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IHG Posts a 33% Rise in Operating Profit Through Q3 2011 to $153 million
Compared with $115 million in the Same Period a Year Earlier

Global RevPAR Up 6.4% Overall Led by China with RevPAR Growth of 10.8%

Continued outperformance by IHG’s brands delivers 33% operating profit growth

 

Financial summary1

2011

2010

% Change YoY

Actual

CER2

CER2 & excluding LDs3

Revenue

$467m

$421m

11%

8%

7%

Operating profit

$153m

$115m

33%

31%

26%

Total adjusted EPS

36.2¢

27.1¢

34%

 

 

Total basic EPS4

61.4¢

35.8¢

72%

 

 

Net debt

$644m

$801m

 

 

 

 

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

“In the third quarter we delivered a strong set of results, with global revenue per available room (RevPAR) up 6.4%, including 2.8% rate growth. This was led by 10.8% RevPAR growth in Greater China and 8.0% in the US where we continued to outperform the industry driven by sustained results from the Holiday Inn relaunch.  We are now rolling out a multi-year programme to reposition and drive stronger performance from our Crowne Plaza brand.

 

“We are focused on supporting our owners by driving demand to their hotels through the most profitable channels.     Our innovations in this area continue to lead the industry and we recently introduced our Best Price Guarantee, designed to drive more guests to book through our direct websites.

 

“We have established firm foundations for high quality growth which we will deliver through driving market share, growing margins and investing behind the growth of our brands and our people.  The economic environment continues to be uncertain, but we remain confident in our future due to our resilient business model, robust balance sheet and powerful brand portfolio, combined with low medium term supply growth in many markets.”

 

Driving Market Share

Third quarter global RevPAR growth of 6.4%, 7.0% excluding Egypt, Bahrain and Japan.

 

-

Americas 7.6% (US 8.0%); EMEA 3.6%; Asia Pacific 5.7%.

 

-

Global rate growth of 2.8%, demonstrating progressive improvement from 2.4% growth in the second quarter.

System size 666,476 rooms (4,520 hotels); pipeline 183,368 rooms (1,152 hotels).

 

-

12,945 rooms (75 hotels) added and 3,143 rooms (17 hotels) removed, with signings of 18,728 rooms (102 hotels).  Openings and signings includes 4,796 rooms (25 hotels) managed on US army bases.

 

-

Holiday Inn brand family signings of 9,653 rooms is up 16% on Q3 2010, taking the global brand pipeline to over 105,000 rooms, demonstrating the continued wider benefits of the relaunch.

 

Growing Margins

Continued cost control

 

-

Regional and central costs of $72m down $3m on Q3 2010 at constant currency (down $2m as reported).

 

-

2011 full year regional and central costs expected to be on target at c.$260m at constant currency (c.$265m at current exchange rates).





 

Current trading update

October global RevPAR up 4.7%, including rate up 3.2%. 

 

-

Americas 6.2% (US 6.4%); EMEA 0.3%; Asia Pacific 5.3%.

Operating profit impact of $2m in the quarter ($9m year to date) from events in Middle East, Japan and New Zealand with full year estimated impact still expected to be around $15m.

 

1All figures are before exceptional items unless otherwise noted.        See appendix 4 and 5 for analysis of financial headlines

2CER =constant exchange rates

³excluding $6m of significant liquidated damages receipts in 2011

4After exceptional items







 

Regional Highlights

Americas – Strong brands drive industry outperformance

RevPAR increased 7.6%, including rate growth of 3.2%. US RevPAR was up 8.0%, including rate growth of 3.4%. On a total basis including the benefit of new hotels, US RevPAR grew 9.5%, outperforming the industry up 7.9%.

 

Revenue increased 3% to $222m and operating profit increased 20% to $126m.  After adjusting for owned hotel disposals and excluding the impact of a $4m benefit year on year from the conclusion of a specific guarantee negotiation relating to one hotel, revenue was up 5% and operating profit up 16%. This was driven by 9.7% owned hotel RevPAR growth and a 7% increase in franchise royalty fees.

 

We signed 11,200 rooms (73 hotels) in the quarter and opened 8,003 rooms (54 hotels) into the system, both of which include 4,796 rooms (25 hotels) managed on US army bases. Two additional Holiday Inn Club Vacations hotels (694 rooms) were signed up, which will take the total number of properties operating under the timeshare alliance brand to eight (3,586 rooms).  Openings include two Holiday Inn hotels in Colombia, marking a strong entry for the brand into that country.

 

 

EMEA – Successfully growing our brands in new markets

RevPAR increased 3.6%, including rate growth of 2.8%.  RevPAR grew 4.5% excluding Egypt (10 hotels) and Bahrain (2 hotels) where the political unrest continued to result in significant declines. RevPAR grew in other Middle East markets, including 10.9% in Saudi Arabia and 9.7% in the United Arab Emirates.

 

Revenue increased 22% (17% at CER) to $128m and operating profit was in line with the prior year at $35m (down 3% at CER). After adjusting for properties that are structured for legal reasons as operating leases but with the same characteristics as management contracts, revenue increased 9% and operating profit was flat.  This was driven by strong growth in the owned business where RevPAR was up 10.0% and a $2m increase in franchise royalties as a result of 3.8% RevPAR growth and a 4% increase in year on year room count. Managed profits were adversely impacted by $1.5m as a result of the unrest in the Middle East.

 

We signed 1,601 rooms (11 hotels) in the quarter, including the first Hotel Indigo for Russia, in St Petersburg.   1,072 rooms (10 hotels) were opened into the system, including the InterContinental Porto, the first for the brand in Portugal.

 

 

Asia Pacific – RevPAR and rooms growth drives a 20% profit increase

RevPAR increased 5.7%, including rate growth of 2.0%. Excluding Japan (32 hotels) where the earthquake and resultant events negatively impacted growth, RevPAR grew 8.6%.  Greater China continues to be our strongest market with RevPAR up 10.8%, including rate growth of 4.9%. 

 

Revenue increased 19% (12% at CER) to $88m and operating profit increased 55% (45% at CER) to $31m.  After adjusting for a $6m liquidated damages receipt, revenue increased 11% (4% at CER) and operating profit increased 25% (15% at CER).  This was driven by strong RevPAR growth and an 8% increase in year on year room count, led by Greater China, up 14%.  Excluding the $6m liquidated damages receipt, managed operating profit grew 20% (10% at CER). The natural disasters in Japan and New Zealand had a $0.5m negative impact in the quarter.

 

We signed 5,927 rooms (18 hotels) in the quarter including a 1,224 room Holiday Inn in Macau, and the fourth hotel development for the Holiday Inn Express brand in Thailand, located along Patong Beach in Phuket.  3,870 rooms (11 hotels) were opened into the system, including a second Holiday Inn resort in Phuket.  IHG now has 11 hotels open in Thailand with a further 10 in the development pipeline.

 

 

Interest, tax, exceptional items, dividend and net debt

The interest charge for the period was $15m (Q3 2010: $16m).  The tax charge has been calculated using an estimated annual tax rate of 26% (Q3 2010: 26%). A $17m net exceptional tax credit relates to a reduction in the estimated tax impact of a prior year corporate restructuring, partially offset by current year items.

 

Exceptional operating credits comprise (i) $28m relating to the closure of the UK defined benefit pension scheme with effect from 1 July 2013 and (ii) $28m gain on sale of a hotel and related investment in Australia.

 

Net debt was $644m (including the $208m finance lease on the InterContinental Boston), down $157m on Q3 2010 and down $99m on the position at year end.

 

The Group refinanced its bank debt after the quarter end, putting in place a 5 year $1.07 billion facility providing certainty of funding until November 2016.


 

Appendix 1: RevPAR movement summary

 

October 2011

Q3 2011

 

RevPAR

Rate

Occ.

RevPAR

Rate

Occ.

Group

4.7%

3.2%

1.0%pts

6.4%

2.8%

2.4%pts

Americas

6.2%

3.4%

1.8%pts

7.6%

3.2%

2.8%pts

EMEA

0.3%

2.6%

(1.6)%pts

3.6%

2.8%

0.6%pts

Asia Pacific

5.3%

4.7%

0.4%pts

5.7%

2.0%

2.5%pts

 

Appendix 2: Third quarter 2011 system & pipeline summary (rooms)

 

System

Pipeline

Openings

Removals

Net

Total

YoY%

Signings

Total

Group

12,945

(3,143)

9,802

666,476

1%

18,728

183,368

Americas

8,003

(2,298)

5,705

451,112

-

11,200

84,788

EMEA

1,072

(639)

433

122,560

2%

1,601

31,403

Asia Pacific

3,870

(206)

3,664

92,804

8%

5,927

67,177

 

Appendix 3: Year to date 2011 system & pipeline summary (rooms)

 

System

Pipeline

Openings

Removals

Net

Total

YoY%

Signings

Total

Group

37,464

(18,149)

19,315

666,476

1%

39,867

183,368

Americas

24,523

(12,786)

11,737

451,112

-

22,814

84,788

EMEA

4,533

(2,825)

1,708

122,560

2%

6,148

31,403

Asia Pacific

8,408

(2,538)

5,870

92,804

8%

10,905

67,177

 

Appendix 4: Third quarter financial headlines

Three months to 30 September 2011

Operating Profit $m

Total

Americas

EMEA

Asia Pacific

Central

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

Franchised

145

131

123

113

19

17

3

1

-

-

Managed

51

35

10

2

11

13

30

20

-

-

Owned & leased

29

23

7

4

16

13

6

6

-

-

Regional costs

(33)

(29)

(14)

(14)

(11)

(8)

(8)

(7)

-

-

Operating profit pre central costs

192

160

126

105

35

35

31

20

-

-

Central costs

(39)

(45)

-

-

-

-

-

-

(39)

(45)

Group Operating profit

153

115

126

105

35

35

31

20

(39)

(45)

 

Appendix 5: Year to date financial headlines

Nine months to 30 September 2011

Operating Profit $m

Total

Americas

EMEA

Asia Pacific

Central

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

Franchised

393

350

332

301

54

45

7

4

-

-

Managed

154

110

43

15

42

45

69

50

-

-

Owned & leased

76

56

13

8

39

28

24

20

-

-

Regional costs

(89)

(84)

(37)

(40)

(29)

(25)

(23)

(19)

-

-

Operating profit pre central costs

534

432

351

284

106

93

77

55

-

-

Central costs

(112)

(98)

-

-

-

-

-

-

(112)

(98)

Group Operating profit

422

334

351

284

106

93

77

55

(112)

(98)

 

Appendix 6: 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)

33%

31%

20%

20%

-

(3)%

55%

45%

Exchange rates:

 

GBP:USD

EUR:USD

* US dollar actual currency

2011

0.62

0.71

** Translated at constant 2010 exchange rates

2010

0.65

0.77

*** After central overheads













 

 


 

For further information, please contact:

Investor Relations (Heather Wood; Catherine Dolton):

+44 (0)1895 512176

 

Media Affairs (Fiona Gornall, Kari Kerr):

+44 (0)1895 512426

+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.

 

UK conference call and Q&A:

A conference call with Richard Solomons (Chief Executive Officer) and Tom Singer (Chief Financial Officer) will commence at 9:30am (London time) on Tuesday 8 November. There will be an opportunity to ask questions. 

International dial-in:

UK Toll Free:

+44 (0)20 7108 6370

0808 238 6029

Passcode:

HOTEL

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 8th November with Richard Solomons (Chief Executive Officer) and Tom Singer (Chief Financial Officer). 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 calls will also be available for 7 days.  To access this please dial the relevant number below

UK Replay

International dial-in: +44 (0)20 7108 6271

US Replay

International Dial in : +44 (0) 20 7108 6272

UK Toll Free: 0808 376 9017

Passcode : 5161

US Toll Free: 866 850 9261

Passcode: 5163

Website:

 

The full release and supplementary data will be available on our website from 7.00 am (London time) on 8 November. The web address is www.ihg.com/Q311. To watch a video of Richard Solomons reviewing our results visit our YouTube channel at www.youtube.com/ihgplc.

 

IHG (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is a global organisation operating seven 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 over 61 million members worldwide.

IHG is the world’s largest hotel group by number of rooms and franchises, leases, manages or owns over 4,500 hotels and more than 666,000 guest rooms in 100 countries and territories, and has more than 1,100 hotels in its development pipeline.

IHG is committed to gender balance throughout its business. We aspire to continue retaining a minimum of 25% female representation on the Board.

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

Visit www.ihg.com for hotel information and reservations and www.priorityclub.com for more on Priority Club Rewards. For our latest news, visit www.ihg.com/media, www.twitter.com/ihgplc or 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.





 

 

 


InterContinental Hotels Group PLC

GROUP INCOME STATEMENT

For the three months ended 30 September 2011

 

 

3 months ended 30 September 2011

3 months ended 30 September 2010

 

Before

exceptional

items

Exceptional

items

(note 7)

 

 

Total

Before

exceptional

items

Exceptional

items

(note 7)

 

 

Total

 

$m

$m

$m

$m

$m

$m

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue (note 3)

467

-

467

421

-

421

Cost of sales

(197)

-

(197)

(186)

-

(186)

Administrative expenses

(93)

28

(65)

(94)

-

(94)

Other operating income and expenses

1

28

29

1

27

28

 

_____

____

____

_____

____

____

 

178

56

234

142

27

169

 

 

 

 

 

 

 

Depreciation and amortisation

(25)

-

(25)

(27)

-

(27)

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Operating profit (note 3)

153

56

209

115

27

142

Financial income

1

-

1

1

-

1

Financial expenses

(16)

-

(16)

(17)

-

(17)

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Profit before tax (note 3)

138

56

194

99

27

126

 

 

 

 

 

 

 

Tax (note 8)

(33)

17

(16)

(21)

(2)

(23)

 

_____

____

____

_____

____

____

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

 

 

105

 

 

73

 

 

178

 

 

78

 

 

25

 

 

103

 

====

====

====

====

====

====

 

 

 

 

 

 

 

Earnings per ordinary share

(note 9)

 

 

 

 

 

 

Continuing and total operations:

 

 

 

 

 

 

 

Basic

 

 

61.4¢

 

 

35.8¢

 

Diluted

 

 

60.5¢

 

 

34.8¢

 

Adjusted

36.2¢

 

 

27.1¢

 

 

 

Adjusted diluted

35.7¢

 

 

26.4¢

 

 

 

====

 

====

====

 

====

 

 


InterContinental Hotels Group PLC

GROUP INCOME STATEMENT

For the nine months ended 30 September 2011

 

 

9 months ended 30 September 2011

9 months ended 30 September 2010

 

Before

exceptional

items

Exceptional

items

(note 7)

 

 

Total

Before

exceptional

items

Exceptional

items

(note 7)

 

 

Total

 

$m

$m

$m

$m

$m

$m

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue (note 3)

1,317

-

1,317

1,193

-

1,193

Cost of sales

(566)

-

(566)

(546)

-

(546)

Administrative expenses

(262)

(31)

(293)

(236)

(3)

(239)

Other operating income and expenses

9

46

55

5

35

40

 

_____

____

____

_____

____

____

 

498

15

513

416

32

448

 

 

 

 

 

 

 

Depreciation and amortisation

(76)

-

(76)

(82)

-

(82)

Impairment

-

9

9

-

(1)

(1)

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Operating profit (note 3)

422

24

446

334

31

365

Financial income

2

-

2

2

-

2

Financial expenses

(49)

-

(49)

(49)

-

(49)

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Profit before tax (note 3)

375

24

399

287

31

318

 

 

 

 

 

 

 

Tax (note 8)

(99)

34

(65)

(74)

(2)

(76)

 

_____

____

____

_____

____

____

Profit for the period from continuing operations

 

276

 

58

 

334

 

213

 

29

 

242

 

 

 

 

 

 

 

Profit for the period from discontinued operations

 

-

 

-

 

-

 

-

 

2

 

2

 

_____

____

____

_____

____

____

Profit for the period attributable to equity holders of the parent

 

276

 

58

 

334

 

213

 

31

 

244

 

====

====

====

====

====

====

 

 

 

 

 

 

 

Earnings per ordinary share

(note 9)

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

Basic

 

 

115.6¢

 

 

84.0¢

 

Diluted

 

 

113.6¢

 

 

81.8¢

 

Adjusted

95.5¢

 

 

74.0¢

 

 

 

Adjusted diluted

93.9¢

 

 

72.0¢

 

 

Total operations:

 

 

 

 

 

 

 

Basic

 

 

115.6¢

 

 

84.7¢

 

Diluted

 

 

113.6¢

 

 

82.4¢

 

Adjusted

95.5¢

 

 

74.0¢

 

 

 

Adjusted diluted

93.9¢

 

 

72.0¢

 

 

 

====

 

====

====

 

====

 


InterContinental Hotels Group PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the three and nine months ended 30 September 2011

 

 

 

2011

3 months

ended

30 September

$m

2010

3 months ended

30 September

$m

2011

9 months ended

30 September

$m

2010

9 months ended

 30 September

$m

 

 

 

 

 

Profit for the period

178

103

334

244

 

 

 

 

 

Other comprehensive income

 

 

 

 

Available-for-sale financial assets:

 

 

 

 

 

(Losses)/gains on valuation

(17)

9

(5)

28

 

Losses reclassified to income on impairment

-

-

3

1

Cash flow hedges:

 

 

 

 

 

Losses arising during the period

-

(1)

-

(3)

 

Reclassified to financial expenses

1

2

4

5

Defined benefit pension plans:

 

 

 

 

 

Actuarial losses, net of related tax credit: 2011 3 months $12m, 9 months $11m (2010 3 months $1m, 9 months $8m)

 

 

(3)

 

 

(10)

 

 

(1)

 

 

(28)

 

Change in asset restriction on plans in surplus and liability in respect of funding commitments, net of related tax credit: 2011 3 months $12m, 9 months $10m (2010 3 months $13m, 9 months $13m)

 

 

 

(1)

 

 

 

(40)

 

 

 

(4)

 

 

 

(39)

Exchange differences on retranslation of foreign operations, net of related tax: 2011 3 months $1m credit, 9 months $1m charge (2010 3 months $2m charge, 9 months $1m credit)

 

 

 

(32)

 

 

 

40

 

 

 

(18)

 

 

 

(5)

Tax related to pension contributions

3

6

6

7

 

____

____

____

____

Other comprehensive (loss)/ income for the period

(49)

6

(15)

(34)

 

____

____

____

____

Total comprehensive income for the period

129

109

319

210

 

====

====

====

====

 

 

 

 

 

Attributable to:

 

 

 

 

 

Equity holders of the parent

129

108

318

209

 

Non-controlling interest

-

1

1

1

 

_____

_____

_____

_____

 

129

109

319

210

 

=====

=====

=====

=====

 


InterContinental Hotels Group PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the nine months ended 30 September 2011

 

 

9 months ended 30 September 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

 

-

 

(17)

 

335

 

1

 

319

Issue of ordinary shares

7

-

-

-

7

Movement in shares in employee share trusts

 

-

 

26

 

(80)

 

-

 

(54)

Equity-settled share-based cost

-

-

23

-

23

Tax related to share schemes

-

-

3

-

3

Equity dividends paid

-

-

(102)

-

(102)

 

____

____

____

____

____

At end of the period

162

(2,650)

2,967

8

487

 

====

====

====

====

====

 

 

9 months ended 30 September 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

 

-

 

25

 

184

 

1

 

210

Issue of ordinary shares

13

-

-

-

13

Movement in shares in employee share trusts

 

-

 

(2)

 

(26)

 

-

 

(28)

Equity-settled share-based cost

-

-

26

-

26

Tax related to share schemes

-

-

17

-

17

Equity dividends paid

-

-

(84)

-

(84)

Exchange and other adjustments

(2)

2

-

-

-

 

____

____

____

____

____

At end of the period

153

(2,624)

2,773

8

310

 

====

====

====

====

====

 

 

*

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 September 2011

 

2011

30 September

2010

30 September

2010

31 December

 

$m

$m

$m

ASSETS

 

 

 

Property, plant and equipment

1,363

1,708

1,690

Goodwill

88

88

92

Intangible assets

300

268

266

Investment in associates and joint ventures

74

44

43

Retirement benefit assets

28

4

5

Other financial assets

145

148

135

Deferred tax receivable

111

143

79

 

_____

_____

_____

Total non-current assets

2,109

2,403

2,310

 

_____

_____

_____

Inventories

4

4

4

Trade and other receivables

449

415

371

Current tax receivable

31

16

13

Cash and cash equivalents

99

51

78

 

_____

_____

_____

Total current assets

583

486

466

Non-current assets classified as held for sale

225

-

-

 

______

______

______

Total assets (note 3)

2,917

2,889

2,776

 

=====

=====

=====

LIABILITIES

 

 

 

Loans and other borrowings

(16)

(29)

(18)

Derivative financial instruments

(1)

(6)

(6)

Trade and other payables

(693)

(740)

(722)

Provisions

(23)

(24)

(8)

Current tax payable

(122)

(238)

(167)

 

_____

_____

_____

Total current liabilities

(855)

(1,037)

(921)

 

_____

_____

_____

Loans and other borrowings

(701)

(806)

(776)

Derivative financial instruments

(42)

(30)

(38)

Retirement benefit obligations

(181)

(197)

(200)

Trade and other payables

(500)

(435)

(464)

Provisions

(2)

-

(2)

Deferred tax payable

(88)

(74)

(84)

 

_____

_____

_____

Total non-current liabilities

(1,514)

(1,542)

(1,564)

Liabilities classified as held for sale

(61)

-

-

 

_____

_____

_____

Total liabilities

2,430

(2,579)

(2,485)

 

=====

=====

=====

Net assets

487

310

291

 

=====

=====

=====

EQUITY

 

 

 

Equity share capital

162

153

155

Capital redemption reserve

10

10

10

Shares held by employee share trusts

(9)

(5)

(35)

Other reserves

(2,894)

(2,898)

(2,894)

Unrealised gains and losses reserve

51

60

49

Currency translation reserve

192

209

211

Retained earnings

2,967

2,773

2,788

 

______

______

______

IHG shareholders’ equity

479

302

284

Non-controlling interest

8

8

7

 

______

______

______

Total equity

487

310

291

 

=====

=====

=====


InterContinental Hotels Group PLC

GROUP STATEMENT OF CASH FLOWS

For the nine months ended 30 September 2011

 

 

2011

9 months ended

30 September

2010

9 months ended

30 September

 

$m

$m

 

 

 

Profit for the period

334

244

Adjustments for:

 

 

 

Net financial expenses

47

47

 

Income tax charge

65

76

 

Depreciation and amortisation

76

82

 

Exceptional operating items

(24)

(31)

 

Equity-settled share-based cost, net of payments

20

19

 

Other non-cash movements

-

(2)

 

_____

_____

Operating cash flow before movements in working capital

518

435

Net change in loyalty programme liability and System Funds surplus

100

60

Other changes in net working capital

(159)

(12)

Utilisation of provisions

(7)

(41)

Retirement benefit contributions, net of cost

(41)

(25)

Cash flows relating to exceptional operating items

(31)

(14)

 

_____

_____

Cash flow from operations

380

403

Interest paid

(25)

(27)

Interest received

1

2

Tax paid on operating activities

(66)

(52)

 

_____

_____

Net cash from operating activities

290

326

 

_____

_____

Cash flow from investing activities

 

 

Purchase of property, plant and equipment

(35)

(45)

Purchase of intangible assets

(27)

(20)

Investment in other financial assets

(50)

(4)

Investment in associates and joint ventures

(38)

-

Disposal of assets, net of costs and cash disposed of

142

108

Proceeds from associates and other financial assets

6

27

Tax (paid)/received on disposals

(1)

2

 

_____

_____

Net cash from investing activities

(3)

68

 

_____

_____

Cash flow from financing activities

 

 

Proceeds from the issue of share capital

7

13

Purchase of own shares by employee share trusts

(57)

(23)

Dividends paid to shareholders

(102)

(84)

Decrease in borrowings

(112)

(289)

 

_____

_____

Net cash from financing activities

(264)

(383)

 

_____

_____

Net movement in cash and cash equivalents in the period

23

11

Cash and cash equivalents at beginning of the period

78

40

Exchange rate effects

(2)

(10)

 

_____

_____

Cash and cash equivalents at end of the period

99

41

 

=====

=====

Comprising

 

 

 

Cash and cash equivalents

99

51

 

Overdrafts included within current loans and other borrowings

-

(10)

 

_____

_____

 

99

41

 

=====

=====


 

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.

 

 

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 nine months ended 30 September is $1= £0.62 (2011 3 months, $1 = £0.62; 2010 9 months, $1 = £0.65; 2010 3 months, $1=£0.65). In the case of the euro, the translation rate for the nine months ended 30 September is $1 = €0.71 (2011 3 months, $1 = €0.71; 2010 9 months, $1 = €0.76; 2010 3 months, $1 = €0.77).

 

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=£0.64 (2010 31 December $1 = £0.64; 2010 30 September $1 = £0.63). In the case of the euro, the translation rate is $1 = €0.74 (2010 31 December $1 = €0.75; 2010 30 September $1 = €0.73).

 

 


 

3.

Segmental information

 

 

 

 


 

 

Revenue

 

 

 

 

 

 

2011

2010

2011

2010

 

 

3 months ended

30 September

3 months ended

30 September

9 months ended

30 September

9 months ended

30 September

 

 

$m

$m

$m

$m

 

 

 

 

 

 

 

Americas  (note 4)

222

215

638

608

 

EMEA  (note 5)

128

105

352

297

 

Asia Pacific (note 6)

88

74

244

211

 

Central

29

27

83

77

 

 

____

____

____

____

 

Total revenue

467

421

1,317

1,193

 

 

====

====

====

====

 

 

 

 

 

 

 

All results relate to continuing operations.

 

 

Profit

2011

3 months ended

30 September

$m

2010

3 months ended

30 September

$m

2011

9 months ended

30 September

$m

2010

9 months ended

30 September

$m

 

 

 

 

 

 

 

Americas  (note 4)

126

105

351

284

 

EMEA  (note 5)

35

35

106

93

 

Asia Pacific (note 6)

31

20

77

55

 

Central

(39)

(45)

(112)

(98)

 

 

____

____

____

____

 

Reportable segments’ operating profit

 

153

 

115

 

422

 

334

 

Exceptional operating items (note 7)

56

27

24

31

 

 

____

____

____

____

 

Operating profit

209

142

446

365

 

 

 

 

 

 

 

Financial income

1

1

2

2

 

Financial expenses

(16)

(17)

(49)

(49)

 

 

____

____

____

____

 

Profit before tax

194

126

399

318

 

 

====

====

====

====

 

 

 

 

 

 

 

All results relate to continuing operations.

 

 

Assets

2011

30 September

$m

2010

30 September

$m

2010

31 December

$m

 

 

 

 

 

 

Americas

950

950

891

 

EMEA

899

879

856

 

Asia Pacific

619

664

665

 

Central

208

186

194

 

 

____

____

____

 

Segment assets

2,676

2,679

2,606

 

 

 

 

 

 

Unallocated assets:

 

 

 

 

Deferred tax receivable

111

143

79

 

Current tax receivable

31

16

13

 

Cash and cash equivalents

99

51

78

 

 

____

____

____

 

Total assets

2,917

2,889

2,776

 

 

====

====

====

 


 

4.

Americas

 

 

 

 

 

 

2011

2010

2011

2010

 

 

3 months ended

30 September

3 months ended

30 September

9 months ended

30 September

9 months ended

30 September

 

 

$m

$m

$m

$m

 

Revenue

 

 

 

 

 

 

Franchised

141

132

385

353

 

 

Managed

31

29

101

88

 

 

Owned and leased

50

54

152

167

 

 

____

____

____

____

 

Total

222

215

638

608

 

 

====

====

====

====

 

Operating profit

 

 

 

 

 

 

Franchised

123

113

332

301

 

 

Managed

10

2

43

15

 

 

Owned and leased

7

4

13

8

 

 

Regional overheads

(14)

(14)

(37)

(40)

 

 

____

____

____

____

 

Total

126

105

351

284

 

 

====

====

====

====

 

 

 

 

 

 

 

All results relate to continuing operations.

 

 

5.

EMEA

 

 

 

 

 

 

2011

2010

2011

2010

 

 

3 months ended

30 September

3 months ended

30 September

9 months ended

30 September

9 months ended

30 September

 

 

$m

$m

$m

$m

 

Revenue

 

 

 

 

 

 

Franchised

24

22

69

59

 

 

Managed

45

31

114

92

 

 

Owned and leased

59

52

169

146

 

 

____

____

____

____

 

Total

128

105

352

297

 

 

====

====

====

====

 

Operating profit

 

 

 

 

 

 

Franchised

19

17

54

45

 

 

Managed

11

13

42

45

 

 

Owned and leased

16

13

39

28

 

 

Regional overheads

(11)

(8)

(29)

(25)

 

 

____

____

____

____

 

Total

35

35

106

93

 

 

====

====

====

====

 

 

 

 

 

 

 

All results relate to continuing operations.

 


 

6.

Asia Pacific

 

 

 

 

 

 

2011

2010

2011

2010

 

 

3 months ended

30 September

3 months ended

30 September

9 months ended

30 September

9 months ended

30 September

 

 

$m

$m

$m

$m

 

Revenue

 

 

 

 

 

 

Franchised

4

3

10

9

 

 

Managed

52

42

131

110

 

 

Owned and leased

32

29

103

92

 

 

____

____

____

____

 

Total

88

74

244

211

 

 

====

====

====

====

 

Operating profit

 

 

 

 

 

 

Franchised

3

1

7

4

 

 

Managed

30

20

69

50

 

 

Owned and leased

6

6

24

20

 

 

Regional overheads

(8)

(7)

(23)

(19)

 

 

____

____

____

____

 

Total

31

20

77

55

 

 

====

====

====

====

 

 

 

 

 

 

 

All results relate to continuing operations.


 

7.

Exceptional items

 

 

 

 

2011

3 months

ended

30 September

$m

2010

3 months

ended

30 September

$m

2011

9 months

ended

30 September

$m

2010

9 months

ended

30 September

$m

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

 

Exceptional operating items

 

 

 

 

 

 

Administrative expenses:

 

 

 

 

 

 

Holiday Inn brand relaunch (a)

-

-

-

(3)

 

 

Litigation provision (b)

-

-

(22)

-

 

 

Resolution of commercial dispute (c)

-

-

(37)

-

 

 

Pension curtailment (d)

28

-

28

-

 

 

 

____

____

____

____

 

 

 

28

-

(31)

(3)

 

 

Other operating income and expenses:

 

 

 

 

 

 

Gain on sale of other financial assets (e)

-

-

-

8

 

 

VAT refund (f)

-

-

9

-

 

 

Gain on disposal of hotels (g)

28

27

37

27

 

 

 

____

____

____

____

 

 

 

28

27

46

35

 

 

 

 

 

 

 

 

 

Impairment:

 

 

 

 

 

 

Other financial assets (h)

-

-

(3)

(1)

 

 

Reversal of previously recorded impairment (i)

 

-

 

-

 

12

 

-

 

 

 

____

____

____

____

 

 

 

-

-

9

(1)

 

 

 

____

____

____

____

 

 

56

27

24

31

 

 

====

====

====

====

 

Tax

 

 

 

 

 

Tax on exceptional operating items

(8)

(11)

3

(11)

 

Exceptional tax credit (j)

25

9

31

9

 

 

 

____

____

____

____

 

 

 

17

(2)

34

(2)

 

 

====

====

====

====

 

Discontinued operations:

 

 

 

 

 

Gain on disposal of assets:

 

 

 

 

 

Tax credit (k)

-

-

-

2

 

 

____

____

____

____

 

 

-

-

-

2

 

 

====

====

====

====










7.

Exceptional items (continued)

 

 

These items are treated as exceptional by reason of their size or nature.

 

a)

Related to costs incurred in support of the worldwide relaunch of the Holiday Inn brand family that was announced on 24 October 2007 and substantially completed in 2010.

 

b)

Estimate of the amount potentially payable in respect of a prior year claim following an unfavourable court judgement in the Americas on 23 February 2011.  Any final amount will not be known until the court process is complete.

 

c)

Relates to the settlement of a prior period commercial dispute in the EMEA region.

 

d)

Relates to the closure of the UK defined benefit pension scheme to future accrual with effect from 1 July 2013.

 

e)

Related to the gain on sale of an investment in the EMEA region.

 

f)

Arises in the UK and relates to periods prior to 1996.

 

g)

Relates to the sale of three hotels in North America ($9m) and the sale of a hotel and related investment in Australia ($28m).

 

h)

Relates to available-for-sale equity investments subject to prolonged declines in their fair value below cost.

 

i)

Mainly relates to the partial reversal of a prior year impairment charge recorded in respect of a North American hotel that was sold in June 2011.

 

j)

Relates to an internal reorganisation completed in 2010 and, in 2011, to the revision of the estimated tax impacts including the recognition of additional deferred tax assets.

 

k)

Related to tax refunded in respect of a prior year hotel sale.

 


 

 

8.

Tax

 

 

The tax charge for the nine months ended 30 September on the combined profit from continuing and discontinued operations, excluding the impact of exceptional items (note 7), has been calculated using an estimated effective annual tax rate of 26% (2010 26%) analysed as follows.

 

 

 

 

2011

2011

2011

2010

2010

2010

 

3 months ended 30 September

Profit

$m

Tax

$m

Tax

rate

Profit

$m

Tax

$m

Tax

rate

 

Before exceptional items

 

 

 

 

 

 

 

Continuing operations

138

(33)

24%

99

(21)

21%

 

 

 

 

 

 

 

 

 

Exceptional items

 

 

 

 

 

 

 

Continuing operations

56

17

 

27

(2)

 

 

 

____

____

 

____

____

 

 

 

194

(16)

 

126

(23)

 

 

 

====

====

 

====

====

 

 

Analysed as:

 

 

 

 

 

 

 

 

UK tax

 

(7)

 

 

27

 

 

 

Foreign tax

 

(9)

 

 

(50)

 

 

 

 

____

 

 

____

 

 

 

 

(16)

 

 

(23)

 

 

 

 

====

 

 

====

 

 

 

 

 

2011

2011

2011

2010

2010

2010

 

9 months ended 30 September

Profit

$m

Tax

$m

Tax

rate

Profit

$m

Tax

$m

Tax

rate

 

Before exceptional items

 

 

 

 

 

 

 

Continuing operations

375

(99)

26%

287

(74)

26%

 

 

 

 

 

 

 

 

 

Exceptional items

 

 

 

 

 

 

 

Continuing operations

24

34

 

31

(2)

 

 

Discontinued operations

-

-

 

-

2

 

 

 

____

____

 

____

____

 

 

 

399

(65)

 

318

(74)

 

 

 

====

====

 

====

====

 

 

Analysed as:

 

 

 

 

 

 

 

 

UK tax

 

(17)

 

 

22

 

 

 

Foreign tax

 

(48)

 

 

(96)

 

 

 

 

____

 

 

____

 

 

 

 

(65)

 

 

(74)

 

 

 

 

====

 

 

====

 

 

 

 

 

By also excluding the effect of prior year items, the equivalent effective tax rate for the nine months ended 30 September would be approximately 36% (2010 33%).  Prior year items have been treated as relating wholly to continuing operations.

 

 

 

 


 


9.

Earnings per ordinary share

 

 

Basic earnings per ordinary share is calculated by dividing the profit for the period available for IHG equity holders by the weighted average number of ordinary shares, excluding investment in own shares, in issue during the period.

 

Diluted earnings per ordinary share is calculated by adjusting basic earnings per ordinary share to reflect the notional exercise of the weighted average number of dilutive ordinary share options outstanding during the period.

 

Adjusted earnings per ordinary share is disclosed in order to show performance undistorted by exceptional items, to give a more meaningful comparison of the Group’s performance.

 

 

3 months ended 30 September

2011

2011

2010

2010

 

 

Continuing

operations

 

Total

Continuing

operations

 

Total

 

Basic earnings per ordinary share

 

 

 

 

 

Profit available for equity holders ($m)

178

178

103

103

 

Basic weighted average number of ordinary shares (millions)

 

290

 

290

 

288

 

288

 

Basic earnings per ordinary share (cents)

61.4

61.4

35.8

35.8

 

 

====

====

====

====

 

Diluted earnings per ordinary share

 

 

 

 

 

Profit available for equity holders ($m)

178

178

103

103

 

Diluted weighted average number of ordinary shares (millions)

 

294

 

294

 

296

 

296

 

Diluted earnings per ordinary share (cents)

60.5

60.5

34.8

34.8

 

 

====

====

====

====

 

Adjusted earnings per ordinary share

 

 

 

 

 

Profit available for equity holders ($m)

178

178

103

103

 

Adjusting items (note 7):

 

 

 

 

 

 

Exceptional operating items ($m)

(56)

(56)

(27)

(27)

 

 

Tax on exceptional operating items ($m)

8

8

11

11

 

 

Exceptional tax credit ($m)

(25)

(25)

(9)

(9)

 

 

____

____

____

____

 

Adjusted earnings ($m)

105

105

78

78

 

Basic weighted average number of ordinary shares (millions)

 

290

 

290

 

288

 

288

 

Adjusted earnings per ordinary share (cents)

36.2

36.2

27.1

27.1

 

 

====

====

====

====

 

Diluted weighted average number of ordinary shares (millions)

 

294

 

294

 

296

 

296

 

Adjusted diluted earnings per ordinary share (cents)

35.7

35.7

26.4

26.4

 

 

====

====

====

====


 


9.

Earnings per ordinary share (continued)

 

 

9 months ended 30 September

2011

2011

2010

2010

 

 

Continuing

operations

 

Total

Continuing

operations

 

Total

 

Basic earnings per ordinary share

 

 

 

 

 

Profit available for equity holders ($m)

334

334

242

244

 

Basic weighted average number of ordinary shares (millions)

 

289

 

289

 

288

 

288

 

Basic earnings per ordinary share (cents)

115.6

115.6

84.0

84.7

 

 

====

====

====

====

 

Diluted earnings per ordinary share

 

 

 

 

 

Profit available for equity holders ($m)

334

334

242

244

 

Diluted weighted average number of ordinary shares (millions)

 

294

 

294

 

296

 

296

 

Diluted earnings per ordinary share (cents)

113.6

113.6

81.8

82.4

 

 

====

====

====

====

 

Adjusted earnings per ordinary share

 

 

 

 

 

Profit available for equity holders ($m)

334

334

242

244

 

Adjusting items (note 7):

 

 

 

 

 

 

Exceptional operating items ($m)

(24)

(24)

(31)

(31)

 

 

Tax on exceptional operating items ($m)

(3)

(3)

11

11

 

 

Exceptional tax credit ($m)

(31)

(31)

(9)

(9)

 

 

Gain on disposal of discontinued operations, net of tax ($m)

 

-

 

-

 

-

 

(2)

 

 

____

____

____

____

 

Adjusted earnings ($m)

276

276

213

213

 

Basic weighted average number of ordinary shares (millions)

 

289

 

289

 

288

 

288

 

Adjusted earnings per ordinary share (cents)

95.5

95.5

74.0

74.0

 

 

====

====

====

====

 

Diluted weighted average number of ordinary shares (millions)

 

294

 

294

 

296

 

296

 

Adjusted diluted earnings per ordinary share (cents)

93.9

93.9

72.0

72.0

 

 

====

====

====

====

 

 

Earnings per ordinary share from discontinued operations

 

 

 

2011

3 months ended

30 September

cents per share

2010

3 months ended

30 September

cents per share

2011

9 months ended

30 September

cents per share

2010

9 months ended

30 September

cents per share

 

 

Basic

 

-

 

-

 

-

 

0.7

 

Diluted

-

-

-

0.6

 

 

====

====

====

====

 

 

The diluted weighted average number of ordinary shares is calculated as:

 

 

 

2011

3 months ended

30 September

millions

2010

3 months ended