Interim Results to 30 June 2012
Preferred brands continue to drive outperformance
Financial summary0 |
2012 |
2011 |
|
% Change YoY |
Actual |
CER1 |
CER & ex. LDs2 |
Revenue |
$878m |
$850m |
3% |
5% |
6% |
Operating profit |
$286m |
$269m |
6% |
7% |
11% |
Total adjusted EPS |
64.1¢ |
59.2¢ |
8% |
|
|
Total basic EPS3 |
94.8¢ |
54.0¢ |
76% |
|
|
Interim dividend per share |
21.0¢ |
16.0¢ |
31%4 |
|
|
Net debt |
$564m |
$818m |
|
|
|
Richard Solomons, Chief Executive of InterContinental
Hotels Group PLC, said:
"We have delivered good results in the first half with RevPAR
growth from all regions through gains in both occupancy and rate. Our
brands continue to perform well and we have achieved solid underlying
margin growth, resulting in increased profits and strong cash flows.
We are increasing the interim dividend by 31% reflecting these
results, our previously stated intention to rebalance the interim and
final dividend payments and our confidence in the future prospects of
the business. Consistent with our asset light strategy and our strong
track record of returning funds to shareholders, we today announce a
$1bn return of capital. This recognises the expected proceeds from the
ongoing disposal of InterContinental New York Barclay and our
commitment to maintaining an investment grade credit rating.
We continue to invest for growth, strengthening both our
existing and our new brands, including EVEN Hotels and HUALUXE Hotels
& Resorts. While the global economic environment remains uncertain,
IHG continues to trade well and we are confident that our strategy will
deliver high quality growth into the future."
Driving Market Share
- Total gross revenue5 from hotels in
IHG's system of $10.3bn, up 7.3%
- First half global RevPAR growth of 6.5% (rate up
3.5%) with second quarter up 6.1% (rate up 3.8%)
- Americas first half RevPAR up 7.1% (US 7.2%); Europe
1.9%; AMEA 7.9%; Greater China 9.7%.
- Total system size of 666,873 rooms (4,542 hotels),
up 2% year on year
- 17,449 rooms (112 hotels) added to the system with
8,924 rooms (50 hotels) removed.
- Pipeline of 167,485 rooms (1,060 hotels, 13% leading
active global share). Over 40% under construction.
- Signings of 22,104 rooms (152 hotels), ahead of H1 2011
including 14,073 Holiday Inn brand family rooms.
- Building preferred brands
- Holiday Inn continues to outperform, growing RevPAR
premiums to the upper midscale segment in the US over the past 5 years
by 6% pts for Holiday Inn and 5% pts for Holiday Inn Express.
- For the second year running in 2012, Holiday Inn has
been awarded the J.D Power and Associates Award for highest in guest
satisfaction among midscale full-service hotel chains.
- Crowne Plaza repositioning underway as planned, with
expected completion by end of 2015.
- Hotel Indigo has demonstrated strong growth in H1, with
8 hotel openings and 10 signings.
- HUALUXE Hotels and Resorts first 4 pipeline signings in
H1, with a further 4 in July, plus 19 letters of intent.
Growing Margins
- Fee based margin5 growth of 2.3%pts to 42.9%
reflects continuing benefits of scale and some favourable phasing of
costs between the first and second half.
Uses of Cash
- Return of funds to shareholders
- $1bn will be returned to shareholders via a $500m
special dividend with share consolidation6 to be paid in Q4
2012 and a $500m share buyback programme6 which will
commence in Q4 2012.
- Reflects our commitment to return significant value to
shareholders, maintains an efficient balance sheet and investment grade
credit rating, and takes into account expected proceeds from the
disposal of InterContinental New York Barclay.
- Takes total funds returned to shareholders since
demerger to $8.9bn, including $1.2bn of ordinary dividends
- Sustainable growth in the ordinary dividend
- 31% increase in the interim dividend to 21¢
reflects confidence in IHG's future prospects, plus continued intention
to rebalance the interim dividend towards one third of the total for
the year.
- Growth investment funded by recycling capital
- Modest growth capital expenditure of $5m in H1 due to
phasing.
- Full year growth capital expenditure remains at $100m -
$200m, plus c.$150m maintenance capex.
- The disposal of InterContinental New York Barclay
continues to progress.
- InterContinental London Park Lane is likely to be the
next major asset disposal, with a key milestone in the decision making
process being the expected opening of InterContinental London
Westminster by early 2013.
Current trading update
- Provisional July RevPAR growth7 3.8%: Americas
5.0%, Europe (0.2)%, AMEA 1.7% and Greater China 7.1%, reflecting in
part tougher comparatives and including the timing of US holidays.
0 All figures are before
exceptional items unless otherwise noted. See appendices for financial
headlines
1 CER = constant exchange rates
2 Excluding $10m of significant liquidated damages
receipts in 2011
3 After exceptional items
4 Partly intended to rebalance interim and final
dividend
5&7 See appendix 6 for definition
6 Subject to shareholder approval
Americas – Continued profit growth driven by franchise
business
RevPAR increased 7.1%, with 4.4% rate growth and second
quarter RevPAR increased 6.7% with 4.7% rate growth. US RevPAR was up
7.2% in the first half, with 6.9% growth in the second quarter. On a
total basis including the benefit of new hotels, US RevPAR grew 8.0% in
the half, in line with the industry. On the same basis, Holiday Inn and
Holiday Inn Express grew 8.5% and 8.6% respectively, significantly
outperforming the upper midscale segment up 7.7%.
Revenue decreased 4% to $400m and operating profit increased
4% to $233m. After adjusting for owned hotel disposals in 2011, the
impact of a $10m liquidated damages receipt in 2011 and the results
from managed lease hotels*, revenue was up 5% and operating profit up
9%. This was driven by good RevPAR growth across the region, resulting
in a 9% increase in franchise royalties, slightly offset by the impact
of a refurbishment of one owned hotel in the Caribbean and a $3m
decrease in fees associated with initial franchising, relicensing, and
termination of hotels.
We signed 12,751 rooms (110 hotels) and opened 8,974 rooms (75
hotels) into the system in the half. The Holiday Inn brand family
accounted for around three quarters of openings and signings in the
region in the half, demonstrating the ongoing benefits from the
relaunch. Openings included 9 hotels for our extended stay hotel
brands, Candlewood Suites and Staybridge Suites and a second hotel for
the InterContinental brand in Mexico City. Signings included 5 Hotel
Indigo hotels and 19 for our extended stay brands.
Europe – Solid performance in challenging markets
RevPAR increased 1.9%, with 1.0% rate growth. RevPAR was up
1.5% in the second quarter reflecting the continued uncertainty in
macro economic conditions across Europe with rate up 0.9%. (Q2 RevPAR:
UK 1.9%, Germany 7.1%, France 0.9%).
Revenue increased 11% (19% at CER) to $206m and operating
profit increased 2% (8% at CER) to $52m, with an adverse impact on
growth from the weakening Euro:Dollar exchange rate over the period. At
CER and after adjusting for a leased hotel disposal and excluding
results from managed lease hotels*, revenue increased 1% and operating
profit increased 10%, driven in part by a decrease in regional
overheads offset by higher costs in the owned and leased hotels.
We signed 2,964 rooms (17 hotels), including an
InterContinental in St. Petersburg and 4 Hotel Indigo hotels. 3,225
rooms (22 hotels) were opened into the system, the most in a half year
since 2008, including 4 Hotel Indigo hotels.
AMEA – Strong RevPAR growth
RevPAR increased 7.9%, with 2.2% rate growth and second
quarter RevPAR increased 8.8% with 2.7% rate growth. Trading was strong
across the region, with most markets showing good RevPAR growth,
reflecting economic growth in Southeast Asia, continued recovery from
the natural disasters last year, and stronger trading in some markets
in the Middle East.
AMEA revenue increased 8% to $108m and operating profit
increased 11% to $40m. After adjusting for the disposal in Q3 2011 of a
hotel asset and partnership interest in Australia, which contributed
$3m to profits in H1 2011, operating profit increased 21% at CER. This
reflects strong RevPAR growth across the managed business.
We signed 1,395 rooms (6 hotels) in the half, including 2
InterContinental hotels (625 rooms). 1,868 rooms (7 hotels) were
opened, mostly with the InterContinental and Crowne Plaza brands,
including the 197 room InterContinental Danang Sun Peninsula Resort
hotel in Vietnam, the first Crowne Plaza Resort for the region in
Thailand and the first Holiday Inn Express hotel for Southeast Asia, in
Bangkok.
Greater China – Double digit system and pipeline growth
RevPAR increased 9.7%, with 3.8% rate growth and second
quarter RevPAR increased 7.9% with 4.1% rate growth. Continuing
strength in RevPAR growth in North and East China of 14.3% and 11.2%
respectively was slightly offset by weaker RevPAR growth in South and
West China of 3.6%.
Revenue increased 14% (13% CER) to $108m and operating profit
increased 20% (23% CER) to $36m. This was driven by 7.6% RevPAR growth
at the InterContinental Hong Kong; $3m growth in managed profits
reflecting strong RevPAR growth and 13% room growth, partly offset by
incremental investment within managed operations. Regional costs
increased by $3m reflecting additional resources in the region to
support continued growth.
We opened 3,382 rooms (8 hotels) in the first half, taking our
open rooms in the region to 58,184, and strengthening our market
leading position. Openings included 2 Crowne Plaza hotels and 5 Holiday
Inn brand family hotels, including the largest Holiday Inn in the world
in Macau with 1,224 rooms.
Signings of 4,994 rooms (19 hotels) took our pipeline to
49,801 rooms (156 hotels) giving us a continued leading 18% share of
the active hotel pipeline in China. 30% of our total group pipeline is
in Greater China, of which over 70% is under construction. Signings
comprised 4 Crowne Plaza hotels, 10 Holiday Inn brand family hotels, 4
HUALUXE Hotels and Resorts hotels and one Hotel Indigo hotel,
demonstrating the strength of our brands in Greater China.
*See appendix 6 for definition
Interest, tax, cash flow and exceptionals
The interest charge for the period was $25m (H1 2011: $32m)
due to lower levels of net debt.
Based on the position at the end of the half, the tax charge
has been calculated using an estimated annual tax rate of 29% (H1 2011:
28%). The 2012 full year tax rate is expected to be in the high 20s,
moving towards the low 30s in 2013. An exceptional tax credit of $79m
relates to prior year matters settled in Q1 2012, together with
associated deferred tax amounts.
A $23m exceptional credit relates to the reversal of a
previously recorded impairment charge on a North American hotel.
Net debt was $564m at the end of the quarter (including the
$210m finance lease on the InterContinental Boston). This is down from
$818m at 30 June 2011 but up $30m on the year end position due to
seasonal working capital movements.
The provisional triennial actuarial valuation of the UK
defined benefit plan as at 31 March 2012 indicates a deficit of
£132m; the future funding related to this is under discussion
with the Trustees.
Appendix 1: RevPAR Movement Summary
|
July 2012 |
Half Year 2012 |
Q2 2012 |
RevPAR* |
RevPAR |
Rate |
Occ. |
RevPAR |
Rate |
Occ. |
Group |
3.8% |
6.5% |
3.5% |
1.8pts |
6.1% |
3.8% |
1.5pts |
Americas |
5.0% |
7.1% |
4.4% |
1.6pts |
6.7% |
4.7% |
1.3pts |
Europe |
(0.2)% |
1.9% |
1.0% |
0.6pts |
1.5% |
0.9% |
0.5pts |
AMEA |
1.7% |
7.9% |
2.2% |
3.6pts |
8.8% |
2.7% |
3.9pts |
G. China |
7.1% |
9.7% |
3.8% |
3.2pts |
7.9% |
4.1% |
2.3pts |
*See appendix 6 for definition
Appendix 2: First Half System & Pipeline Summary
(rooms)
|
System |
Pipeline |
Openings |
Removals |
Net |
Total |
YoY% |
Signings |
Total |
Group |
17,449 |
(8,924) |
8,525 |
666,873 |
1.6% |
22,104 |
167,485 |
Americas |
8,974 |
(4,289) |
4,685 |
446,883 |
0.3% |
12,751 |
76,721 |
Europe |
3,225 |
(1,987) |
1,238 |
101,123 |
2.4% |
2,964 |
14,467 |
AMEA |
1,868 |
(2,268) |
(400) |
60,683 |
(0.7)% |
1,395 |
26,496 |
G. China |
3,382 |
(380) |
3,002 |
58,184 |
13.2% |
4,994 |
49,801 |
Appendix 3: Quarter 2 financial headlines
3 months to
30 June 2012
Operating Profit $m |
Total |
Americas |
Europe |
AMEA |
G. China |
Central |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
Franchised |
146 |
140 |
123 |
118 |
18 |
19 |
3 |
3 |
2 |
0 |
- |
- |
Managed |
53 |
54 |
12 |
15 |
11 |
11 |
19 |
17 |
11 |
11 |
- |
- |
Owned & leased |
34 |
31 |
9 |
7 |
15 |
17 |
1 |
1 |
9 |
6 |
- |
- |
Regional overheads |
(29) |
(28) |
(11) |
(12) |
(7) |
(8) |
(5) |
(5) |
(6) |
(3) |
- |
- |
Profit pre central overheads |
204 |
197 |
133 |
128 |
37 |
39 |
18 |
16 |
16 |
14 |
- |
- |
Central overheads |
(36) |
(40) |
- |
- |
- |
- |
- |
- |
- |
- |
(36) |
(40) |
Group Operating profit |
168 |
157 |
133 |
128 |
37 |
39 |
18 |
16 |
16 |
14 |
(36) |
(40) |
Appendix 4: First Half financial headlines
6 months to 30 June 2012
Operating Profit $m |
Total |
Americas |
Europe |
AMEA |
G.China |
Central |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
Franchised |
263 |
248 |
224 |
209 |
31 |
33 |
6 |
5 |
2 |
1 |
- |
- |
Managed |
103 |
103 |
24 |
33 |
15 |
12 |
42 |
39 |
22 |
19 |
- |
- |
Owned & leased |
50 |
47 |
7 |
6 |
20 |
23 |
2 |
2 |
21 |
16 |
- |
- |
Regional overheads |
(55) |
(56) |
(22) |
(23) |
(14) |
(17) |
(10) |
(10) |
(9) |
(6) |
- |
- |
Profit pre central overheads |
361 |
342 |
233 |
225 |
52 |
51 |
40 |
36 |
36 |
30 |
- |
- |
Central overheads |
(75) |
(73) |
- |
- |
- |
- |
- |
- |
- |
- |
(75) |
(73) |
Group Operating profit |
286 |
269 |
233 |
225 |
52 |
51 |
40 |
36 |
36 |
30 |
(75) |
(73) |
Appendix 5: Constant exchange rate (CER) operating
profit movement before exceptional items
|
Total*** |
Americas |
Europe |
AMEA |
G. China |
|
Actual* |
CER** |
Actual* |
CER** |
Actual* |
CER** |
Actual* |
CER** |
Actual* |
CER** |
Q2 Growth/ (decline) |
7% |
8% |
4% |
4% |
(5)% |
0% |
13% |
13% |
14% |
21% |
H1 Growth/ (decline) |
6% |
7% |
4% |
4% |
2% |
8% |
11% |
11% |
20% |
23% |
Exchange rates:
|
H1 2012 |
Q2 |
|
|
|
GBP:USD |
EUR:USD |
GBP:USD |
EUR:USD |
* US dollar actual currency |
|
2012 |
0.63 |
0.77 |
0.63 |
0.78 |
** Translated at constant 2011 exchange
rates |
|
2011 |
0.62 |
0.71 |
0.61 |
0.70 |
*** 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 individually significant liquidated damages
payments.
Managed lease hotels: properties that are
structured for legal reasons as operating leases but with the same
characteristics as management contracts.
Provisional July RevPAR growth : represents
actuals other than for Americas and Group for which the last 3 days in
July are estimated
Appendix 7: Investor Information for 2012 interim
dividend
Ex-dividend date: |
22 August 2012 |
Record date: |
24 August 2012 |
Payment date: |
28 September 2012 |
Dividend payment: |
Ordinary shares = 13.5 pence per share |
ADRs = 21.0 cents per ADR |
For further information, please contact:
Investor Relations (Catherine
Dolton; Isabel Green): |
+44 (0)1895 512176 |
|
Media Relations (Yasmin
Diamond, Kari Kerr): |
+44 (0)1895 512426 |
+44 (0) 7770 736849 |
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.
Webcast and conference call for Analysts and
Shareholders:
A webcast with Richard Solomons (Chief Executive Officer) and Tom
Singer (Chief Financial Officer) will commence at 9.30am UK time on 7
August and can be accessed on www.ihgplc.com/interims12.
There will also be a live dial-in facility to enable you to ask
questions. The presentation will conclude at approximately 10.30am UK
time.
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.
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US conference call and Q&A:
There will also be a conference call, primarily for US investors and
analysts, at 9.00am Eastern Standard Time on 7 August with Richard
Solomons (Chief Executive Officer) and Tom Singer (Chief Financial
Officer). There will be an opportunity to ask questions.
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Website:
The full release and supplementary data will be available on our
website from 7.00 am (London time) on 7 August. The web address is www.ihgplc.com/interims12.
To watch a video of Tom Singer 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 organisation with nine hotel brands including
InterContinental® Hotels & Resorts, Hotel Indigo®, Crowne
Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts,
Holiday Inn Express®, Staybridge Suites®, Candlewood
Suites®, as well as our two newest brands, EVEN™ Hotels and
HUALUXE™ Hotels & Resorts. IHG also manages Priority Club®
Rewards, the world’s first and largest hotel loyalty programme with
over 67 million members worldwide. IHG franchises, leases, manages or
owns over 4,500 hotels and more than 666,000 guest rooms in nearly 100
countries and territories. With more than 1,000 hotels in its
development pipeline, IHG expects to recruit around 90,000 people into
additional roles across its estate 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.
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,
www.facebook.com/ihg
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.
|