 

 

 

 

 

 

Basic

 

 

(10.2)¢

 

 

56.0¢

 

Diluted

 

 

(10.0)¢

 

 

54.9¢

 

Adjusted

41.5¢

 

 

58.1¢

 

 

 

Adjusted diluted

40.7¢

 

 

56.9¢

 

 

 

====

 

====

====

 

====

 

 

 


InterContinental Hotels Group PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2009

 

 

 

2009

6 months ended

30 June

 

$m

2008

6 months ended

30 June

restated*

$m

 

 

 

(Loss)/profit for the period

(29)

163

 

 

 

Other comprehensive income

 

 

Gains on valuation of available-for-sale assets

9

7

Losses on disposal of available-for sale assets

-

(15)

Cash flow hedges:

 

 

 

(Losses)/gains arising during the period

(3)

2

 

Transferred to financial expenses

7

1

Actuarial losses on defined benefit pension plans, net of asset restriction

 

(15)

 

(66)

Exchange differences on retranslation of foreign operations

12

22

Tax related to above components of other comprehensive income:

 

 

 

Actuarial losses

(1)

2

Tax related to share schemes

-

2

Tax related to pension contributions

-

7

 

____

____

Other comprehensive income/(loss) for the period

9

(38)

 

____

____

Total comprehensive (loss)/income for the period

(20)

125

 

====

====

Attributable to:

 

 

 

Equity holders of the parent

(19)

125

 

Minority equity interest

(1)

-

 

 

____

____

 

 

(20)

125

 

 

====

====

 

 

 

*

Restated for IFRIC 14 (note 1).

 

 


 

 

InterContinental Hotels Group PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2009

 

 

6 months ended 30 June 2009

 

Equity share capital

Other reserves*

Retained earnings

Minority interest

Total equity

 

$m

$m

$m

$m

$m

 

 

 

 

 

 

At beginning of the period

118

(2,748)

2,624

7

1

 

 

 

 

 

 

Total comprehensive income for the period

-

26

(45)

(1)

(20)

Issue of ordinary shares

3

-

-

-

3

Movement in shares in employee share trusts

 

-

 

44

 

(44)

 

-

 

-

Equity-settled share-based cost, net of payments

 

-

 

-

 

8

 

-

 

8

Equity dividends paid

-

-

(83)

-

(83)

Exchange adjustments

16

(16)

-

-

-

 

____

____

____

____

____

At end of the period

137

(2,694)

2,460

6

(91)

 

====

====

====

====

====

 

 

6 months ended 30 June 2008

 

Equity share capital

Other reserves*

Retained earnings

Minority interest

Total equity

 

$m

$m

$m

$m

$m

 

 

 

 

 

 

At beginning of the period

163

(2,720)

2,649

6

98

 

 

 

 

 

 

Total comprehensive income for the period

-

17

108

-

125

Issue of ordinary shares

2

-

-

-

2

Purchase of own shares

(3)

-

(136)

-

(139)

Transfer to capital redemption reserve

-

3

(3)

-

-

Movement in shares in employee share trusts

 

-

 

29

 

(39)

 

-

 

(10)

Equity-settled share-based cost, net of payments

 

-

 

-

 

12

 

-

 

12

Equity dividends paid

-

-

(86)

-

(86)

Exchange adjustments

(1)

1

-

-

-

 

____

____

____

____

____

At end of the period

161

(2,670)

2,505

6

2

 

====

====

====

====

====

 

 

*

Other reserves comprise the capital redemption reserve, shares held by employee share trusts, other reserves, unrealised gains and losses reserve and currency translation reserve.


 

InterContinental Hotels Group PLC

GROUP STATEMENT OF CASH FLOWS

For the six months ended 30 June 2009

 

 

 

2009

6 months

ended 30 June

2008

6 months

ended 30 June

 

$m

$m

 

 

 

(Loss)/profit for the period

(29)

163

Adjustments for:

 

 

 

Net financial expenses

28

55

 

Income tax (credit)/charge

(15)

69

 

Gain on disposal of assets

(6)

-

 

Exceptional operating items before depreciation

201

2

 

Depreciation and amortisation

51

59

 

Equity settled share-based cost, net of payments

8

12

 

_____

_____

Operating cash flow before movements in working capital

238

360

Increase in net working capital

(34)

(8)

Retirement benefit contributions, net of cost

-

(25)

Cash flows relating to exceptional operating items

(43)

(17)

 

_____

_____

Cash flow from operations

161

310

Interest paid

(28)

(58)

Interest received

1

6

Tax (paid)/received on operating activities

(43)

30

 

_____

_____

Net cash from operating activities

91

288

 

_____

_____

Cash flow from investing activities

 

 

Purchases of property, plant and equipment

(15)

(11)

Purchase of intangible assets

(24)

(22)

Investment in associates and other financial assets

(1)

(5)

Proceeds from associates and other financial assets

12

28

 

_____

_____

Net cash from investing activities

(28)

(10)

 

_____

_____

Cash flow from financing activities

 

 

Proceeds from the issue of share capital

1

2

Purchase of own shares

-

(131)

Purchase of own shares by employee share trusts

(3)

(12)

Proceeds on release of own shares by employee share trusts

1

2

Dividends paid to shareholders

(83)

(86)

Increase in borrowings

54

11

 

_____

_____

Net cash from financing activities

(30)

(214)

 

_____

_____

 

 

 

Net movement in cash and cash equivalents in the period

33

64

Cash and cash equivalents at beginning of the period

82

105

Exchange rate effects

(6)

(4)

 

_____

_____

Cash and cash equivalents at end of the period

109

165

 

=====

=====

 


InterContinental Hotels Group PLC

GROUP STATEMENT OF FINANCIAL POSITION

30 June 2009

 

2009

30 June

2008

30 June

restated*

2008

31 December

 

$m

$m

$m

ASSETS

 

 

 

Property, plant and equipment

1,854

1,843

1,684

Goodwill

95

228

143

Intangible assets

284

342

302

Investment in associates

44

50

43

Retirement benefit assets

23

16

40

Other financial assets

155

173

152

 

_____

_____

_____

Total non-current assets

2,455

2,652

2,364

 

_____

_____

_____

Inventories

4

5

4

Trade and other receivables

437

489

412

Current tax receivable

45

27

36

Cash and cash equivalents

109

165

82

Other financial assets

5

18

10

 

_____

_____

_____

Total current assets

600

704

544

 

 

 

 

Non-current assets classified as held for sale

22

239

210

 

______

______

______

Total assets (note 3)

3,077

3,595

3,118

 

=====

=====

=====

LIABILITIES

 

 

 

Loans and other borrowings

(22)

(17)

(21)

Trade and other payables

(739)

(783)

(746)

Current tax payable

(341)

(428)

(374)

 

_____

_____

_____

Total current liabilities

(1,102)

(1,228)

(1,141)

 

_____

_____

_____

Loans and other borrowings

(1,415)

(1,771)

(1,334)

Retirement benefit obligations

(133)

(124)

(129)

Trade and other payables

(400)

(305)

(392)

Deferred tax payable

(118)

(150)

(117)

 

_____

_____

_____

Total non-current liabilities

(2,066)

(2,350)

(1,972)

 

 

 

 

Liabilities classified as held for sale

-

(15)

(4)

 

_____

_____

_____

Total liabilities

(3,168)

(3,593)

(3,117)

 

=====

=====

=====

Net (liabilities)/assets

(91)

2

1

 

=====

=====

=====

EQUITY

 

 

 

Equity share capital

137

161

118

Capital redemption reserve

11

13

10

Shares held by employee share trusts

(7)

(53)

(49)

Other reserves

(2,905)

(2,918)

(2,890)

Unrealised gains and losses reserve

23

33

9

Currency translation reserve

184

255

172

Retained earnings

2,460

2,505

2,624

 

______

______

______

IHG shareholders’ equity

(97)

(4)

(6)

Minority equity interest

6

6

7

 

______

______

______

Total equity

(91)

2

1

 

=====

=====

=====

 

*

Restated for IFRIC 14 (note 1).


InterContinental Hotels Group plc

NOTES TO THE INTERIM FINANCIAL STATEMENTS

 

 

1.

Basis of preparation

 

 

These condensed interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the United Kingdom’s Financial Services Authority and IAS 34 ‘Interim Financial Reporting’.  Other than the changes listed below, they have been prepared on a consistent basis using the accounting policies set out in the InterContinental Hotels Group (the Group or IHG) Annual Report and Financial Statements for the year ended 31 December 2008.

 

With effect from 1 January 2009, the Group has implemented IAS 1 (Revised) ‘Presentation of Financial Statements’, IAS 23 (Revised) ‘Borrowing Costs’, IFRS 8 ‘Operating Segments’ and IFRIC 13 ‘Customer Loyalty Programmes’.  Except for certain presentational changes, including the introduction of a ‘Group Statement of Changes in Equity’ as a primary financial statement, the adoption of these standards has had no material impact on the financial statements and there has been no requirement to restate prior year comparatives.

 

Following the adoption of IFRIC 14 ‘IAS 19 – The limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’ at 31 December 2007, the 30 June 2008 Statement of Financial Position has been amended to show the retirement benefit assets net of tax previously recorded within deferred tax payable.  There have been corresponding changes to the actuarial gains and related tax reported in the restated Group Statement of Comprehensive Income for the six months ended 30 June 2008.  There is no change to previously reported net assets or income.

 

These condensed interim financial statements are unaudited and do not constitute statutory accounts of the Group within the meaning of Section 240 of the Companies Act 1985.  The auditors have carried out a review of the financial information in accordance with the guidance contained in ISRE 2410 (UK and Ireland) ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued by the Auditing Practices Board.

 

The financial information for the year ended 31 December 2008 has been extracted from the Group’s published financial statements for that year which contain an unqualified audit report and which have been filed with the Registrar of Companies. 

 

Two hotels, which were previously classified as assets held for sale and whose results were presented as discontinued operations, no longer meet the criteria for designation as held for sale assets.  Consequently, the results of these hotels are now reported as continuing operations and comparative data has been represented on a consistent basis.  The impact has been to increase revenue from continuing operations for the three months ended 30 June by $8m (2008 $11m) and for the six months ended 30 June by $17m (2008 $22m) and to increase operating profit from continuing operations, before exceptional items, for the three months ended 30 June by $2m (2008 $4m) and for the six months ended 30 June by $5m (2008 $7m).

 

 

2.

Exchange rates

 

 

The results of operations have been translated into US dollars at the average rates of exchange for the period.  In the case of sterling, the translation rate for the six months ended 30 June is $1= £0.67 (2009 3 months, $1 = £0.65; 2008 6 months, $1 = £0.51; 2008 3 months, $1=£0.51).  In the case of the euro, the translation rate for the six months ended 30 June is $1 = €0.75 (2009 3 months, $1 = €0.73; 2008 6 months, $1 = €0.65; 2008 3 months, $1 = €0.64).

 

Assets and liabilities have been translated into US dollars at the rates of exchange on the last day of the period.  In the case of sterling, the translation rate is $1=£0.60 (2008 31 December $1 = £0.69; 30 June $1 = £0.50).  In the case of the euro, the translation rate is $1 = €0.71 (2008 31 December $1 = €0.71; 30 June $1= €0.63).

 


 

3.

Segmental information

 

 

 

 


 

 

Revenue

 

 

 

 

 

 

2009

3 months

ended 30 June

2008

3 months

ended 30 June

2009

6 months

ended 30 June

2008

6 months

ended 30 June

 

 

$m

$m

$m

$m

 

 

 

 

 

 

 

Americas 

196

258

375

499

 

EMEA  

99

156

186

271

 

Asia Pacific 

50

69

106

141

 

Central

30

32

59

63

 

 

____

____

____

____

 

Total revenue

375

515

726

974

 

 

====

====

====

====

 

 

 

 

 

 

 

All results relate to continuing operations.

 

 

 

 

 

 

 

 

 

 








 

 

Profit

 

 

2009

3 months

ended 30 June

$m

2008

3 months

ended 30 June

$m

2009

6 months

ended 30 June

$m

2008

6 months

ended 30 June

$m

 

 

 

 

 

 

 

Americas

86

134

149

249

 

EMEA

34

59

58

89

 

Asia Pacific

7

12

17

29

 

Central

(20)

(41)

(45)

(76)

 

 

____

___

____

____

 

Reportable segments’ operating profit

107

164

179

291

 

Exceptional operating items (note 4)

(175)

6

(201)

(4)

 

 

____

____

____

____

 

Operating (loss)/profit

(68)

170

(22)

287

 

 

 

 

 

 

 

Financial income

1

3

2

6

 

Financial expenses

(15)

(28)

(30)

(61)

 

 

____

____

____

____

 

Total (loss)/profit before tax

(82)

145

(50)

232

 

 

====

====

====

====

 

 

 

 

 

 

 

All results relate to continuing operations.

 

 

 

 

 

 

 

 

 

 

 

 

Assets

2009

30 June

 

$m

2008

30 June

restated*

$m

2008

31 December

 

$m

 

Americas

1,120

1,350

1,240

 

EMEA

988

1,204

958

 

Asia Pacific

617

684

613

 

Central

198

165

189

 

 

____

____

____

 

Segment assets

2,923

3,403

3,000

 

 

 

 

 

 

Unallocated assets:

 

 

 

 

Current tax receivable

45

27

36

 

Cash and cash equivalents

109

165

82

 

 

____

____

____

 

Total assets

3,077

3,595

3,118

 

 

====

====

====

 

*

Restated for IFRIC 14 (note 1).


 

 

4.

Exceptional items

 

 

 

 

2009

3 months

ended 30 June

$m

2008

3 months

ended 30 June

$m

2009

6 months

ended 30 June

$m

2008

6 months

ended 30 June

$m

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

 

Exceptional operating items

 

 

 

 

 

 

Administrative expenses:

 

 

 

 

 

 

Holiday Inn brand relaunch (a)

(9)

(3)

(14)

(9)

 

 

Office reorganisations (b)

-

(2)

-

(5)

 

 

Enhanced pensions transfer (c)

-

-

(21)

-

 

 

Severance costs (d)

(4)

-

(4)

-

 

 

 

____

____

____

____

 

 

 

(13)

(5)

(39)

(14)

 

 

Other operating income and expenses:

 

 

 

 

 

 

 

Gain on sale of other financial assets

 

-

 

12

 

-

 

12

 

 

 

 

 

 

 

 

Depreciation and amortisation:

 

 

 

 

 

 

Office reorganisations (b)

-

(1)

-

(2)

 

 

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