InterContinental Hotels Group PLC
First Quarter Results to 31 March 2010
Financial results
|
2010
|
2009
|
% change
|
% change CER
|
|
|
|
Total
|
Excluding LDs1
|
Total
|
Excluding LDs1
|
Revenue 2
|
$362m
|
$351m
|
3%
|
4%
|
0%
|
1%
|
Operating profit 2
|
$83m
|
$72m
|
15%
|
20%
|
15%
|
20%
|
Total adjusted EPS 2
|
17.4¢
|
15.5¢
|
12%
|
|
|
|
Total basic EPS 3
|
18.8¢
|
9.5¢
|
98%
|
|
|
|
Net debt
|
$1,077m
|
$1,287m
|
|
|
|
|
May 11, 2010 - All figures are before exceptional items
unless otherwise
noted. See appendix 2 for analysis of financial headlines. Constant
exchange
rate comparatives shown in appendix 3.
(% CER) = change at constant
exchange
rates.
1 – excluding
$3m of significant liquidated damages (LDs) receipts in 2009.
2 – hotels previously
accounted for as discontinued operations have been re-presented as
continuing
operations and the relevant comparatives restated.
3 – total basic EPS after exceptional items.
Business headlines
|
·
|
Global constant currency first quarter RevPAR growth of
0.2%, including growth of 4.1% in March.
|
·
|
Asia Pacific was the strongest region reporting RevPAR
growth of 10.0%, including a 22.2% increase in Greater China.
|
·
|
5,151 net rooms (38 hotels) added in the quarter,
increasing total system size to 651,830 rooms (4,476 hotels).
|
·
|
9,872 rooms (82 hotels) added to the system, 4,721 rooms
(44 hotels) removed in line with our quality growth strategy.
|
·
|
8,160 rooms (55 hotels) signed, taking the pipeline to
200,895 rooms (1,344 hotels).
|
·
|
Net debt of $1.1bn, down $0.2bn on the position as at 31
March 2009 and held flat on the position as at 31 December 2009.
|
Recent trading
|
·
|
April global constant currency RevPAR growth of 5.2%;
3.7% Americas, 5.0%
EMEA and 13.0% Asia Pacific,
including a 27.1% increase in Greater China.
|
·
|
2,646 rooms (22 hotels) signed in April.
4,248 rooms (25 hotels) added to the system, 2,129
rooms (18 hotels) removed.
|
Update on priorities
|
·
|
Focus on efficiency. First quarter regional and central costs of $57m increased $2m on 2009
at constant exchange rates and $5m at reported rates.
IHG is on track to maintain the c.$75m of
sustainable savings achieved in 2009 in both regional and central costs
and managed and franchised cost of sales.
|
·
|
Support hotel performance. System delivery continued
to improve with 68% of rooms revenue booked through IHG’s channels or
by Priority Club Rewards (PCR) members direct to hotel (Q1 2009: 66%). PCR members total over 48m.
|
·
|
Build quality distribution. 2,300 hotels are operating under the new Holiday Inn
standards with 613 completed since the start of the year. IHG now has a
16% share of the global new build supply pipeline compared to 3% of
existing supply. 75,000 rooms in the pipeline are under construction of
which over 30,000 are expected to open in the remainder of the year. (9,872 rooms were opened in the first
quarter). 2010 total room removals are still expected to be in the region of
40,000.
|
Commenting on the results, Andrew Cosslett, Chief
Executive of InterContinental Hotels Group
PLC said:
|
“In the quarter Global Revenue Per Available Room (RevPAR)
grew for the first time in 18 months driven by improving occupancy. Asia is leading the rebound and our dominant
position in China
underpinned an 80% rise in Asia Pacific profits.
“Business travel is returning although at this stage
mainly to the luxury end of the market which was most affected by the
recession. We expect the more resilient midscale sector to
benefit from this trend as the year progresses and market norms
are reset. We are encouraged by the return
to growth but rates remain under pressure in many markets, booking
windows are short and visibility is limited.
“The financing environment remains difficult but we
signed 55 deals in the quarter and are on track to open around 300
hotels this year. The Holiday Inn relaunch
continues to go very well. Over two-thirds of the hotels are now
operating to the new standards and last week we launched the largest
advertising campaign in the history of the brand. Performance in
relaunched hotels continues to meet or beat expectations.
“During the difficult last 18 months we have continued to
invest in the things that make a sustainable long term difference to
our business performance - strengthening our brands, increasing our
scale, investing in our system, developing our people and working
closely with our hotel owners. With this
strengthening of our core business and the early signs of recovery in
the market we are feeling confident about the outlook and our ability
to grow market share.”
|
Americas
|
Revenue performance
RevPAR declined 1.9% in the quarter, with growth in
occupancy of 1.7 percentage points offset by a decline in rate of 4.9%. March RevPAR grew by 3.0%.
In the US Holiday Inn and Holiday Inn Express
outperformed their segments by 2.3 and 1.3 percentage points
respectively reporting RevPAR declines of 3.5% at Holiday Inn and 3.4%
at Holiday Inn Express. Revenues were
broadly flat at $178m.
Operating profit performance
Operating profit increased 14% to $72m.
Franchised hotels’ operating profit grew 1% to $81m
driven by a royalty fee increase of 3% partly offset by a $2m reduction
in initial franchising, relicensing and termination fees.
In the managed business operating profit of $7m
compares to a loss of $4m in 2009 which included an $11m charge for
priority guarantee shortfalls. The owned
and leased hotels’ operating loss of $2m (2009: $1m loss) reflects
RevPAR growth of 0.8% offset by a reinstatement of depreciation on
hotels classified as held for sale in the prior year period.
|
EMEA
|
Revenue performance
RevPAR grew 0.5% in the quarter, driven by a 3.3
percentage point improvement in occupancy offset by a 4.9% decrease in
rates. Germany
and France
performed best with RevPAR growth of 8.0% and 6.7% respectively. The RevPAR decline of 6.8% in the Middle East
was driven by weakness in the United
Arab Emirates while other parts of the region
including Egypt and
Saudi
Arabia remain resilient. Revenues increased 3% to $90m (2% decline at
CER). Excluding one liquidated damages receipt of $3m in 2009, revenues
increased 7% (1% CER).
Operating profit performance
Excluding the impact of the $3m liquidated damages
receipt in 2009 operating profit was flat at $21m. On this same basis
franchised hotels’ operating profit declined $1m to $12m ($2m decline
at CER). Managed hotels’ operating profit
declined by $3m to $13m driven by a RevPAR decline of 3.8%. Owned and leased hotels’ operating profit
increased from $1m to $5m driven by RevPAR growth of 13.9% and strong
cost control.
|
Asia Pacific
|
Revenue performance
RevPAR grew 10.0% in the quarter, driven by a 7.7
percentage point improvement in occupancy offset by a 3.3% decline in
rates. Greater China
was the strongest performing region with first quarter RevPAR growth of
22.2%. Revenues
increased 23% to $69m (16% CER).
Operating profit performance
Operating profit increased 80% to $18m (70% CER). Franchised hotels’ operating profit increased
$1m to $2m. Managed hotels’ operating
profit grew 75% to $14m (63% CER) primarily driven by 23.7% RevPAR
growth across IHG’s managed operations in Greater China and 10% rooms
growth across the region. Operating profit
at owned and leased hotels increased 14% to $8m (14% CER) reflecting
RevPAR growth of 9.9% at InterContinental Hong Kong and good cost
control.
|
Interest and tax
|
The interest charge for the quarter increased $1m to $15m
as the impact of lower levels of average net debt was offset by a
higher average cost of debt.
Based on the position at the end of the quarter, the tax
charge has been calculated using an estimated annual tax rate of 27%
(Q1 2009: 24%).
|
Cash flow & net debt
|
IHG’s balance sheet has been strengthened with net debt
reduced to $1.1bn (including the $205m finance lease on the
InterContinental Boston) from $1.3bn as at 31 March 2009.
During 2009 IHG extended the maturity and
diversification of its debt profile issuing a seven year £250m
bond in the fourth quarter using this to refinance $415m of the $500m
term loan expiring in November 2010. In
addition, IHG has a $1.6bn revolving credit facility expiring May 2013.
|
RevPAR Sensitivity
|
IHG estimates that a 1% change in global RevPAR impacts
Group EBIT by $13m, split as follows: $4m owned & leased; $4m
managed (of which $1m relates to the Americas managed business);
and $5m franchised.
|
Appendix 1: Rooms
|
Americas
|
EMEA
|
Asia Pacific
|
Total
|
Openings
|
7,136
|
1,901
|
835
|
9,872
|
Removals/adjustments
|
(3,849)
|
(951)
|
79
|
(4,721)
|
Net openings
|
3,287
|
950
|
914
|
5,151
|
Signings
|
4,785
|
758
|
2,617
|
8,160
|
Appendix 2: First quarter financial headlines
Three
months to 31 March $m
|
Total
|
Americas
|
EMEA
|
Asia Pacific
|
Central
|
|
2010
|
2009*
|
2010
|
2009*
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
Franchised
operating profit
|
95
|
97
|
81
|
80
|
12
|
16
|
2
|
1
|
-
|
-
|
Managed
operating profit
|
34
|
20
|
7
|
(4)
|
13
|
16
|
14
|
8
|
-
|
-
|
Owned
and leased operating profit
|
11
|
7
|
(2)
|
(1)
|
5
|
1
|
8
|
7
|
-
|
-
|
Regional
overheads
|
(29)
|
(27)
|
(14)
|
(12)
|
(9)
|
(9)
|
(6)
|
(6)
|
-
|
-
|
Operating
profit pre central overheads
|
111
|
97
|
72
|
63
|
21
|
24
|
18
|
10
|
-
|
-
|
Central
overheads
|
(28)
|
(25)
|
-
|
-
|
-
|
-
|
-
|
-
|
(28)
|
(25)
|
Operating
profit
|
83
|
72
|
72
|
63
|
21
|
24
|
18
|
10
|
(28)
|
(25)
|
* 2009 comparatives restated for
those owned hotels previously accounted for as
discontinued operations, now re-presented as continuing operations.
Appendix 3: Constant
currency operating profit movement before exceptional items.
|
Americas
|
EMEA
|
Asia Pacific
|
Total***
|
|
Actual currency*
|
Constant currency**
|
Actual currency*
|
Constant currency**
|
Actual currency*
|
Constant
Currency**
|
Actual currency*
|
Constant currency**
|
(Decline)/ growth
|
14%
|
13%
|
(13)%
|
(13)%
|
80%
|
70%
|
15%
|
15%
|
Exchange rates
|
GBP:USD
|
EUR: USD
|
|
* US dollar actual
currency;
|
2010
|
0.64
|
0.72
|
|
** Translated at constant 2009 exchange rates
|
2009
|
0.70
|
0.77
|
|
*** After central overheads
|
For further information, please contact:
Investor Relations (Heather Wood; Catherine Dolton):
|
+44 (0) 1895 512 176
|
|
Media Affairs (Leslie McGibbon; Emma Corcoran):
|
+44 (0) 1895 512 425
|
+44 (0) 7808 094 471
|
|
|
|
High resolution images to accompany this announcement are
available for
the media to download free of charge from www.vismedia.co.uk . This
includes
profile shots of the key executives.
UK Q&A conference call:
A conference call
with Richard Solomons (Chief Financial Officer and Head of
Commercial Development) will commence at 8.00 am (London
time) on 11 May. There will be an
opportunity to ask questions.
International dial-in:
|
+44 (0)20 7108 6370
|
UK Free Call:
|
0808 238 6029
|
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 4541.
International dial-in:
|
+44 (0)20 7108 6295
|
UK Free Call:
|
0800 376 9044
|
US Q&A conference call
There
will also be a conference call,
primarily for US investors and analysts, at 10.00am (Eastern Standard
Time) on 11
May with Richard Solomons (Chief Financial Officer and Head of
Commercial
Development). There will be an
opportunity to ask questions.
International
dial-in
|
+1 517
345 9004
|
US
Dial-in
|
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.4566
.
InterContinental
Hotels Group PLC
GROUP INCOME STATEMENT
For
the three months ended 31 March 2010
|
3 months ended 31 March
2010
|
3 months ended 31 March
2009
|
|
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)
|
362
|
-
|
362
|
351
|
-
|
351
|
Cost of sales
|
(178)
|
-
|
(178)
|
(182)
|
-
|
(182)
|
Administrative
expenses
|
(74)
|
(1)
|
(75)
|
(73)
|
(26)
|
(99)
|
Other operating
income and expenses
|
1
|
-
|
1
|
1
|
-
|
1
|
|
_____
|
____
|
____
|
_____
|
____
|
____
|
|
111
|
(1)
|
110
|
97
|
(26)
|
71
|
|
|
|
|
|
|
|
Depreciation and
amortisation
|
(28)
|
-
|
(28)
|
(25)
|
-
|
(25)
|
Impairment
|
-
|
(1)
|
(1)
|
-
|
-
|
-
|
|
_____
|
____
|
____
|
_____
|
____
|
____
|
|
|
|
|
|
|
|
Operating
profit (note 3)
|
83
|
(2)
|
81
|
72
|
`(26)
|
46
|
Financial income
|
1
|
-
|
1
|
1
|
-
|
1
|
Financial expenses
|
(16)
|
-
|
(16)
|
(15)
|
-
|
(15)
|
|
_____
|
____
|
____
|
_____
|
____
|
____
|
|
|
|
|
|
|
|
Profit
before tax (note 3)
|
68
|
(2)
|
66
|
58
|
(26)
|
32
|
|
|
|
|
|
|
|
Tax (note 8)
|
(18)
|
4
|
(14)
|
(14)
|
5
|
(9)
|
|
_____
|
____
|
____
|
_____
|
____
|
____
|
Profit
for the period from continuing operations
|
50
|
2
|
52
|
44
|
(21)
|
23
|
|
|
|
|
|
|
|
Profit for the
period from discontinued operations
|
-
|
2
|
2
|
-
|
4
|
4
|
|
_____
|
____
|
____
|
_____
|
____
|
____
|
Profit
for the period attributable to the equity holders of the parent
|
50
|
4
|
54
|
44
|
(17)
|
27
|
|
====
|
====
|
====
|
====
|
====
|
====
|
|
|
|
|
|
|
|
Earnings
per ordinary share
(note 9)
|
|
|
|
|
|
|
Continuing
operations:
|
|
|
|
|
|
|
|
Basic
|
|
|
18.1¢
|
|
|
8.1¢
|
|
Diluted
|
|
|
17.6¢
|
|
|
8.1¢
|
|
Adjusted
|
17.4¢
|
|
|
15.5¢
|
|
|
|
Adjusted diluted
|
16.9¢
|
|
|
15.4¢
|
|
|
Total operations:
|
|
|
|
|
|
|
|
Basic
|
|
|
18.8¢
|
|
|
9.5¢
|
|
Diluted
|
|
|
18.3¢
|
|
|
9.5¢
|
|
Adjusted
|
17.4¢
|
|
|
15.5¢
|
|
|
|
Adjusted diluted
|
16.9¢
|
|
|
15.4¢
|
|
|
|
====
|
|
====
|
====
|
|
====
|
InterContinental
Hotels Group PLC
GROUP
STATEMENT OF COMPREHENSIVE INCOME
For
the three months ended 31 March 2010
|
2010
3 months ended
31 March
$m
|
2009
3 months ended
31 March
$m
|
|
|
|
Profit
for the period
|
54
|
27
|
|
|
|
Other
comprehensive income
|
|
|
Available-for-sale
financial assets:
|
|
|
|
Gains on valuation
|
6
|
5
|
|
Losses reclassified
to income on impairment
|
1
|
-
|
Cash flow hedges:
|
|
|
|
Losses arising
during the period
|
(2)
|
(4)
|
|
Reclassified to
financial expenses
|
2
|
3
|
Defined benefit
pension plans:
|
|
|
|
Actuarial gains,
net of related tax charge of $1m (2009 $4m)
|
7
|
35
|
|
Increase in asset
restriction on plans in surplus
|
(3)
|
(5)
|
Exchange
differences on retranslation of foreign operations
|
(21)
|
(14)
|
Tax related to
pension contributions
|
1
|
-
|
|
____
|
____
|
Other
comprehensive (loss)/income for the period
|
(9)
|
20
|
|
____
|
____
|
Total
comprehensive income for the period
|
45
|
47
|
|
====
|
====
|
|
|
|
Attributable to:
|
|
|
|
Equity holders of
the parent
|
45
|
48
|
|
Non-controlling
interest
|
-
|
(1)
|
|
_____
|
_____
|
|
45
|
47
|
|
=====
|
=====
|
InterContinental
Hotels Group PLC
GROUP
STATEMENT OF CHANGES IN EQUITY
For
the three months ended 31 March 2010
|
3 months ended 31 March
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
|
-
|
(14)
|
59
|
-
|
45
|
Issue of ordinary
shares
|
9
|
-
|
-
|
-
|
9
|
Movement in shares
in employee share trusts
|
-
|
(2)
|
(26)
|
-
|
(28)
|
Equity-settled
share-based cost
|
-
|
-
|
2
|
-
|
2
|
Tax related to
share schemes
|
-
|
-
|
4
|
-
|
4
|
Exchange and other
adjustments
|
(9)
|
9
|
-
|
-
|
-
|
|
____
|
____
|
____
|
____
|
____
|
At end
of the period
|
142
|
(2,656)
|
2,695
|
7
|
188
|
|
====
|
====
|
====
|
====
|
====
|
|
3 months ended 31 March
2009
|
|
Equity share capital
|
Other reserves*
|
Retained earnings
|
Non-controlling interest
|
Total equity
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
|
|
|
|
|
|
At beginning of the
period
|
118
|
(2,748)
|
2,624
|
7
|
1
|
|
|
|
|
|
|
Total comprehensive
income for the period
|
-
|
(9)
|
57
|
(1)
|
47
|
Movement in shares
in employee share trusts
|
-
|
42
|
(46)
|
-
|
(4)
|
Equity-settled
share-based cost
|
-
|
-
|
8
|
-
|
8
|
Tax related to
share schemes
|
-
|
-
|
(1)
|
-
|
(1)
|
Exchange and other
adjustments
|
(2)
|
2
|
-
|
-
|
-
|
|
____
|
____
|
____
|
____
|
____
|
At end
of the period
|
116
|
(2,713)
|
2,642
|
6
|
51
|
|
====
|
====
|
====
|
====
|
====
|
*
|
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
31
March 2010
|
2010
31 March
|
2009
31 March
|
2009
31 December
|
|
$m
|
$m
|
$m
|
ASSETS
|
|
|
|
Property, plant and
equipment
|
1,767
|
1,660
|
1,836
|
Goodwill
|
83
|
142
|
82
|
Intangible assets
|
260
|
300
|
274
|
Investment in
associates
|
44
|
42
|
45
|
Retirement benefit
assets
|
18
|
55
|
12
|
Other financial
assets
|
136
|
153
|
130
|
Deferred tax
receivable
|
90
|
-
|
95
|
|
_____
|
_____
|
_____
|
Total
non-current assets
|
2,398
|
2,352
|
2,474
|
|
_____
|
_____
|
_____
|
Inventories
|
4
|
4
|
4
|
Trade and other
receivables
|
373
|
393
|
335
|
Current tax
receivable
|
37
|
46
|
35
|
Cash and cash
equivalents
|
41
|
121
|
40
|
Other financial
assets
|
3
|
5
|
5
|
|
_____
|
_____
|
_____
|
Total
current assets
|
458
|
569
|
419
|
|
|
|
|
Non-current assets
classified as held for sale
|
-
|
211
|
-
|
|
______
|
______
|
______
|
Total
assets (note 3)
|
2,856
|
3,132
|
2,893
|
|
=====
|
=====
|
=====
|
LIABILITIES
|
|
|
|
Loans and other
borrowings
|
(104)
|
(20)
|
(106)
|
Trade and other
payables
|
(668)
|
(683)
|
(675)
|
Provisions
|
(45)
|
-
|
(65)
|
Current tax payable
|
(165)
|
(345)
|
(194)
|
|
_____
|
_____
|
_____
|
Total
current liabilities
|
(982)
|
(1,048)
|
(1,040)
|
|
_____
|
_____
|
_____
|
Loans and other
borrowings
|
(977)
|
(1,388)
|
(1,016)
|
Retirement benefit
obligations
|
(139)
|
(113)
|
(142)
|
Trade and other
payables
|
(457)
|
(398)
|
(421)
|
Deferred tax payable
|
(113)
|
(131)
|
(118)
|
|
_____
|
_____
|
_____
|
Total
non-current liabilities
|
(1,686)
|
(2,030)
|
(1,697)
|
|
|
|
|
Liabilities
classified as held for sale
|
-
|
(3)
|
-
|
|
_____
|
_____
|
_____
|
Total
liabilities
|
(2,668)
|
(3,081)
|
(2,737)
|
|
=====
|
=====
|
=====
|
Net
assets
|
188
|
51
|
156
|
|
=====
|
=====
|
=====
|
EQUITY
|
|
|
|
Equity share capital
|
142
|
116
|
142
|
Capital redemption
reserve
|
10
|
10
|
11
|
Shares held by
employee share trusts
|
(6)
|
(7)
|
(4)
|
Other reserves
|
(2,890)
|
(2,888)
|
(2,900)
|
Unrealised gains
and losses reserve
|
35
|
13
|
29
|
Currency
translation reserve
|
195
|
159
|
215
|
Retained earnings
|
2,695
|
2,642
|
2,656
|
|
______
|
______
|
______
|
IHG
shareholders’ equity
|
181
|
45
|
149
|
Non-controlling
interest
|
7
|
6
|
7
|
|
______
|
______
|
______
|
Total
equity
|
188
|
51
|
156
|
|
=====
|
=====
|
=====
|
InterContinental
Hotels Group PLC
GROUP
STATEMENT OF CASH FLOWS
For
the three months ended 31 March 2010
|
2010
3 months ended
31 March
|
2009
3 months ended
31 March
|
|
$m
|
$m
|
|
|
|
Profit
for the period
|
54
|
27
|
Adjustments for:
|
|
|
|
Net financial
expenses
|
15
|
14
|
|
Income tax charge
|
14
|
9
|
|
Depreciation and
amortisation
|
28
|
25
|
|
Exceptional
operating items
|
2
|
26
|
|
Gain on disposal of
assets, net of tax
|
(2)
|
(4)
|
|
Equity-settled
share-based cost, net of payments
|
(2)
|
3
|
|
_____
|
_____
|
Operating cash flow
before movements in working capital
|
109
|
100
|
Increase in net
working capital
|
(19)
|
(35)
|
Utilisation of
provisions
|
(20)
|
-
|
Retirement benefit
contributions, net of cost
|
(1)
|
(1)
|
Cash flows relating
to exceptional operating items
|
(5)
|
(32)
|
|
_____
|
_____
|
Cash
flow from operations
|
64
|
32
|
Interest paid
|
(8)
|
(14)
|
Interest received
|
-
|
1
|
Tax paid on
operating activities
|
(28)
|
(28)
|
|
_____
|
_____
|
Net
cash from operating activities
|
28
|
(9)
|
|
_____
|
_____
|
Cash
flow from investing activities
|
|
|
Purchases of
property, plant and equipment
|
(5)
|
(9)
|
Purchase of
intangible assets
|
(3)
|
(9)
|
Disposal of assets,
net of costs and cash disposed of
|
4
|
-
|
Proceeds from other
financial assets
|
1
|
8
|
Tax received on
disposals
|
2
|
-
|
|
_____
|
_____
|
Net
cash from investing activities
|
(1)
|
(10)
|
|
_____
|
_____
|
Cash
flow from financing activities
|
|
|
Proceeds from the
issue of share capital
|
8
|
-
|
Purchase of own
shares by employee share trusts
|
(23)
|
(2)
|
Proceeds on release
of own shares by employee share trusts
|
-
|
1
|
(Decrease)/increase
in borrowings
|
(12)
|
66
|
|
_____
|
_____
|
Net
cash from financing activities
|
(27)
|
65
|
|
_____
|
_____
|
|
|
|
Net
movement in cash and cash equivalents in the period
|
-
|
46
|
Cash and cash
equivalents at beginning of the period
|
40
|
82
|
Exchange rate
effects
|
1
|
(7)
|
|
_____
|
_____
|
Cash
and cash equivalents at end of the period
|
41
|
121
|
|
=====
|
=====
|
InterContinental Hotels Group plc
NOTES
TO THE INTERIM FINANCIAL STATEMENTS
1.
|
Basis
of preparation
|
|
These condensed
interim financial statements have been prepared in accordance with the
Disclosure and Transparency Rules of the United Kingdom’s Financial
Services Authority and IAS 34 ‘Interim Financial Reporting’. Other than
the changes listed below, they have been prepared on a consistent basis
using the accounting policies set out in the InterContinental Hotels
Group PLC (the Group or IHG) Annual Report and Financial Statements for
the year ended 31 December 2009.
With effect from 1
January 2010, the Group has implemented IFRS 3 (Revised) ‘Business
Combinations’ and IAS 27 (Revised) ‘Consolidated and Separate Financial
Statements’. The adoption of these
standards has had no material impact on the financial statements and
there has been no requirement to restate prior year comparatives.
Two hotels, which,
prior to 30 June 2009, were classified as assets held for sale and
whose results were presented as discontinued operations, no longer meet
the criteria for designation as held for sale assets.
Consequently, the results of these hotels are now
reported as continuing operations and prior period results have been
re-presented on a consistent basis. The
impact has been to increase revenue from continuing operations for the
period by $9m (2009 $9m) and to increase operating profit from
continuing operations, before exceptional items, for the period by $2m
(2009 $2m).
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 2009 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, subject to a $13m reclassification from current
trade and other payables to non-current trade and other payables in the
Group statement of financial position.
|
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 three months ended 31 March is $1= £0.64 (2009
$1=£0.70). In the case of the euro,
the translation rate for the three months ended 31 March is $1 = €0.72
(2009 $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=£0.66 (2009 31
December $1 = £0.62, 2009 31 March $1 = £0.70). In the case of the euro, the translation rate
is $1 = €0.74 (2009 31 December $1 = €0.69, 2009 31 March $1 = €0.75).
|
3.
|
Segmental
information
|
|
|
|
Revenue
|
|
|
|
|
2010
|
2009
|
|
|
3 months ended
31 March
|
3 months ended
31 March
|
|
|
$m
|
$m
|
|
|
|
|
|
Americas (note 4)
|
178
|
179
|
|
EMEA (note
5)
|
90
|
87
|
|
Asia Pacific (note
6)
|
69
|
56
|
|
Central
|
25
|
29
|
|
|
____
|
____
|
|
Total
revenue
|
362
|
351
|
|
|
====
|
====
|
|
|
|
|
|
All results relate
to continuing operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
|
2010
3 months ended
31 March
$m
|
2009
3 months ended
31 March
$m
|
|
|
|
|
|
Americas (note 4)
|
72
|
63
|
|
EMEA
(note 5)
|
21
|
24
|
|
Asia Pacific (note
6)
|
18
|
10
|
|
Central
|
(28)
|
(25)
|
|
|
____
|
____
|
|
Reportable
segments’ operating profit
|
83
|
72
|
|
Exceptional
operating items (note 7)
|
(2)
|
(26)
|
|
|
____
|
____
|
|
Operating
profit
|
81
|
46
|
|
|
|
|
|
Financial income
|
1
|
1
|
|
Financial expenses
|
(16)
|
(15)
|
|
|
____
|
____
|
|
Profit
before tax
|
66
|
32
|
|
|
====
|
====
|
|
|
|
|
|
All results relate
to continuing operations.
|
|
|
|
|
|
|
|
Assets
|
2010
31 March
$m
|
2009
31 March
$m
|
2009
31 December
$m
|
|
|
|
|
|
|
Americas
|
997
|
1,238
|
970
|
|
EMEA
|
873
|
932
|
926
|
|
Asia Pacific
|
631
|
604
|
631
|
|
Central
|
187
|
191
|
196
|
|
|
____
|
____
|
____
|
|
Segment
assets
|
2,688
|
2,965
|
2,723
|
|
|
|
|
|
|
Unallocated assets:
|
|
|
|
|
Deferred tax
receivable
|
90
|
-
|
95
|
|
Current tax
receivable
|
37
|
46
|
35
|
|
Cash and cash
equivalents
|
41
|
121
|
40
|
|
|
____
|
____
|
____
|
|
Total
assets
|
2,856
|
3,132
|
2,893
|
|
|
====
|
====
|
====
|
4.
|
Americas
|
|
|
2010
3 months ended
31 March
$m
|
2009
3 months ended
31 March
$m
|
|
Revenue
|
|
|
|
|
Franchised
|
98
|
99
|
|
|
Managed
|
29
|
31
|
|
|
Owned and leased
|
51
|
49
|
|
|
____
|
____
|
|
Total
|
178
|
179
|
|
|
====
|
====
|
|
Operating
profit
|
|
|
|
|
Franchised
|
81
|
80
|
|
|
Managed
|
7
|
(4)
|
|
|
Owned and leased
|
(2)
|
(1)
|
|
|
Regional overheads
|
(14)
|
(12)
|
|
|
____
|
____
|
|
Total
|
72
|
63
|
|
|
====
|
====
|
|
All results relate
to continuing operations.
|
5.
|
EMEA
|
|
|
2010
3 months ended
31 March
$m
|
2009
3 months ended
31 March
$m
|
|
Revenue
|
|
|
|
|
Franchised
|
17
|
21
|
|
|
Managed
|
29
|
28
|
|
|
Owned and leased
|
44
|
38
|
|
|
____
|
____
|
|
Total
|
90
|
87
|
|
|
====
|
====
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
Franchised
|
12
|
16
|
|
|
Managed
|
13
|
16
|
|
|
Owned and leased
|
5
|
1
|
|
|
Regional overheads
|
(9)
|
(9)
|
|
|
____
|
____
|
|
Total
|
21
|
24
|
|
|
====
|
====
|
|
All results relate
to continuing operations.
|
6.
|
Asia
Pacific
|
|
|
2010
3 months ended
31 March
$m
|
2009
3 months ended
31 March
$m
|
|
Revenue
|
|
|
|
|
Franchised
|
3
|
3
|
|
|
Managed
|
33
|
21
|
|
|
Owned and leased
|
33
|
32
|
|
|
____
|
____
|
|
Total
|
69
|
56
|
|
|
===
|
===
|
|
Operating
profit
|
|
|
|
|
Franchised
|
2
|
1
|
|
|
Managed
|
14
|
8
|
|
|
Owned and leased
|
8
|
7
|
|
|
Regional overheads
|
(6)
|
(6)
|
|
|
____
|
____
|
|
Total
|
18
|
10
|
|
|
===
|
===
|
|
All results relate
to continuing operations.
|
7.
|
Exceptional
items
|
|
|
2010
3 months ended
31 March
$m
|
2009
3 months ended
31 March
$m
|
|
Continuing
operations:
|
|
|
|
|
|
|
|
Exceptional
operating items
|
|
|
|
|
Administrative
expenses:
|
|
|
|
|
Holiday Inn brand
relaunch (a)
|
(1)
|
(5)
|
|
|
Enhanced pension
transfer (b)
|
-
|
(21)
|
|
|
|
____
|
____
|
|
|
|
(1)
|
(26)
|
|
|
Impairment:
|
|
|
|
|
Impairment of other
financial assets (c)
|
(1)
|
-
|
|
|
|
____
|
____
|
|
|
(2)
|
(26)
|
|
|
====
|
====
|
|
Tax
|
|
|
|
Tax on exceptional
operating items
|
4
|
5
|
|
|
|
____
|
____
|
|
|
|
4
|
5
|
|
|
====
|
====
|
|
Discontinued
operations:
|
|
|
|
Gain on disposal of
assets:
|
|
|
|
Tax credit (d)
|
2
|
4
|
|
|
____
|
____
|
|
|
2
|
4
|
|
|
====
|
====
|
|
|
|
|
|
|
|
Exceptional
items
|
|
These items are
treated as exceptional by reason of their size or nature.
|
|
a)
|
Relates to costs
incurred in support of the worldwide relaunch of the Holiday Inn brand
family that was announced on 24 October 2007.
|
|
b)
|
Related to
the payment of enhanced pension transfers to those deferred members of
the InterContinental Hotels UK Pension Plan who had accepted an offer
to receive the enhancement either as a cash lump sum or as an
additional transfer value to an alternative pension plan provider. The exceptional item in 2009 comprises the
lump sum payments ($9m), the IAS 19 settlement loss arising on the
pension transfers ($11m) and the costs of the arrangement ($1m). The payments and transfers were made in
January 2009.
|
|
c)
|
Relates to
available-for-sale equity investments and arises as a result of a
prolonged decline in their fair value below cost.
|
|
d)
|
In 2010,
relates primarily to tax refunded relating to the sale of a hotel in a
prior year. In 2009, related to tax
arising on disposals together with the release of provisions no longer
required in respect of hotels disposed of in prior years.
|
8.
|
Tax
|
|
The tax charge 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 27% (2009 24%) analysed
as follows.
|
|
|
2010
|
2010
|
2010
|
2009
|
2009
|
2009
|
|
3
months ended 31 March
|
Profit
$m
|
Tax
$m
|
Tax
rate
|
Profit
$m
|
Tax
$m
|
Tax
rate
|
|
Before
exceptional items
|
|
|
|
|
|
|
|
Continuing
operations
|
68
|
(18)
|
27%
|
58
|
(14)
|
24%
|
|
|
|
|
|
|
|
|
|
Exceptional
items
|
|
|
|
|
|
|
|
Continuing
operations
|
(2)
|
4
|
|
(26)
|
5
|
|
|
Discontinued
operations
|
-
|
2
|
|
-
|
4
|
|
|
|
____
|
____
|
|
____
|
____
|
|
|
|
66
|
(12)
|
|
32
|
(5)
|
|
|
|
====
|
====
|
|
====
|
====
|
|
|
Analysed as:
|
|
|
|
|
|
|
|
|
UK tax
|
|
(1)
|
|
|
4
|
|
|
|
Foreign tax
|
|
(11)
|
|
|
(9)
|
|
|
|
|
____
|
|
|
____
|
|
|
|
|
(12)
|
|
|
(5)
|
|
|
|
|
====
|
|
|
====
|
|
|
By also excluding
the effect of prior year items, the equivalent effective tax rate would
be approximately 35% (2009 39%). Prior
year items have been treated as relating wholly to continuing
operations.
|
9.
|
Earnings
per ordinary share
|
|
Basic earnings per
ordinary share is calculated by dividing the profit for the period
available for IHG equity holders by the weighted average number of
ordinary shares, excluding investment in own shares, in issue during
the period.
Diluted earnings
per ordinary share is calculated by adjusting basic earnings per
ordinary share to reflect the notional exercise of the weighted average
number of dilutive ordinary share options outstanding during the period.
Adjusted earnings
per ordinary share is disclosed in order to show performance
undistorted by exceptional items, to give a more meaningful comparison
of the Group’s performance.
|
|
3
months ended 31 March
|
2010
|
2010
|
2009
|
2009
|
|
|
Continuing
operations
|
Total
|
Continuing
operations
|
Total
|
|
Basic
earnings per ordinary share
|
|
|
|
|
|
Profit available
for equity holders ($m)
|
52
|
54
|
23
|
27
|
|
Basic weighted
average number of ordinary shares (millions)
|
287
|
287
|
284
|
284
|
|
Basic earnings per
ordinary share (cents)
|
18.1
|
18.8
|
8.1
|
9.5
|
|
|
====
|
====
|
====
|
====
|
|
Diluted
earnings per ordinary share
|
|
|
|
|
|
Profit available
for equity holders ($m)
|
52
|
54
|
23
|
27
|
|
Diluted weighted
average number of ordinary shares (millions)
|
295
|
295
|
285
|
285
|
|
Diluted earnings
per ordinary share (cents)
|
17.6
|
18.3
|
8.1
|
9.5
|
|
|
====
|
====
|
====
|
====
|
|
Adjusted
earnings per ordinary share
|
|
|
|
|
|
Profit available
for equity holders ($m)
|
52
|
54
|
23
|
27
|
|
Adjusting items
(note 7):
|
|
|
|
|
|
|
Exceptional
operating items ($m)
|
2
|
2
|
26
|
26
|
|
|
Tax on exceptional
operating items ($m)
|
(4)
|
(4)
|
(5)
|
(5)
|
|
|
Gain on disposal of
assets, net of tax ($m)
|
-
|
(2)
|
-
|
(4)
|
|
|
____
|
____
|
____
|
____
|
|
Adjusted earnings
($m)
|
50
|
50
|
44
|
44
|
|
Basic weighted
average number of ordinary shares (millions)
|
287
|
287
|
284
|
284
|
|
Adjusted earnings
per ordinary share (cents)
|
17.4
|
17.4
|
15.5
|
15.5
|
|
|
====
|
====
|
====
|
====
|
|
Diluted weighted
average number of ordinary shares (millions)
|
295
|
295
|
285
|
285
|
|
Adjusted diluted
earnings per ordinary share (cents)
|
16.9
|
16.9
|
15.4
|
15.4
|
|
|
====
|
====
|
====
|
====
|
|
Earnings
per ordinary share from discontinued operations
|
2010
3 months ended
31 March
cents per share
|
2009
3 months ended
31 March
cents per share
|
|
Basic
|
0.7
|
1.4
|
|
Diluted
|
0.7
|
1.4
|
|
|
====
|
====
|
|
The diluted
weighted average number of ordinary shares is calculated as:
|
|
|
2010
3 months ended
31 March
millions
|
2009
3 months ended
31 March
millions
|
|
Basic weighted
average number of ordinary shares
|
287
|
284
|
|
Dilutive potential
ordinary shares – employee share options
|
8
|
1
|
|
|
____
|
____
|
|
|
295
|
285
|
|
|
====
|
====
|
10.
|
Net debt
|
|
|
2010
31 March
|
2009
31 March
|
2009
31 December
|
|
|
|
|
restated*
|
|
|
$m
|
$m
|
$m
|
|
|
|
|
|
|
Cash and cash
equivalents
|
41
|
121
|
40
|
|
Loans and other
borrowings – current
|
(104)
|
(20)
|
(106)
|
|
Loans and other
borrowings – non-current
|
(977)
|
(1,388)
|
(1,016)
|
|
Derivatives hedging
debt values*
|
(37)
|
-
|
(10)
|
|
|
____
|
____
|
____
|
|
Net debt
|
(1,077)
|
(1,287)
|
(1,092)
|
|
|
====
|
====
|
====
|
|
Finance lease
liability included above
|
(205)
|
(202)
|
(204)
|
|
|
====
|
====
|
====
|
|
*
|
With effect from 1
January 2010, net debt includes the exchange element of the fair value
of currency swaps that fix the value of the Group’s £250m 6%
bonds at $415m. An equal and opposite
exchange adjustment on the retranslation of the £250m 6% bonds is
included in non-current loans and other borrowings.
Comparatives have been restated on a consistent
basis.
|
11.
|
Movement
in net debt
|
|
|
2010
3 months ended
31 March
|
2009
3 months
ended
31 March
|
2009
12 months ended
31 December
|
|
|
$m
|
$m
|
$m
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents
|
-
|
46
|
(44)
|
|
Add back cash flows
in respect of other components of net debt:
|
|
|
|
|
Issue of
£250m 6% bonds
|
-
|
-
|
(411)
|
|
Decrease/(increase)
in other borrowings
|
12
|
(66)
|
660
|
|
|
____
|
____
|
____
|
|
Decrease/(increase)
in net debt arising from cash flows
|
12
|
(20)
|
205
|
|
|
|
|
|
|
Non-cash movements:
|
|
|
|
|
Finance lease
liability
|
(1)
|
(1)
|
(2)
|
|
Exchange and other
adjustments
|
4
|
7
|
(22)
|
|
|
____
|
____
|
____
|
|
Decrease/(increase)
in net debt
|
15
|
(14)
|
181
|
|
|
|
|
|
|
Net debt at
beginning of the period
|
(1,092)
|
(1,273)
|
(1,273)
|
|
|
____
|
____
|
____
|
|
Net
debt at end of the period
|
(1,077)
|
(1,287)
|
(1,092)
|
|
|
====
|
====
|
====
|
12.
|
Dividends
|
|
The proposed final
dividend of 29.2 cents per share for the year ended 31 December 2009 is
not recognised in these accounts as it remains subject to approval at
the Annual General Meeting to be held on 28 May 2010. If approved, the
dividend will be paid on 4 June 2010 to shareholders who were
registered on 26 March 2010 at an expected total cost of $84m.
|
13.
|
Capital
commitments and contingencies
|
|
At 31 March 2010,
the amount contracted for but not provided for in the financial
statements for expenditure on property, plant and equipment and
intangible assets was $3m (2009 31 December $9m, 31 March $33m).
At 31 March 2010,
the Group had contingent liabilities of $15m (2009 31 December $16m, 31
March $10m) mainly relating to litigation claims.
In limited cases,
the Group may provide performance guarantees to third-party owners to
secure management contracts. The maximum
unprovided exposure under such guarantees is $99m (2009 31 December
$106m, 31 March $232m).
From time to time,
the Group is subject to legal proceedings the ultimate outcome of each
being always subject to many uncertainties inherent in litigation. The Group has also given warranties in respect
of the disposal of certain of its former subsidiaries.
It is the view of the Directors that, other than to
the extent that liabilities have been provided for in these financial
statements, such legal proceedings and warranties are not expected to
result in material financial loss to the Group.
|
|
INDEPENDENT
REVIEW REPORT TO InterContinental
Hotels Group pLC
|
|
Introduction
We have been engaged by the Company to review the
condensed set of financial statements in the interim financial report
for the three months ended 31 March 2010 which comprises the Group
income statement, Group statement of comprehensive income, Group
statement of changes in equity, Group statement of financial position,
Group statement of cash flows and the related notes 1 to 13. We have read the other information contained
in the interim financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information
in the condensed set of financial statements.
This report is made solely to the Company in accordance
with 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. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our work, for this
report, or for the conclusions we have formed.
Directors' Responsibilities
The interim financial report is the responsibility of,
and has been approved by, the Directors. The
Directors are responsible for preparing the interim financial report in
accordance with the Disclosure and Transparency Rules of the United Kingdom’s
Financial Services Authority.
As disclosed in note 1, the annual financial statements
of the Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of
financial statements included in this interim financial report has been
prepared in accordance with International Accounting Standard 34,
‘Interim Financial Reporting’, as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company
a conclusion on the condensed set of financial statements in the
interim financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor of
the Entity’ issued by the Auditing Practices Board for use in the
United Kingdom. A review of interim
financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and consequently
does not enable us to obtain assurance that we would become aware of
all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention
that causes us to believe that the condensed set of financial
statements in the interim financial report for the three months ended
31 March 2010 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules
of the United Kingdom’s Financial Services Authority.
Ernst & Young LLP
London
10 May 2010
Notes to
Editors:
InterContinental
Hotels Group (IHG) [LON:IHG, NYSE:IHG (ADRs)] is the world's largest
hotel
group by number of rooms. IHG owns,
manages, leases or franchises, through various subsidiaries, over 4,400
hotels
and more than 650,000 guest rooms in 100 countries and territories
around the
world. The Group owns a portfolio of
well recognised and respected hotel brands including InterContinental®
Hotels & Resorts, Hotel Indigo®, Crowne Plaza®
Hotels
& Resorts, Holiday Inn® Hotels and Resorts, Holiday
Inn Express®,
Staybridge Suites® and Candlewood Suites®,
and also
manages the
world's largest hotel loyalty programme, Priority Club® Rewards with
48 million members
worldwide.
IHG has over 1,300 hotels
in its development pipeline, which will create 160,000 jobs worldwide
over the
next few years.
InterContinental
Hotels
Group PLC is the Group's holding company and is incorporated in Great Britain and registered in England and Wales.
IHG
offers information and online reservations for all
its hotel brands at www.ihg.com
and
information for the Priority Club Rewards programme at www.priorityclub.com.
For the latest news from IHG, visit our online Press Office at www.ihg.com/media.
Cautionary
note regarding forward-looking statements
This
announcement contains certain forward-looking statements as defined
under US
law
(Section 21E of the Securities Exchange Act of 1934).
These forward-looking statements can be
identified by the fact that they do not relate to historical or current
facts. Forward-looking statements often
use words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’,
‘intend’,
‘plan’, ‘goal’, ‘believe’ or other words of similar meaning. By their nature, forward-looking statements
are inherently predictive, speculative and involve risk and uncertainty. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed in or
implied by, such forward-looking statements.
Factors that could affect the business and the
financial results are
described in ‘Risk Factors’ in the InterContinental Hotels Group PLC
Annual
report on Form 20-F filed with the United States Securities and
Exchange
Commission.
|
|