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IHG Posts a 21% Rise in Operating Profit Through Q2 2011 to $269 million
Compared with $219 million in the Same Period a Year Earlier

Global RevPAR Up 6.7% Overall; Greater China Reporting RevPAR Growth of 12.7%

Financial summary1

2011

2010

% Change YoY

Actual

CER2

CER2 & excluding LDs3

Revenue

$850m

$772m

10%

8%

6%

Operating profit

$269m

$219m

23%

21%

17%

Total adjusted EPS

59.2¢

47.0¢

26%

 

 

Total basic EPS4

54.0¢

49.1¢

10%

 

 

Interim dividend per share

16.0¢5

12.8¢

25%5

 

 

Net debt

$818m

$1,019m

 

 

 

 

Richard Solomons, Chief Executive of InterContinental Hotels Group PLC, said:

“In the first half we delivered a strong performance across each of our regions, driven both by increased occupancy from business and leisure travellers as well as progressive rate improvement.  Global revenue per available room (RevPAR) grew 6.7% with Greater China up 12.7% and the US up 8.2%, where the Holiday Inn relaunch is delivering sustained outperformance.

We continue to support our owners, driving guests to our hotels through the most efficient channels. Our industry leading developments in mobile booking sites and apps are now generating over $10m of revenue a month and we expect this to grow quickly as consumer booking preferences evolve.

 “We have realised over $140m in the year to date from the sale of our interests in four hotels and have committed to invest over $70m of capital behind our brands, including the roll out of Holiday Inn Express in India and a world class site for Hotel Indigo in New York.

 “Our priorities are to develop our brands, invest in our people and strengthen our revenue delivery systems, thereby creating firmer foundations for growth. I have made a number of senior appointments including Tom Singer as CFO and Tracy Robbins our EVP Human Resources and Global Operations Support will be joining the Board.  Whilst we continue to monitor the uncertain economic outlook, we look forward with confidence in the currently favourable hotel trading environment of record demand and low supply growth in many markets.”

Driving Market Share

Total gross revenue6 from hotels in IHG’s system of $9.6bn, up 9%.

First half global RevPAR growth of 6.7%, 7.6% excluding Egypt, Bahrain and Japan.

 

-

Americas 7.6% (including US 8.2%); EMEA 4.0%; Asia Pacific 7.0%.

 

-

Second quarter global RevPAR growth of 6.5%, 7.4% excluding Egypt, Bahrain and Japan.

 

-

Global rate growth of 2.1% in the first half, with 2.4% in the second quarter.

System size 656,674 rooms (4,462 hotels); pipeline 186,116 rooms (1,190 hotels), 26% in Greater China.

 

-

24,519 rooms (122 hotels) added, including 6,986 rooms (2 hotels) from the first InterContinental Alliance Resorts in Las Vegas; and 15,006 rooms (97 hotels) removed.

 

-

Signings of 21,139 rooms (148 hotels) were ahead of H1 2010.

 

-

2011 net system growth still expected to be modest, with annual medium term growth from 2012 of 3%-5%.

 

Growing Margins

Sustainable efficiencies drive fee-based margins6 up 0.9% pts to 40.6%.

 

-

Regional and central costs of $129m increased $16m on 2010 at constant currency ($21m as reported) driven primarily by increased performance based incentive costs and investment in brand innovation.

 

-

2011 full year regional and central costs in the region of $260m at constant currency.





 

Current trading update

July global RevPAR up 5.6%, including rate up 2.7%.  RevPAR up 6.3% excluding Egypt, Bahrain and Japan.

 

-

Americas 6.6%; (includes US 6.7%); EMEA 3.0%; Asia Pacific 5.5%.

$14m operating profit benefit in the second half compared to 2010 from one significant liquidated damages receipt, cessation of depreciation on a hotel now held for sale and one favourable guarantee settlement.

Operating profit impact from events in Middle East, Japan and New Zealand of $7m in the first half with full year estimated impact unchanged at $15m to $20m.

 

1All figures are before exceptional items unless otherwise noted.        See appendix 3 and 4 for analysis of financial headlines

2CER =constant exchange rates

³excluding $10m of significant liquidated damages receipts in 2011

4After exceptional items

5partly intended to rebalance interim and final dividend payments

6see appendix 6 for definition.

Regional Highlights

Americas – Holiday Inn brand family drives increase in signings on 2010

RevPAR increased 7.6%, including rate growth of 2.1%. US RevPAR was up 8.2%, including rate growth of 2.4%. Second quarter RevPAR growth of 7.5%, with 2.6% rate growth and 8.1% in the US, with 2.8% rate growth.

Revenue increased 6% to $416m (5.3% at CER) and operating profit increased 26% to $225m.  After adjusting for the owned hotel disposals and excluding the impact of a $10m liquidated damages receipt and $5m benefit year on year from the conclusion of a specific guarantee negotiation relating to one hotel, revenue was up 8% and operating profit up 19%. This was driven by 10.2% owned hotel RevPAR growth and a $19m increase in franchise royalty fees, net of a $5m reduction in royalties due to a net system size reduction primarily due to Holiday Inn exits. 

We signed 11,614 rooms (102 hotels) in the half, up almost 1,500 rooms on the same period in 2010, due to an additional 19 Holiday Inn brand family deals, demonstrating the continued wider benefits of the relaunch. Four new Hotel Indigo deals were signed, including one on the Lower East Side of Manhattan, taking our Hotel Indigo pipeline in the Americas to 5,701 rooms (44 hotels). 16,520 rooms (88 hotels) were opened into the system (2010: 12,320 rooms), including the 6,986 room Las Vegas Sands (LVS) Venetian and Palazzo InterContinental Alliance Resorts.







 

EMEA – 14.4% owned RevPAR growth drives owned profits up over 50%

RevPAR increased 4.0%, including rate growth of 2.0%.   RevPAR grew 5.3% excluding Egypt (10 hotels) and Bahrain (2 hotels) where the political unrest resulted in significant declines. In other Middle East markets RevPAR grew, including 10.2% in Saudi Arabia and 3.4% in the United Arab Emirates. Second quarter EMEA RevPAR growth of 4.8%, with rate growth of 2.1%. 6.0% second quarter RevPAR growth excluding Egypt and Bahrain.

Revenue increased 17% (10% at CER) to $224m and operating profit increased 22% (12% at CER) to $71m. This was driven by 14.4% owned RevPAR growth and a $6m increase in franchise royalties as a result of 5.3% RevPAR growth and a 2% increase in year on year room count. Managed operating profit declined by $1m to $31m as underlying growth across Continental Europe was offset by a $4m impact from the unrest in the Middle East.

We signed 4,547 rooms (24 hotels) in the half, up over 1,200 rooms on the first half of 2010. These included 7 Crowne Plaza hotels, 3 Hotel Indigo hotels and 4 Staybridge Suites hotels.  3,461 rooms (19 hotels) were opened into the system (2010: 2,938), including 2 Hotel Indigo hotels in the UK and 9 Crowne Plaza hotels across 8 different countries demonstrating the strength of this brand across the region.

 

Asia Pacific – Strong RevPAR and rooms growth drives a 31% profit increase

RevPAR increased 7.0%, including rate growth of 3.7%. Excluding Japan (32 hotels) where the earthquake and resultant events negatively impacted growth, RevPAR grew 11.6%.  Greater China continues to be our strongest market with RevPAR up 12.7%, including rate growth of 7.1%.  Second quarter Asia Pacific RevPAR growth of 4.4%, with 2.7% rate growth. 9.8% second quarter RevPAR growth excluding Japan.

Revenue increased 14% (10% at CER) to $156m and operating profit increased 31% to $46m, driven by strong RevPAR growth and a 5% increase in year on year room count, led by Greater China, up 11%.  Managed operating profit increased $9m to $39m, despite the $3m impact from the natural disasters in Japan and New Zealand.

We signed 4,978 rooms (22 hotels) in the half, comprising: 9 hotels in Greater China; 4 hotels in India as part of the deal with Duet Hotels India; 6 hotels in Indonesia and 3 hotels in Thailand. On 8 August we announced the signing of a 1,224 room Holiday Inn in Macau with Sands China Ltd. 4,538 rooms (15 hotels) were opened into the system, including 3 hotels in India and 9 in Greater China where we now have 154 hotels open and 142 in the pipeline.

 

Capital recycling strategy driving growth

In the first half we completed the disposal of Hotel Indigo San Diego, Staybridge Suites Denver Cherry Creek, Holiday Inn Atlanta-Gwinnett Place and agreed the sale of a hotel asset and partnership interest in Australia. Proceeds from these sales will total $143m, 36% above book value.  We now own just 12 hotels, including InterContinental New York Barclay which is on the market.

In line with our strategy to recycle capital to drive growth in our brands, during the half we committed to invest $72m in growth capital expenditure, spending $45m in the first half.  These multi-year investments comprise a $12m equity stake in Summit Hotel Properties Inc. in the US with whom we have a hotel sourcing agreement; a $30m joint venture to take Holiday Inn Express into India; and a $30m joint venture to develop a Hotel Indigo on the Lower East side of Manhattan. 

 

Interest, tax, exceptional items, dividend and net debt

The interest charge for the period was $32m (H1 2010: $31m).  The tax charge has been calculated using an estimated annual tax rate of 28% (H1 2010: 28%).

Exceptional operating charge includes $37m in relation to the settlement of a commercial dispute in the EMEA region and a $22m litigation provision in the Americas.

The 25% increase in the interim dividend to 16.0¢ reflects strong performance in the first half and the intention to move towards rebalancing the interim and final payouts towards approximately a 30:70 ratio.

Net debt was $818m at the end of the half (including the $208m finance lease on the InterContinental Boston).  This is down from $1.0bn at 30 June 2010 but up $75m on the year end 2010 position due to seasonal working capital movements including incentive payments. This is expected to partly reverse for the full year 2011.

 

Appendix 1: RevPAR Movement Summary

 

July 2011

Half Year 2011

Q2 2011

 

RevPAR

Rate

Occ.

RevPAR

Rate

Occ.

RevPAR

Rate

Occ.

Group

5.6%

2.7%

2.0%pts

6.7%

2.1%

2.7%pts

6.5%

2.4%

2.6%pts

Americas

6.6%

3.5%

2.1%pts

7.6%

2.1%

3.3%pts

7.5%

2.6%

3.1%pts

EMEA

3.0%

1.1%

1.3%pts

4.0%

2.0%

1.3%pts

4.8%

2.1%

1.8%pts

Asia Pacific

5.5%

2.1%

2.4%pts

7.0%

3.7%

2.0%pts

4.4%

2.7%

1.1%pts

 

Appendix 2: Half Year 2011 System & Pipeline Summary (rooms)

 

System

Pipeline

Openings

Removals

Net

Total

YoY%

Signings

Total

Group

24,519

(15,006)

9,513

656,674

0%

21,139

186,116

Americas

16,520

(10,488)

6,032

445,407

(1)%

11,614

87,862

EMEA

3,461

(2,186)

1,275

122,127

1%

4,547

31,558

Asia Pacific

4,538

(2,332)

2,206

89,140

5%

4,978

66,696

 

Appendix 3: Second quarter financial headlines

Three months to 30 June 2011

Operating Profit $m

Total

Americas

EMEA

Asia Pacific

Central

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

Franchised

140

124

118

107

20

16

2

1

-

-

Managed

54

41

15

6

20

19

19

16

-

-

Owned & leased

31

22

7

6

17

10

7

6

-

-

Regional costs

(28)

(26)

(12)

(12)

(9)

(8)

(7)

(6)

-

-

Operating profit pre central costs

197

161

128

107

48

37

21

17

-

-

Central costs

(40)

(25)

-

-

-

-

-

-

(40)

(25)

Group Operating profit

157

136

128

107

48

37

21

17

(40)

(25)

 

Appendix 4: First half financial headlines

Six months to 30 June 2011

Operating Profit $m

Total

Americas

EMEA

Asia Pacific

Central

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

Franchised

248

219

209

188

35

28

4

3

-

-

Managed

103

75

33

13

31

32

39

30

-

-

Owned & leased

47

33

6

4

23

15

18

14

-

-

Regional costs

(56)

(55)

(23)

(26)

(18)

(17)

(15)

(12)

-

-

Operating profit pre central costs

342

272

225

179

71

58

46

35

-

-

Central costs

(73)

(53)

-

-

-

-

-

-

(73)

(53)

Group Operating profit

269

219

225

179

71

58

46

35

(73)

(53)

 

Appendix 5: Constant exchange rate (CER) operating profit movement before exceptional items

 

Total***

Americas

EMEA

Asia Pacific

Actual currency*

CER**

Actual currency*

CER**

Actual currency*

CER**

Actual currency*

CER**

Growth/ (decline)

23%

21%

26%

26%

22%

12%

31%

31%

Exchange rates:

 

GBP:USD

EUR:USD

* US dollar actual currency

2011

0.62

0.71

** Translated at constant 2010 exchange rates

2010

0.66

0.75

*** After central overheads













 

Appendix 6: Definitions

Total gross revenue: total room revenue from franchised hotels and total hotel revenue from managed, owned and leased hotels. It is not revenue attributable to IHG, as it is derived mainly from hotels owned by third parties. The metric is highlighted as an indicator of the scale and reach of IHG’s brands.

Fee based margins: adjusted for owned and leased hotels, managed leases and one individually significant liquidated damages receipt in 2011.

 

Appendix 7: Investor Information for 2011 Interim Dividend

Ex-dividend date:

24 August 2011

Record date:

26 August 2011

Payment date:

7 October 2011

Dividend payment:

Ordinary shares = 9.8 pence per share

 

 

ADRs = 16.0 cents per ADR

For further information, please contact:

    Investor Relations (Heather Wood; Catherine Dolton):

+44 (0)1895 512176

 

Media Affairs (Leslie McGibbon, Kari Kerr):

+44 (0)1895 512425

+44 (0) 7770 736 849

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 Richard Solomons (Chief Executive) will commence at 9.30am (London time) on 9th August at Bank of America 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/interims11.  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)20 7136 2054

Passcode:

9495779

US conference call and Q&A:

There will also be a conference call, primarily for US investors and analysts, at 10.00am (Eastern Standard Time) on 9th August with Richard Solomons (Chief Executive).  There will be an opportunity to ask questions.

International dial-in:

+44 (0)20 7108 6370

Standard US dial-in:

+1 517 345 9004

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 2341.

International dial-in:

+1 203 369 4810

US Toll Free:

+1 877 267 9692

Website:

The full release and supplementary data will be available on our website from 7.00 am (London time) on 9 August. The web address is www.ihg.com/interims11. To watch a video of Richard Solomons reviewing our results visit our YouTube channel at www.youtube.com/ihgplc.

Notes to Editors:

IHG (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is a global company operating seven well-known 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® . IHG also manages Priority Club® Rewards, the world’s first and largest hotel loyalty programme with almost 60 million members worldwide.

IHG is the world’s largest hotel group by number of rooms and IHG franchises, leases, manages or owns, through various subsidiaries, a portfolio of over 4,400 hotels and more than 656,000 guest rooms in 100 countries and territories around the world

IHG has more than 1,100 hotels in its development pipeline and expects to recruit around 160,000 people 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 http://www.ihg.com and information for the Priority Club Rewards programme at www.priorityclub.com .For our latest news visit www.ihg.com/media, Twitter www.twitter.com/ihgplc or YouTube http://www.youtube.com/ihgplc

 

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 REPORT

 

This Interim Management Report discusses the performance of InterContinental Hotels Group (the Group or IHG) for the six months ended 30 June 2011.

 

GROUP PERFORMANCE

 

 

3 months ended

6 months ended

 

30 June

2011

30 June

2010

 

%

30 June

2011

30 June

2010

 

%

Group Results

$m

$m

change

$m

$m

change

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

Americas

222

215

3.3

416

393

5.9

 

EMEA

129

102

26.5

224

192

16.7

 

Asia Pacific

76

68

11.8

156

137

13.9

 

Central

27

25

8.0

54

50

8.0

 

____

____

____

____

____

____

Total

454

410

10.7

850

772

10.1

 

____

____

____

____

____

____

Operating profit before exceptional items

 

 

 

 

 

 

 

Americas

128

107

19.6

225

179

25.7

 

EMEA

48

37

29.7

71

58

22.4

 

Asia Pacific

21

17

23.5

46

35

31.4

 

Central

(40)

(25)

(60.0)

(73)

(53)

(37.7)

 

____

____

____

____

____

____

 

157

136

15.4

269

219

22.8

 

 

 

 

 

 

 

Exceptional operating items

(30)

6

n/m

(32)

4

n/m

 

____

____

____

____

____

____

 

127

142

(10.6)

237

223

6.3

Net financial expenses

(16)

(16)

-

(32)

(31)

(3.2)

 

____

____

____

____

____

____

Profit before tax

111

126

(11.9)

205

192

6.8

 

____

____

____

____

____

____

 

 

 

 

 

 

 

Total Earnings per ordinary share

 

 

 

 

 

 

 

Basic

30.0¢

30.2¢

(0.7)

54.0¢

49.1¢

10.0

 

Adjusted

35.2¢

29.5¢

19.3

59.2¢

47.0¢

26.0

 

n/m – non meaningful

 

Revenue increased by 10.1% in the period to $850m, driven by an increase in RevPAR of 6.7% with system size broadly flat on the same period in 2010.  Operating profit before exceptional items increased by 22.8% to $269m during the six months ended 30 June 2011.  Applying 2010 exchange rates, revenue and operating profit before exceptional items increased by 7.5% and 21.5% respectively. 

Underlying fee based margin has increased by 0.9 percentage points to 40.6%, driven by strong RevPAR growth, scale and efficiencies. [1]

Operating profit for the first quarter of 2011 benefited from an individually significant receipt of liquidated damages in the Americas region amounting to $10m.  Operating profit in the Americas in the second quarter also included a $5m benefit against the same period in the prior year on the conclusion of a specific guarantee payment negotiation in relation to a different hotel; the full year benefit against 2010 will be $10m.  There is no further guarantee exposure on this hotel.

 

Natural disasters in Japan and New Zealand, as well as political unrest in the Middle East have had an adverse impact on the results for the period estimated at $7m.  The current expected full year impact from these events is between $15m and $20m. 

 

Group RevPAR increased by 6.7% against the six months ended 30 June 2010, and by 6.5% in the second quarter against the same period in the prior year.  Whilst RevPAR growth continued to be led by strengthening occupancy, daily room rates increased across all brands.  Group RevPAR growth excluding the impact of natural disasters in the Asia Pacific region and political unrest in the Middle East was 7.6%.

 

Central and regional costs increased by $21m to $129m in the six months ($16m on a constant currency basis).  This increase was as a result of higher investment in brand innovation as well as higher performance based incentive costs in the first half of 2011 as compared to 2010.  Full year central and regional costs on a constant currency basis are expected to be in the region of $260m, compared to $258m in 2010.

 

Profit before tax increased by $13m from $192m to $205m. Adjusted earnings per ordinary share increased by 26.0% to 59.2¢.

 

The IHG global system (the number of hotels which are franchised, managed, owned or leased) increased in the first half of 2011 by 25 hotels (9,513 rooms) with openings of 122 hotels (24,519 rooms) and removals of 97 hotels (15,006 rooms) as a result of the continuing reinvigoration and global relaunch of the Holiday Inn brand.  The InterContinental Alliance relationship with the Las Vegas Sands Corp. contributed to these openings through 6,986 all-suite rooms at the Venetian and Palazzo Resorts in March of 2011. 

 

At 30 June 2011, the IHG pipeline which represents hotels and rooms where a contract has been signed and the appropriate fees paid, totalled 1,190 hotels (186,116 rooms), a decline of 85 hotels (18,743 rooms) since the year end.  The movement included additions to the pipeline totalling 148 hotels (21,139 rooms), which were above additions in the same period of 2010 by 18 hotels (2,013 rooms).  Additions were offset by openings and pipeline terminations which occur for a number of reasons such as withdrawal of financing and changes in local market conditions.


THE AMERICAS

 

 

3 months ended

6 months ended

 

30 June

2011

30 June

2010

 

%

30 June

2011

30 June

2010

 

%

Americas Results

$m

$m

change

$m

$m

change

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

Franchised

135

123

9.8

244

221

10.4

 

Managed

32

30

6.7

70

59

18.6

 

Owned and leased

55

62

(11.3)

102

113

(9.7)

 

____

____

____

____

____

____

Total

222

215

3.3

416

393

5.9

 

____

____

____

____

____

____

Operating profit before

 exceptional items

 

 

 

 

 

 

Franchised

118

107

10.3

209

188

11.2

 

Managed

15

6

150.0

33

13

153.8

 

Owned and leased

7

6

16.7

6

4

50.0

 

____

____

____

____

____

____

 

 

140

119

17.6

248

205

21.0

Regional overheads

(12)

(12)

-

(23)

(26)

11.5

 

____

____

____

____

____

____

Total

128

107

19.6

225

179

25.7

 

____

____

____

____

____

____

 

Revenue and operating profit before exceptional items increased by $23m to $416m (5.9%) and $46m to $225m (25.7%) respectively during the six months ended 30 June 2011. 

 

During the period, three owned and leased hotels, the Holiday Inn Atlanta Gwinnett Place, the Staybridge Suites Denver Cherry Creek and the Hotel Indigo San Diego were sold.  The Holiday Inn Atlanta Gwinnett Place was retained on a managed basis and the Staybridge Suites Denver Cherry Creek was retained on a franchise basis, both as part of a new strategic relationship with a US hotel real estate investment trust, in which IHG also purchased a 4.7% stake.  The Hotel Indigo San Diego was retained on a managed basis.  In the prior year, the InterContinental Buckhead, Atlanta was sold on 1 July 2010 and the Holiday Inn Lexington on 25 March 2010. 

 

The Group has commenced marketing for sale the InterContinental New York Barclay.  As such this property has been classified as held for sale during the period.  Depreciation was charged on this property in the first quarter prior to its classification as held for sale, subsequent to which no depreciation charge was booked. 

 

Americas revenue and operating profit increased by $31m (8.4%) and $34m (19.3%) after adjusting for owned and leased disposals and excluding the impact of an individually significant liquidated damages receipt of $10m and a $5m benefit from the conclusion of a specific guarantee negotiation relating to a different hotel.  RevPAR in the first half of the year increased by 7.6% and system size was broadly flat on the same period of 2010.

 

During the first half of 2011, franchised revenue and operating profit increased by $23m to $244m (10.4%) and $21m to $209m (11.2%) respectively, compared to the same period in 2010.  This increase was predominantly in relation to royalties, driven by growth in RevPAR on the prior year of 7.3%.  Increased fees associated with initial franchising, relicensing and termination of hotels leaving the system contributed a further $3m to the variance on 2010.

 

Managed revenue increased by $11m to $70m (18.6%) and operating profit increased by $20m to $33m (153.8%).  This increase in revenue was driven by RevPAR growth across the American managed estate of 9.5% on the same period in the prior year, with an increase of 2% in system size.  Excluding the impact of an individually significant liquidated damages receipt of $10m and a $5m benefit from the conclusion of a specific guarantee negotiation relating to a different hotel, revenue and operating profit increased by $1m (1.7%) and $5m (38.5%) respectively.  Additional non-trading events, including bad debt receipts, also had a favourable impact on profit of approximately $3m.

 

The managed results include $36m (2010: $36m) of revenue and $2m (2010: $1m) of operating profit from properties that are structured for legal reasons as operating leases but with the same characteristics as management contracts.

 

Owned and leased revenue excluding the impact of disposals increased by $7m (8.2%) and operating profit excluding the impact of disposals and depreciation charged on held for sale assets increased by $3m to $7m, with growth primarily driven by an increase in RevPAR of 10.2%.

 

Hotels

Rooms

 

 

Change over

 

Change over

 

Americas hotel and room count

2011

30 June

2010

31 December

2011

30 June

2010

31 December

Analysed by brand

 

 

 

 

 

InterContinental

56

-

19,094

(26)

 

Crowne Plaza

202

(7)

54,680

(2,393)

 

Holiday Inn

808

(4)

143,315

(1,368)

 

Holiday Inn Express

1,856

9

161,313

1,446

 

Staybridge Suites

188

5

20,550

536

 

Candlewood Suites

297

9

29,077

824

 

Hotel Indigo

33

(2)

3,973

(281)

 

Holiday Inn Club Vacations

6

-

2,892

-

 

Other

25

3

10,513

7,294

 

____

____

______

_____

Total

3,471

13

445,407

6,032

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

3,244

14

398,730

6,194

 

Managed

221

2

44,166

318

 

Owned and leased

6

(3)

2,511

(480)

 

____

____

______

_____

Total

3,471

13

445,407

6,032

 

____

____

______

_____

The Americas system size increased in the first half of 2011 by 13 hotels (6,032 rooms), with 88 hotels (16,520 rooms) joining the system including the two InterContinental Alliance Resorts (6,986 rooms).  Holiday Inn and Holiday Inn Express contributed 69 hotels (7,545 rooms) to the openings in the period with Staybridge Suites and Candlewood Suites contributing 14 hotels (1,326 rooms).

 

75 hotels (10,448 rooms) left the system in the period, primarily across the Holiday Inn and Holiday Inn Express brands (64 hotels, 7,467 rooms).


 

Hotels

Rooms

 

 

Change over

 

Change over

 

Americas pipeline

2011

30 June

2010

31 December

2011

30 June

2010

31 December

Analysed by brand

 

 

 

 

 

InterContinental

5

-

1,340

-

 

Crowne Plaza

24

(3)

4,922

(747)

 

Holiday Inn

170

(17)

23,008

(2,252)

 

Holiday Inn Express

383

(24)

35,065

(1,946)

 

Staybridge Suites

84

(12)

8,673

(1,443)

 

Candlewood Suites

105

(15)

9,153

(1,353)

 

Hotel Indigo

44

(2)

5,701

(32)

 

Other brands

-

(2)

-

(6,874)

 

____

____

______

_____

Total

815

(75)

87,862

(14,647)

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

803

(75)

85,280

(14,792)

 

Managed

12

-

2,582

145

 

____

____

______

_____

Total

815

(75)

87,862

(14,647)

 

____

____

______

_____

 

 

The Americas pipeline at 30 June 2011 totalled 815 hotels (87,862 rooms) representing a decline of 75 hotels (14,647 rooms) over 31 December 2010.  Openings in the period from hotels in the pipeline at 31 December 2010 included the two InterContinental Alliance Resorts. 

 

New signings in the period of 102 hotels (11,614 rooms) were ahead of the same period last year by 16 hotels (1,490 rooms, 14.7%).  Significant signings in the period included the Hotel Indigo Lower East Side, New York, which contributed 290 rooms.  Terminations from the pipeline of 9,741 rooms were down on the prior year by 1,223 rooms (11.2%).


Europe, Middle East and Africa (EMEA)

 

 

3 months ended

6 months ended

 

30 June

2011

30 June

2010

 

%

30 June

2011

30 June

2010

 

%

EMEA Results

$m

$m

change

$m

$m

change

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

Franchised

25

20

25.0

45

37

21.6

 

Managed

40

32

25.0

69

61

13.1

 

Owned and leased

64

50

28.0

110

94

17.0

 

____

____

____

____

____

____

Total

129

102

26.5

224

192

16.7

 

____

____

____

____

____

____

Operating profit before

exceptional items

 

 

 

 

 

 

Franchised

20

16

25.0

35

28

25.0

 

Managed

20

19

5.3

31

32

(3.1)

 

Owned and leased

17

10

70.0

23

15

53.3

 

____

____

____

____

____

____

 

 

57

45

26.7

89

75

18.7

Regional overheads

(9)

(8)

(12.5)

(18)

(17)

(5.9)

 

____

____

____

____

____

____

Total

48

37

29.7

71

58

22.4

 

____

____

____

____

____

____

 

 

 

 

 

 

 


Revenue increased by $32m to $224m (16.7%) and operating profit before exceptional items increased by $13m to $71m (22.4%) during the six months ended 30 June 2011.  At constant exchange rates, revenue and operating profit before exceptional items increased by 9.9% and 12.1% respectively.  

 

RevPAR growth across the region was 4.0% in the six months to 30 June 2011 compared to the same period in the prior year, including a 4.8% increase in the second quarter compared to the same period in 2010.  RevPAR growth for the region excluding the countries impacted by political unrest was 5.3%.  System size across the region grew by 941 rooms (0.8%) on that at 30 June 2010. 

 

Franchised revenue and operating profit increased by $8m to $45m (21.6%) and by $7m to $35m (25.0%) respectively.  On a constant currency basis, revenue and operating profit increased by $4m (10.8%) and $4m (14.3%) respectively primarily driven by a RevPAR increase of 5.3%.  System size in the franchised business grew by 2.4% on the same period in 2010.

 

Managed revenue increased by $8m to $69m (13.1%), whilst operating profit decreased by $1m to $31m (3.1%).  On a constant currency basis, excluding the areas impacted by political unrest in the Middle East, revenue was unchanged on the same period last year whilst operating profit grew by $1m (6.3%). 

 

In the owned and leased estate RevPAR increased by 14.4%, driving a revenue increase of $16m to $110m (17.0%).  Operating profit increased by $8m to $23m (53.3%).  On a constant currency basis, revenue and operating profit grew by $10m (10.6%) and $6m (40%) respectively.  Increases were driven, in particular, by strong daily room rate growth from the InterContinental London Park Lane and the InterContinental Paris Le Grand.


 

 

Hotels

Rooms

 

 

Change over

 

Change over

 

 EMEA hotel and room count

2011

30 June

2010

31 December

2011

30 June

2010

31 December

Analysed by brand

 

 

 

 

 

InterContinental

61

(3)

19,360

(751)

 

Crowne Plaza

106

8

24,978

2,037

 

Holiday Inn

321

(4)

52,059

(886)

 

Holiday Inn Express

202

4

24,337

631

 

Staybridge Suites

5

-

747

(1)

 

Hotel Indigo

4

2

355

245

 

Other

2

-

291

-

 

____

____

______

_____

Total

701

7

122,127

1,275

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

533

10

81,696

1,746

 

Managed

164

(3)

38,985

(471)

 

Owned and leased

4

-

1,446

-

 

____

____

______

_____

Total

701

7

122,127

1,275

 

____

____

______

_____


During the first half of 2011, EMEA system size increased by seven hotels (1,275 rooms), including the removal of 12 hotels (2,186 rooms) offset by 19 hotel openings (3,461 rooms).  The removal of eight Holiday Inn and Holiday Inn Express hotels (1,347 rooms) was driven by the completion of the reinvigoration and global relaunch of the Holiday Inn brand.


 

Hotels

Rooms

 

 

Change over

 

Change over

 

EMEA pipeline

2011

30 June

2010

31 December

2011

30 June

2010

31 December

Analysed by brand

 

 

 

 

 

InterContinental

25

1

6,714

245

 

Crowne Plaza

23

(2)

6,845

(754)

 

Holiday Inn

42

1

9,621

493

 

Holiday Inn Express

43

(4)

6,106

(417)

 

Staybridge Suites

9

4

1,131

487

 

Hotel Indigo

10

(1)

1,141

69

 

____

____

______

_____

Total

152

(1)

31,558

123

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

84

(6)

12,719

(823)

 

Managed

68

5

18,839

946

 

____

____

______

_____

Total

152

(1)

31,558

123

 

____

____

______

_____

 

The EMEA pipeline at 30 June 2011 totalled 152 hotels (31,558 rooms) representing a decrease of one hotel but an increase of 123 rooms over the pipeline at 31 December 2010.  A total of 24 hotels (4,547 rooms) were added to the region’s pipeline during the first six months of 2011.  New signings were focussed on the Crowne Plaza (1,480 rooms) and Holiday Inn (1,220 rooms) brands which together accounted for 59% of additions to the pipeline. 

 


Asia Pacific

 

 

3 months ended

6 months ended

 

30 June

2011

30 June

2010

 

%

30 June

2011

30 June

2010

 

%

Asia Pacific Results

$m

$m

change

$m

$m

change

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

Franchised

3

3

-

6

6

-

 

Managed

39

35

11.4

79

68

16.2

 

Owned and leased

34

30

13.3

71

63

12.7

 

____

____

____

____

____

____

Total

76

68

11.8

156

137

13.9

 

____

____

____

____

____

____

Operating profit before

exceptional items

 

 

 

 

 

 

Franchised

2

1

100.0

4

3

33.3

 

Managed

19

16

18.8

39

30

30.0

 

Owned and leased

7

6

16.7

18

14

28.6

 

____

____

____

____

____

____

 

 

28

23

21.7

61

47

29.8

Regional overheads

(7)

(6)

(16.7)

(15)

(12)

(25.0)

 

____

____

____

____

____

____

Total

21

17

23.5

46

35

31.4

 

____

____

____

____

____

____

 

 

 

 

 

 

 

 

Revenue increased by $19m to $156m (13.9%) and operating profit before exceptional items increased by $11m to $46m (31.4%). At constant exchange rates, revenue and operating profit before exceptional items increased by $14m (10.2%) and $11m (31.4%) respectively. 

 

RevPAR increased by 7.0% compared to the first half of 2010, as the impact of natural disasters in New Zealand and Japan was offset by RevPAR growth of 12.7% in Greater China.  Excluding areas impacted by natural disasters, RevPAR across the Asia Pacific region increased by 11.6%.  System size for the region increased by 5.0% compared to that at 30 June 2010. 

 

Franchised revenue remained flat at $6m and operating profit increased by $1m to $4m (33.3%).

 

Managed revenue increased by $11m to $79m (16.2%) and managed operating profit increased by $9m to $39m (30.0%).  Managed RevPAR increased by 7.4%, compared to the first half of 2010 and system size increased by 5.2% on that at 30 June 2010.  Despite the impact of the Shanghai Expo which drove exceptional RevPAR growth of 31.2% in the first half of 2010, managed RevPAR in Greater China continued to show strong growth through the first half of 2011 at 12.0%.

 

In the owned and leased estate, revenue and operating profit increased by $8m to $71m (12.7%) and by $4m to $18m (28.6%) respectively reflecting a RevPAR increase of 18.1% at the InterContinental Hong Kong. 


 

Hotels

Rooms

 

 

Change over

 

Change over

 

Asia Pacific hotel and room count

2011

30 June

2010

31 December

2011

30 June

2010

31 December

Analysed by brand

 

 

 

 

 

InterContinental

53

2

20,103

905

 

Crowne Plaza

86

5

27,827

1,686

 

Holiday Inn

104

-

29,544

(53)

 

Holiday Inn Express

30

-

7,828

173

 

Hotel Indigo

1

-

184

-

 

Other

16

(2)

3,654

(505)

 

____

____

______

_____

Total

290

5

89,140

2,206

 

____

____

______

_____

Analysed by ownership type:

 

 

 

 

 

Franchised

30

-

7,646

812

 

Managed

258

5

80,799

1,392

 

Owned and leased

2

-

695

2

 

____

____

______

_____

Total

290

5

89,140

2,206

 

____

____

______

_____

 

Asia Pacific system size increased by five hotels (2,206 rooms) to 290 hotels (89,140 rooms) in the first half of 2011.  Removals of 10 hotels (2,332 rooms) were offset by openings of 15 hotels (4,538 rooms).  Openings included nine hotels (2,902 rooms) in Greater China.


 

Hotels

Rooms

 

 

Change over

 

Change over

 

Asia Pacific pipeline

2011

30 June

2010

31 December

2011

30 June

2010

31 December

Analysed by brand

 

 

 

 

 

InterContinental

29

(2)

10,548

(1,017)

 

Crowne Plaza

68

(3)

24,446

(1,280)

 

Holiday Inn

73

(12)

20,051

(3,066)

 

Holiday Inn Express

47

7

10,701

1,016

 

Hotel Indigo

6

1

950

128

 

____

____

______

_____

Total

223

(9)

66,696

(4,219)

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

2

-

326

-

 

Managed

221

(9)

66,370

(4,219)

 

____

____

______

_____

Total

223

(9)

66,696

(4,219)

 

____

____

______

_____

The pipeline in Asia Pacific decreased over the period by nine hotels (4,219 rooms) to 223 hotels (66,696 rooms). This movement included signings of 22 hotels (4,978 rooms), including nine hotels (2,705 rooms) in Greater China, with seven of these hotels (2,272 rooms) in the luxury and upscale brands (InterContinental, Crowne Plaza and Hotel Indigo).  Key signings included 1,773 rooms as a result of a new agreement in China and 572 rooms as part of our new joint venture in India.

 


Central

 

Net central costs increased by $20m to $73m (37.7%) during the six months ended 30 June 2011, $17m (32.1%) on a constant currency basis.  The increase was driven by higher performance based incentive costs in the first half of 2011 compared to 2010, as well as higher investment in brand innovation.

 

System Funds

 

In the six months ended 30 June 2011, System Fund income increased by $38m to $541m due to the growth in RevPAR and system size.

OTHER FINANCIAL INFORMATION

 

Exceptional Operating Items

  • Exceptional operating items of $32m in the six months ended 30 June 2011, included:
  • a $22m estimate to cover an amount potentially payable in respect of a prior year claim following an unfavourable court judgement in the Americas on 23 February 2011;
  • $37m relating to the settlement of a prior period commercial dispute in EMEA;
  • $3m impairment charge relating to available-for-sale equity investments;
  • $12m credit relating mainly to the reversal of previously recorded impairment recorded on a North American hotel sold in the quarter;
  • $9m UK VAT refund; and
  • $9m gain on disposal of hotels.


Net Financial Expenses

 

Net financial expenses increased by $1m to $32m for the six months ended 30 June 2011.

 

Taxation

The tax charge on profit before tax, excluding the impact of exceptional items, has been calculated using an estimated effective annual tax rate of 28%.  By also excluding the effect of prior year items, the equivalent effective tax rate would be approximately 35%. This rate is higher than the average UK statutory rate for the year of 26.5% 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 $17m.  This represented, primarily, tax relief on exceptional costs together with tax arising on the disposal of hotels and a release of exceptional taxes booked in a prior year.

 

Net tax paid in the six months ended 30 June 2011 totalled $51m.

 

Dividends

 

Following the strong performance of the business last year, the Board rebased the dividend and paid a 2010 final dividend of 35.2¢, up 21%, taking total 2010 dividend growth to 16%. Reflecting the strong performance of the business in the first half of 2011 and the intention to move towards rebalancing the interim and final dividend payouts towards approximately a 30:70 ratio, the Board has proposed a 2011 interim dividend per share of 16.0¢ (9.8p), representing growth of 25% on the 2010 interim dividend. 

 

Capital Structure and Liquidity Management

 

During the six months ended 30 June 2011, $113m of cash was generated from operating activities with the other key elements of the cash flow being:

 

  • proceeds from the disposal of hotels and investments of $76m, including $17m from the disposal of  the Holiday Inn Atlanta Gwinnett Place and the Staybridge Suites Denver Cherry Creek to Summit Hotel Properties on 27 April 2011 and $56m from the sale of Hotel Indigo San Diego to Chesapeake Lodging Trust on 17 June 2011.  IHG continues to manage the Holiday Inn Gwinnett and the Hotel Indigo San Diego and operates the Staybridge Cherry Creek under a license agreement; and

 

  • capital expenditure of $82m including a $12m equity stake in Summit Hotel Properties Inc. in the US, $24m of a total $30m investment in a joint venture to develop a Hotel Indigo on the Lower East side of Manhattan and $8m of a total $30m investment in a joint venture to develop Holiday Inn Express hotels in India.

 

Net debt at 30 June 2011 of $818m comprised cash and cash equivalents of $55m, loans and other borrowings of $858m and the exchange element of the fair value of currency swaps of $15m that fix the value of the Group’s £250m 6% bonds at $415m. 

 


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 34 to 36 of the IHG Annual Report and Financial Statements 2010.

 

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 franchise and management agreements;

  •  

political and economic developments;

  •  

requiring the right people, skills and capability to manage growth and change;

  •  

events that adversely impact domestic or international travel;

  •  

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

  •  

technology and systems;

  •  

the hotel industry supply and demand cycle;

  •  

a lack of selected development opportunities;

  •  

corporate responsibility;

  •  

litigation;

  •  

difficulties insuring the business;

  •  

its financial stability, 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 wider economic environment remains uncertain however we continue to see good growth in all our regions.  Trading strengthened further during the first half of the year driven by increased occupancy from business and leisure travellers and progressive rate improvement.  RevPAR is also benefiting from low supply growth.  Booking windows do, however, remain short and visibility limited. 

 

The financing environment remains tough, however IHG continues to open and sign high quality hotels. Following the Holiday Inn relaunch the hotels operating under the new brand standards are outperforming their closest competitors.

 

Our priorities to develop our brands and invest behind growth and people mean we are well placed to increase share and improve margins in the currently favourable trading environment.  Our global scale, powerful brands, revenue delivery systems, resilient cash generative business model and focus on efficiency combined with an optimistic market outlook give us confidence in the future. 

 

A copy of the IHG Annual Report and Financial Statements 2010 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 related party transactions and changes therein, as required by DTR 4.2.8R.

 

On behalf of the Board


Richard Solomons     

Chief Executive Officer

8 August 2011


InterContinental Hotels Group PLC

GROUP INCOME STATEMENT

For the three months ended 30 June 2011

 

 

3 months ended 30 June 2011

3 months ended 30 June 2010

 

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)

454

-

454

410

-

410

Cost of sales

(188)

-

(188)

(182)

-

(182)

Administrative expenses

(88)

(37)

(125)

(68)

(2)

(70)

Other operating income and expenses

4

9

13

3

8

11

 

_____

____

____

_____

____

____

 

182

(28)

154

163

6

169

 

 

 

 

 

 

 

Depreciation and amortisation

(25)

-

(25)

(27)

-

(27)

Impairment

-

(2)

(2)

-

-

-

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Operating profit (note 3)

157

(30)

127

136

6

142

Financial income

1

-

1

-

-

-

Financial expenses

(17)

-

(17)

(16)

-

(16)

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Profit before tax (note 3)

141

(30)

111

120

6

126

 

 

 

 

 

 

 

Tax (note 5)

(39)

15

(24)

(35)

(4)

(39)

 

_____

____

____

_____

____

____

Profit for the period from continuing operations attributable to the equity holders of the parent

 

 

102

 

 

(15)

 

 

87

 

 

85

 

 

2

 

 

87

 

====

====

====

====

====

====

 

 

 

 

 

 

 

Earnings per ordinary share

(note 6)

 

 

 

 

 

 

Continuing and total operations:

 

 

 

 

 

 

 

Basic

 

 

30.0¢

 

 

30.2¢

 

Diluted

 

 

29.5¢

 

 

29.3¢

 

Adjusted

35.2¢

 

 

29.5¢

 

 

 

Adjusted diluted

34.6¢

 

 

28.6¢

 

 

 

====

 

====

====

 

====

 


InterContinental Hotels Group PLC

GROUP INCOME STATEMENT

For the six months ended 30 June 2011

 

 

6 months ended 30 June 2011

6 months ended 30 June 2010

 

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)

850

-

850

772

-

772

Cost of sales

(369)

-

(369)

(360)

-

(360)

Administrative expenses

(169)

(59)

(228)

(142)

(3)

(145)

Other operating income and expenses

8

18

26

4

8

12

 

_____

____

____

_____

____

____

 

320

(41)

279

274

5

279

 

 

 

 

 

 

 

Depreciation and amortisation

(51)

-

(51)

(55)

-

(55)

Impairment

-

9

9

-

(1)

(1)

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Operating profit (note 3)

269

(32)

237

219

4

223

Financial income

1

-

1

1

-

1

Financial expenses

(33)

-

(33)

(32)

-

(32)

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Profit before tax (note 3)

237

(32)

205

188

4

192

 

 

 

 

 

 

 

Tax (note 5)

(66)

17

(49)

(53)

-

(53)

 

_____

____

____

_____

____

____

Profit for the period from continuing operations

 

171

 

(15)

 

156

 

135

 

4

 

139

 

 

 

 

 

 

 

Profit for the period from discontinued operations

 

-

 

-

 

-

 

-

 

2

 

2

 

_____

____

____

_____

____

____

Profit for the period attributable to the equity holders of the parent

 

171

 

(15)

 

156

 

135

 

6

 

141

 

====

====

====

====

====

====

 

 

 

 

 

 

 

Earnings per ordinary share

(note 6)

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

Basic

 

 

54.0¢

 

 

48.4¢

 

Diluted

 

 

53.1¢

 

 

47.0¢

 

Adjusted

59.2¢

 

 

47.0¢

 

 

 

Adjusted diluted

58.2¢

 

 

45.6¢

 

 

Total operations:

 

 

 

 

 

 

 

Basic

 

 

54.0¢

 

 

49.1¢

 

Diluted

 

 

53.1¢

 

 

47.6¢

 

Adjusted

59.2¢

 

 

47.0¢

 

 

 

Adjusted diluted

58.2¢

 

 

45.6¢

 

 

 

====

 

====

====

 

====

 


InterContinental Hotels Group PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the three and six months ended 30 June 2011

 

 

 

2011

3 months ended 30 June

$m

2010

3 months ended 30 June

$m

2011

6 months ended 30 June

$m

2010

6 months ended 30 June

$m

 

 

 

 

 

Profit for the period

87

87

156

141

 

 

 

 

 

Other comprehensive income

 

 

 

 

Available-for-sale financial assets:

 

 

 

 

 

Gains on valuation

12

13

12

19

 

Losses reclassified to income on impairment

3

-

3

1

Cash flow hedges:

 

 

 

 

 

Losses arising during the period

-

-

-

(2)

 

Reclassified to financial expenses

1

1

3

3

Defined benefit pension plans:

 

 

 

 

 

Actuarial (losses)/gains, net of related tax: 2011 3 months $1m credit, 6 months $1m charge (2010 3 months $8m credit, 6 months $7m credit)

 

 

(10)

 

 

(25)

 

 

2

 

 

(18)

 

Change in asset restriction on plans in surplus and liability in respect of funding commitments, including related tax charge of: 2011 3 months $nil, 6 months $2m (2010 3 months $nil; 6 months $nil)

 

 

 

1

 

 

 

4

 

 

 

(3)

 

 

 

1

Exchange differences on retranslation of foreign operations, net of related tax: 2011 3 months $2m charge, 6 months $2m charge (2010 3 months $3m credit, 6 months $3m credit)

 

 

 

2

 

 

 

(24)

 

 

 

14

 

 

 

(45)

Tax related to pension contributions

1

-

3

1

 

____

____

____

____

Other comprehensive income/(loss) for the period

10

(31)

34

(40)

 

____

____

____

____

Total comprehensive income for the period

97

56

190

101

 

===

====

====

====

 

 

 

 

 

Attributable to:

 

 

 

 

 

Equity holders of the parent

96

56

189

101

 

Non-controlling interest

1

-

1

-

 

_____

_____

_____

_____

 

97

56

190

101

 

=====

=====

=====

=====

 


InterContinental Hotels Group PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2011

 

 

6 months ended 30 June 2011

 

Equity share capital

Other reserves*

Retained earnings

Non-controlling interest

 

Total equity

 

$m

$m

$m

$m

$m

 

 

 

 

 

 

At beginning of the period

155

(2,659)

2,788

7

291

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

31

 

158

 

1

 

190

Issue of ordinary shares

6

-

-

-

6

Movement in shares in employee share trusts

 

-

 

26

 

(80)

 

-

 

(54)

Equity-settled share-based cost

-

-

18

-

18

Tax related to share schemes

-

-

10

-

10

Equity dividends paid

-

-

(102)

-

(102)

Exchange and other adjustments

5

(5)

-

-

-

 

____

____

____

____

____

At end of the period

166

(2,607)

2,792

8

359

 

====

====

====

====

====

 

 

6 months ended 30 June 2010

 

Equity share capital

Other reserves*

Retained earnings

Non-controlling interest

 

Total equity

 

$m

$m

$m

$m

$m

 

 

 

 

 

 

At beginning of the period

142

(2,649)

2,656

7

156

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

(24)

 

125

 

-

 

101

Issue of ordinary shares

12

-

-

-

12

Movement in shares in employee share trusts

 

-

 

(2)

 

(28)

 

-

 

(30)

Equity-settled share-based cost

-

-

6

-

6

Tax related to share schemes

-

-

7

-

7

Equity dividends paid

-

-

(84)

-

(84)

Exchange and other adjustments

(10)

10

-

-

-

 

____

____

____

____

____

At end of the period

144

(2,665)

2,682

7

168

 

====

====

====

====

====

 

 

*

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 FINANCIAL POSITION

30 June 2011

 

2011

30 June

2010

30 June

2010

31 December

 

$m

$m

$m

ASSETS

 

 

 

Property, plant and equipment

1,401

1,654

1,690

Goodwill

96

78

92

Intangible assets

277

253

266

Investment in associates and joint ventures

80

43

43

Retirement benefit assets

6

10

5

Other financial assets

154

151

135

Deferred tax receivable

116

86

79

 

_____

_____

_____

Total non-current assets

2,130

2,275

2,310

 

_____

_____

_____

Inventories

4

4

4

Trade and other receivables

427

421

371

Current tax receivable

4

50

13

Cash and cash equivalents

55

48

78

 

_____

_____

_____

Total current assets

490

523

466

Non-current assets classified as held for sale

258

82

-

 

______

______

______

Total assets (note 3)

2,878

2,880

2,776

 

=====

=====

=====

LIABILITIES

 

 

 

Loans and other borrowings

(54)

(111)

(18)

Derivative financial instruments

(3)

(6)

(6)

Trade and other payables

(645)

(713)

(722)

Provisions

(23)

(38)

(8)

Current tax payable

(120)

(188)

(167)

 

_____

_____

_____

Total current liabilities

(845)

(1,056)

(921)

 

_____

_____

_____

Loans and other borrowings

(804)

(916)

(776)

Derivative financial instruments

(34)

(50)

(38)

Retirement benefit obligations

(190)

(159)

(200)

Trade and other payables

(488)

(427)

(464)

Provisions

(3)

-

(2)

Deferred tax payable

(94)

(100)

(84)

 

_____

_____

_____

Total non-current liabilities

(1,613)

(1,652)

(1,564)

Liabilities classified as held for sale

(61)

(4)

-

 

_____

_____

_____

Total liabilities

(2,519)

(2,712)

(2,485)

 

=====

=====

=====

Net assets

359

168

291

 

=====

=====

=====

EQUITY

 

 

 

Equity share capital

166

144

155

Capital redemption reserve

10

10

10

Shares held by employee share trusts

(10)

(5)

(35)

Other reserves

(2,898)

(2,890)

(2,894)

Unrealised gains and losses reserve

67

49

49

Currency translation reserve

224

171

211

Retained earnings

2,792

2,682

2,788

 

______

______

______

IHG shareholders’ equity

351

161

284

Non-controlling interest

8

7

7

 

______

______

______

Total equity

359

168

291

 

=====

=====

=====


InterContinental Hotels Group PLC

GROUP STATEMENT OF CASH FLOWS

For the six months ended 30 June 2011


 

2011

6 months ended

30 June

2010

6 months ended

30 June

 

$m

$m

 

 

 

Profit for the period

156

141

Adjustments for:

 

 

 

Net financial expenses

32

31

 

Income tax charge

49

53

 

Depreciation and amortisation

51

55

 

Exceptional operating items

32

(4)

 

Equity-settled share-based cost, net of payments

15

-

 

Other non-cash movements

(1)

(2)

 

_____

_____

Operating cash flow before movements in working capital

334

274

Net change in loyalty programme liability and System Fund surplus

83

58

Other changes in net working capital

(190)

(56)

Utilisation of provisions

(7)

(27)

Retirement benefit contributions, net of cost

(11)

(2)

Cash flows relating to exceptional operating items

(29)

(9)

 

_____

_____

Cash flow from operations

180

238

Interest paid

(17)

(18)

Interest received

1

1

Tax paid on operating activities

(51)

(40)

 

_____

_____

Net cash from operating activities

113

181

 

_____

_____

Cash flow from investing activities

 

 

Purchases of property, plant and equipment

(18)

(33)

Purchase of intangible assets

(18)

(11)

Purchases of other financial assets

(12)

(3)

Purchases of associates and joint ventures

(34)

-

Disposal of assets, net of costs and cash disposed of

71

4

Proceeds from associates and other financial assets

5

13

Tax received on disposals

-

2

 

_____

_____

Net cash from investing activities

(6)

(28)

 

_____

_____

Cash flow from financing activities

 

 

Proceeds from the issue of share capital

6

12

Purchase of own shares by employee share trusts

(57)

(23)

Dividends paid to shareholders

(102)

(84)

Decrease in borrowings

(3)

(48)

 

_____

_____

Net cash from financing activities

(156)

(143)

 

_____

_____

 

 

 

Net movement in cash and cash equivalents in the period

(49)

10

Cash and cash equivalents at beginning of the period

78

40

Exchange rate effects

(1)

(2)

 

_____

_____

Cash and cash equivalents at end of the period

28

48

 

=====

=====

Comprising:

 

 

 

Cash and cash equivalants

55

48

 

Overdrafts included within current loans and other borrowings

(27)

-

 

____

____

 

28

48

 

====

====


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’. They have been prepared on a consistent basis using the accounting policies set out in the InterContinental Hotels Group PLC (the Group or IHG) Annual Report and Financial Statements for the year ended 31 December 2010.

 

These condensed interim financial statements are unaudited and do not constitute statutory accounts of the Group within the meaning of Section 435 of the Companies Act 2006. 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 2010 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.

 

After making enquiries, the directors have concluded that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.  Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed financial statements

 

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= £0.62 (2011 3 months, $1 = £0.61; 2010 6 months, $1 = £0.66; 2010 3 months, $1=£0.67). In the case of the euro, the translation rate for the six months ended 30 June is $1 = €0.71 (2011 3 months, $1 = €0.70; 2010 6 months, $1 = €0.75; 2010 3 months, $1 = €0.79).

 

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=£0.62 (2010 31 December $1 = £0.64; 2010 30 June $1 = £0.67). In the case of the euro, the translation rate is $1 = €0.69 (2010 31 December $1 = €0.75; 2010 30 June $1 = €0.81).

 

 

3.

Segmental information

 

 

 

 


 

 

Revenue

 

 

 

 

 

 

2011

2010

2011

2010

 

 

3 months ended

30 June

3 months ended

30 June

6 months ended

30 June

6 months ended

30 June

 

 

$m

$m

$m

$m

 

 

 

 

 

 

 

Americas 

222

215

416

393

 

EMEA  

129

102

224

192

 

Asia Pacific

76

68

156

137

 

Central

27

25

54

50