3rd Quarter Results
InterContinental Hotels Group PLC
22 November 2005
22 November 2005
InterContinental Hotels Group PLC
Third Quarter Results to 30 September 2005
Third Quarter Headlines
• Continuing Hotels operating profit up 22% from £46m to £56m*.
• Hotels managed and franchised operating profit up 18% from £66m to £78m*.
• Group operating profit reduced from £102m to £87m*, due to disposals of owned hotels. Hotels operating profit
of £64m and Soft Drinks operating profit of £23m. Special item costs of £9m, reflecting property damage from
fire and natural disasters.
• 8.8% RevPAR growth across IHG's hotels. Strongest trading in Americas, with continued rate increases.
• 16,100 pipeline signings. Pipeline of signed rooms now at 95,000, by far the largest in the industry.
• 1,700 net rooms added to room count in the quarter, 5,200 added year to date. 8,300 rooms opened in the
quarter, 25,200 year to date, up 40% year on year. 6,600 room exits, 20,000 year to date, as focus on
improving rooms quality continued.
• Reservation channel revenue delivery up 17% to $1.3bn, year to date up 17% to $3.7bn.
• Intention to float Britvic announced.
• Adjusted earnings per share up 15% from 10.1p to 11.6p in the quarter.
All figures and movements at actual exchange rates and before special items.
*See appendix 4 for analysis of financial headlines.
Current trading
RevPAR continues to be primarily rate led. The Americas, UK Holiday Inn, Middle East and China continue to show good
RevPAR growth. The full year outlook remains positive and in line with company expectations.
Commenting on the results, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:
"We are seeing good progress being made against IHG's strategy, in particular encouraging growth in our development
pipeline and, more recently, the announcement of our intention to float Britvic. Our hotel operating system continues to
strengthen with the number of room nights we deliver to our hotels on the rise. Trading in two of our key markets, the
US and the UK remained strong and we saw RevPAR growth in each of our three regions. Sadly, we have witnessed further
destructive events around the world but we can be proud of the way our people have responded."
Americas: strong performance across the business
Revenue performance
RevPAR increased 11.0% in the quarter, with all brands performing strongly. Rate growth generated most of the increase,
though occupancy continued to rise. Corporate rate business and corporate groups remained strong. InterContinental
showed strong RevPAR growth, with a 28% increase. Holiday Inn showed 10.0% RevPAR growth, outperforming its market
segment.
Operating profit performance
Operating profit from continuing operations increased by 15% from $82m to $94m in the quarter. Continuing owned and
leased profit grew from $1m to $6m, driven by strong trading in New York and San Francisco. Managed and franchised
profit was up 13% to $105m, driven by RevPAR increases and fees from increased franchise sales. Investments in
additional development headcount and technology led to an increase in regional overheads. The trading impact from
hurricanes was broadly neutral.
EMEA: continued out-performance in UK market
Revenue performance
RevPAR increased 5.2% in the quarter, albeit there were considerable variances in performance across geographic markets.
Holiday Inn UK RevPAR was up 1.8%, all rate driven, continuing its market out-performance. The terrorist attacks in
London had some impact on occupancy, particularly from leisure demand, but this now appears to be recovering gradually.
France, where RevPAR was up 3.1%, saw continued improvement at the reopened InterContinental Le Grand Paris, but
declines at the now sold InterContinental Paris. Germany saw recent RevPAR declines reverse, with a 3.7% gain in the
quarter, driven by both occupancy and rate. The Middle East saw RevPAR increase 18.6%, driven by rate growth.
Operating profit performance
Operating profit from continuing operations increased 89% in the quarter from £9m to £17m. Continuing owned and leased
profits were up 75% from £4m to £7m, driven by continued improvement at InterContinental Le Grand Paris. Managed profit
was up 125% from £4m to £9m, as a result of retained management contracts on assets disposed. Franchised profit was
marginally down by £1m to £6m, as a result of foreign exchange movements and the termination of IHG's South African
master franchise. The regional overhead declined marginally.
Asia Pacific: strong growth year to date
Revenue performance
RevPAR increased 0.6% in the quarter. Mainland China RevPAR increased 10.2%, driven by rate increases as strong demand
for IHG brands continues. Performances elsewhere in the region were mixed.
Operating profit performance
IHG continues to experience strong demand in the region, particularly in China. Operating profit from continuing
operations year to date was up 15% from $20m to $23m. Owned and leased operating profit fell $1m to $1m in the quarter,
as a result of fewer rooms being available at the InterContinental Hong Kong due to refurbishment. Managed hotels profit
decreased $1m to $6m in the quarter, after investment in expanding management resources and infrastructure to support
the development growth in the region, particularly China. The regional overhead decreased marginally in the quarter.
Increase in pipeline size and room count
IHG continues to increase its pipeline, supporting the target of 50,000-60,000 net organic room additions by the
end of 2008.
• 16,100 rooms were signed, of which 12,300 rooms were in the Americas, 1,100 in EMEA and 2,700 in Asia Pacific.
43,300 rooms have been signed in the year to date.
• 95,000 rooms are now in the pipeline, up nearly 12,000 (14%) since the start of the year.
• IHG's development activity in China continues to gain pace. There are 47 hotels open, with a further 34 in the
pipeline, an increase of seven in the quarter.
IHG's room count continues to grow, despite a focus on removing poorer quality rooms.
• IHG's room count increased by 1,700 rooms to 539,400. 8,300 rooms opened, of which 3,900 were new build. Two
new InterContinentals and eight Crowne Plazas opened, further increasing the distribution of IHG's upscale
brands.
• 6,600 rooms exited, of which 4,400 were in the Americas. 2,200 rooms exited in EMEA, 1,400 of which were
related to the termination of IHG's South African master franchise, and 600 from sales by IHG without flag.
Strong year to date performance
Continuing Hotels trading has been strong across each of IHG's three regions year to date, with revenues up 14% to £696m
and operating profit up 28% to £147m. Investment in China and development resources has been increased, though total
overheads are still expected to be approximately flat for the full year.
Returns to shareholders
IHG has now returned nearly £2bn to shareholders since Separation in April 2003, with £1.2bn returned so far in 2005. A
further £323m is yet to be returned via IHG's ongoing share buyback programme. Following the receipt of proceeds from
the IPO of Britvic, further cash returns will be made to shareholders. The timing of these returns will be considered in
the light of market conditions and satisfactory progress being made on the intended divestment of further non core hotel
assets.
Disposals
Since the period end, the disposal of the InterContinental Paris and a portfolio of nine hotels in Australasia has been
completed. Proceeds of approximately £380m have been received. IHG remains committed to further disposals when the time
is right, and the retention of up to £1.0bn of its current hotel portfolio.
Britvic intention to float announced
The intention to proceed with a flotation of Britvic was announced on 14 November 2005, and a circular was posted to
shareholders on 16 November 2005.
Comparative third quarter performance was impacted by the non recurrence of 2004's extra trading week, as a result of
which revenues decreased from £186m to £174m, and operating profit from £26m to £23m.
Britvic's strong track record of innovation continued, with J2O, Tango Clear, Pepsi Max Twist and Fruit Shoot further
increasing their market share, particularly in off premises sales.
Appendix 1: Asset disposal programme detail
Number of hotels Proceeds Net book value Annual EBITDA Annual EBIT
forgone* forgone*
Disposed to date** 140 £2.2bn £2.2bn £193m £132m
On the market 4 - £43m - -
Remaining hotels 53 - £1.5bn - -
*Based on EBITDA and EBIT in the last full year before disposal. An analysis of
EBIT and EBITDA foregone is provided in the supplementary information.
** Holiday Inn Ghent sold since date of last announcement
For a full list please visit www.ihgplc.com/Investors
Appendix 2: Return of funds programme
Timing Total return Returned to date Still to be returned
£501m special dividend Paid December 2004 £501m £501m Nil
First £250m share Completed in 2004 £250m £250m Nil
buyback
Second £250m share Ongoing £250m £177m £73m
buyback
£996m capital return Paid 8 July 2005 £996m £996m Nil
Third £250m share Yet to commence £250m - £250m
buyback
Total £2.25bn £1.92bn £0.32bn
Appendix 3: Continuing operations
The 2004 full year profit analysed between discontinued and continuing
operations is available in the supplementary information slides which are
available on our website at www.ihgplc.com/Q3
Appendix 4: Financial headlines
Q3 £m Total Americas EMEA Asia Pacific Central
2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
Managed and franchised operating profit 78 66 59 51 15 11 4 4
Continuing owned and leased operating 11 5 4 - 7 4 - 1
profit
Regional overheads (17) (14) (10) (6) (5) (6) (2) (2)
Continuing hotels operating profit pre 72 57 53 45 17 9 2 3
central overheads
Central overheads (16) (11) (16) (11)
Continuing hotels operating profit 56 46
Discontinued owned and leased operating 8 30 - 3 3 25 5 2
profit
Total Hotels operating profit 64 76 53 48 20 34 7 5 (16) (11)
Soft drinks operating profit 23 26
Group operating profit pre special 87 102
items
Special items (9) (5)
Group operating profit post special 78 97
items
For further information, please contact:
Investor Relations (Gavin Flynn/Paul Edgecliffe-Johnson): +44 (0) 1753 410 176
+44 (0) 7808 098 972
Media Affairs (Leslie McGibbon): +44 (0) 1753 410 425
+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.
Conference call for Analysts and Shareholders
A conference call with Andrew Cosslett (Chief Executive) and Richard Solomons
(Finance Director) will commence at 8.00 am (London time) on 22 November. There
will be an opportunity to ask questions.
UK Local Rate 0800 953 0844
Standard International Dial In +44 (0)1452 562 716
A recording of the conference call will be available for 7 days. To access this
please dial the relevant number below and use the access number 2070837#
UK dial in 0845 245 5205
International dial-in +44 (0)1452 550000
US Q&A conference call
There will also be a conference call, primarily for US investors and analysts,
at 10am (Eastern Standard Time) on 22 November with Andrew Cosslett (Chief
Executive) and Richard Solomons (Finance Director). There will be an
opportunity to ask questions.
International dial-in +44 (0)1452 562 716
US Toll Free 1866 832 0717
A recording of the conference will also be available for 7 days. To access this
please dial the relevant number below and use the access number 2076272#.
International dial-in +44 (0)1452 550000
US Toll Free 0845 245 5205
Website
The full release and supplementary data will be available on our website from
7.00 am (London time) on 22 November 2005. The web address is www.ihgplc.com/Q3
Note to Editors:
InterContinental Hotels Group PLC of the United Kingdom (LON:IHG, NYSE:IHG
(ADRs)) is the world's largest hotel group by number of rooms. InterContinental
Hotels Group owns, manages, leases or franchises, through various subsidiaries,
almost 3,600 hotels and 539,000 guest rooms in nearly 100 countries and
territories around the world. The Group owns a portfolio of well recognised and
respected hotel brands including InterContinental(R) Hotels & Resorts, Crowne
Plaza(R) Hotels & Resorts, Holiday Inn(R) Hotels and Resorts, Holiday Inn
Express(R), Staybridge Suites(R), Candlewood Suites(R) and Hotel IndigoTM, and
also manages the world's largest hotel loyalty programme, Priority Club(R)
Rewards, with over 27 million members worldwide. In addition to this,
InterContinental Hotels Group has a 47.5% interest in Britvic, one of the two
leading manufacturers of soft drinks, by value and volume, in Great Britain.
InterContinental Hotels Group offers information and online reservations for all
its hotel brands at www.ichotelsgroup.com and information for the Priority Club
Rewards programme at www.priorityclub.com.
For the latest news from InterContinental Hotels Group, visit our online Press
Office at www.ihgplc.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 ' target', 'expect', 'intend', '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 2005
3 months ended 30 September 2005 3 months ended 30 September 2004
Continuing Discontinued Continuing Discontinued
operations operations operations operations
Total Total
£m £m £m £m £m £m
Revenue (note 3) 420 34 454 398 165 563
Cost of sales (251) (26) (277) (251) (117) (368)
Administrative expenses (58) - (58) (45) - (45)
____ ____ ____ ____ ____ ____
111 8 119 102 48 150
Depreciation and amortisation (32) - (32) (30) (18) (48)
Other operating income and (9) - (9) (5) - (5)
expenses (note 8)
____ ____ ____ ____ ____ ____
Operating profit (note 4) 70 8 78 67 30 97
Financial income 7 - 7 11 - 11
Financial expenses (15) - (15) (16) - (16)
____ ____ ____ ____ ____ ____
Profit before tax 62 8 70 62 30 92
____ ____ ____ ____ ____ ____
UK tax (5) - (5) 1 (6) (5)
Foreign tax (15) (2) (17) (9) (3) (12)
Special tax (note 8) 2 - 2 12 - 12
____ ____ ____ ____ ____ ____
Total tax (note 9) (18) (2) (20) 4 (9) (5)
____ ____ ____ ____ ____ ____
Profit after tax 44 6 50 66 21 87
Gain on disposal of assets, - - - - - -
net of tax charge of £1m
(2004 credit of £nil)
____ ____ ____ ____ ____ ____
Profit available for 87
shareholders
44 6 50 66 21
==== ==== ==== ==== ==== ====
Attributable to:
Equity holders of the 38 6 44 57 21 78
parent
Minority interest 6 - 6 9 - 9
____ ____ ____ ____ ____ ____
Profit for the period 44 6 50 66 21 87
==== ==== ==== ==== ==== ====
Earnings per ordinary share
(note 10):
Basic 8.6p 1.4p 10.0p 8.1p 3.0p 11.1p
Diluted 8.4p 1.3p 9.7p 8.0p 3.0p 11.0p
Adjusted 10.2p 11.6p 7.1p 10.1p
===== ===== ===== =====
INTERCONTINENTAL HOTELS GROUP PLC
GROUP INCOME STATEMENT
For the nine months ended 30 September 2005
9 months ended 30 September 2005 9 months ended 30 September 2004
Continuing Discontinued Continuing Discontinued
operations operations operations operations
Total Total
£m £m £m £m £m £m
Revenue (note 3) 1,238 276 1,514 1,164 500 1,664
Cost of sales (769) (203) (972) (747) (368) (1,115)
Administrative expenses (166) - (166) (151) - (151)
____ ____ ____ ____ ____ ____
303 73 376 266 132 398
Depreciation and amortisation (94) (3) (97) (88) (56) (144)
Other operating income and (17) - (17) 1 - 1
expenses (note 8)
____ ____ ____ ____ ____ ____
Operating profit (note 4) 192 70 262 179 76 255
Financial income 24 - 24 50 - 50
Financial expenses (50) - (50) (59) - (59)
____ ____ ____ ____ ____ ____
Profit before tax 166 70 236 170 76 246
____ ____ ____ ____ ____ ____
UK tax (5) (14) (19) - (16) (16)
Foreign tax (46) (8) (54) (18) (8) (26)
Special tax (note 8) 10 - 10 148 - 148
____ ____ ____ ____ ____ ____
Total tax (note 9) (41) (22) (63) 130 (24) 106
____ ____ ____ ____ ____ ____
Profit after tax 125 48 173 300 52 352
Gain on disposal of assets, - 14 14 - 23 23
net of tax charge of £21m
(2004 credit of £5m)
____ ____ ____ ____ ____ ____
Profit available for 375
shareholders
125 62 187 300 75
==== ==== ==== ==== ==== ====
Attributable to:
Equity holders of the 106 62 168 277 75 352
parent
Minority interest 19 - 19 23 - 23
____ ____ ____ ____ ____ ____
Profit for the period 125 62 187 300 75 375
==== ==== ==== ==== ==== ====
Earnings per ordinary share
(note 10):
Basic 19.2p 11.3p 30.5p 38.5p 10.5p 49.0p
Diluted 18.8p 11.0p 29.8p 38.1p 10.3p 48.4p
Adjusted 20.5p 29.2p 17.0p 24.2p
===== ===== ===== =====
Dividends per ordinary share:
Paid in the period 10.00p 9.45p
Interim proposed 4.60p 4.30p
===== ====
InterContinental Hotels Group PLC
GROUP CASH FLOW STATEMENT
For the nine months ended 30 September 2005
2005 2004
9 months 9 months
ended 30 September ended 30 September
£m £m
Cash flow from operations (note 11) 303 443
Interest paid (23) (1)
Tax paid (40) (24)
_____ _____
Net cash from operating activities 240 418
_____ _____
Cash flow from investing activities
Purchases of property, plant and equipment - Hotels (80) (114)
Purchases of associates and other financial assets - Hotels (11) (6)
Disposal of operations - Hotels 1,438 101
Proceeds from other financial assets - Hotels 8 2
Purchases of property, plant and equipment - Soft Drinks (38) (52)
_____ _____
Net cash from investing activities 1,317 (69)
_____ _____
Cash flow from financing activities
Proceeds from issue of share capital 10 12
Purchase of own shares (144) (225)
Payment to shareholders as a result of the capital reorganisation on
27 June 2005
(996) -
Purchase of own shares by ESOP trusts, net of proceeds on share
releases
(12) -
Dividends paid (including £125m (2004 £26m) to minority shareholders)
(186) (95)
(Reduction)/increase in borrowings (155) 4
_____ _____
Net cash from financing activities (1,483) (304)
_____ _____
Net movement in cash and cash equivalents in the period 74 45
Cash and cash equivalents at beginning of the period 72 411
Exchange rate effects (14) (5)
_____ _____
Cash and cash equivalents at end of the period 132 451
===== =====
InterContinental Hotels Group PLC
GROUP STATEMENT OF CHANGES IN EQUITY
For the nine months ended 30 September 2005
Movement in IHG shareholders' equity 2005 2004
9 months 9 months
ended 30 September ended 30 September
£m £m
At 1 January 1,821 2,323
Adoption of IAS 39 on 1 January 2005 (4) -
_____ _____
As restated at 1 January 1,817 2,323
_____ _____
Net profit for the period (excluding minority interests of £19m
(2004 £23m))
168 352
Exchange movement on foreign currency denominated net assets,
borrowings and currency swaps
29 (14)
Valuation losses taken to equity, net of tax (5) -
_____ _____
Total recognised income and expense for the period 192 338
Dividends to shareholders (61) (69)
Issue of ordinary shares 10 12
Purchase of own shares (147) (228)
Cash element of capital reorganisation (996) -
Movement in shares in ESOP trusts and share schemes (5) 12
_____ _____
At 30 September 810 2,388
==== ====
INTERCONTINENTAL HOTELS GROUP PLC
GROUP BALANCE SHEET
As at 30 September 2005
2005 2004 2004
30 September 30 September 31 December
£m £m £m
ASSETS
Property, plant and equipment 1,818 1,966 1,926
Goodwill 155 155 152
Intangible assets 140 57 54
Investment in associates 44 55 42
Other financial assets 86 73 69
_____ _____ _____
Total non-current assets 2,243 2,306 2,243
Inventories 42 41 42
Trade and other receivables 401 377 401
Current tax receivable 14 7 14
Cash and cash equivalents 132 451 72
Other financial assets 92 63 80
_____ _____ _____
Total current assets 681 939 609
Non-current assets classified as held for sale 360 1,821 1,826
______ ______ ______
Total assets 3,284 5,066 4,678
===== ===== =====
LIABILITIES
Short-term borrowings (19) (13) (32)
Trade and other payables (597) (625) (628)
Current tax payable (296) (308) (261)
_____ _____ _____
Total current liabilities (912) (946) (921)
Loans and other borrowings (1,018) (929) (1,156)
Employee benefits (150) (170) (173)
Provisions and other payables (107) (122) (108)
Deferred tax payable (272) (239) (234)
_____ _____ _____
Total non-current liabilities (1,547) (1,460) (1,671)
Liabilities classified as held for sale (6) (148) (148)
_____ ______ ______
Total liabilities (2,465) (2,554) (2,740)
===== ===== =====
Net assets (note 13) 819 2,512 1,938
===== ===== =====
EQUITY
IHG shareholders' equity 810 2,388 1,821
Minority equity interests 9 124 117
______ ______ ______
Total equity 819 2,512 1,938
===== ===== =====
INTERCONTINENTAL HOTELS GROUP PLC
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
For all periods up to and including the year ended 31 December 2004, InterContinental Hotels Group PLC
(IHG) prepared its financial statements in accordance with UK generally accepted accounting practice (UK
GAAP). From 1 January 2005 IHG is required to prepare consolidated financial statements in accordance
with International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU).
Consequently, financial information for interim quarters of 2005 must be prepared on the basis of IFRS
with comparative information restated.
These interim financial statements have been prepared in accordance with International Accounting Standard
(IAS) 34 'Interim Financial Reporting'. The unaudited financial statements for the period ended 30
September 2005 and the restatement of financial information for the year ended 31 December 2004 and the
period ended 30 September 2004 have been prepared in accordance with IFRS expected to be endorsed by the
EU and available for use by listed European companies at 31 December 2005 (with the exception of IAS 32 '
Financial Instruments: Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition and
Measurement' (as amended) for the 2004 information). These International Financial Reporting Standards,
Standing Interpretations Committee and International Financial Reporting Interpretations Committee
interpretations issued by the International Accounting Standards Board (IASB) are subject to ongoing
review and possible amendment or interpretive guidance and are therefore still subject to change which may
require further adjustments to this information before it is included in the 2005 Annual Report and
Financial Statements.
Shareholder approval was given on 1 June 2005 to recommended proposals for the return of approximately £1
billion to shareholders by way of a capital reorganisation (by means of a Scheme of Arrangement under
Section 425 of the Companies Act 1985). Under the arrangement, shareholders received 11 New Ordinary
Shares and £24.75 cash in exchange for every 15 Existing Ordinary Shares held on 24 June 2005. The
overall effect of the transaction was that of a share repurchase at fair value, therefore no adjustment
has been made to comparative earnings per share data (see note 10).
The capital reorganisation of InterContinental Hotels Group PLC to New InterContinental Hotels Group PLC
(the Company) has been accounted for in accordance with the principles of merger accounting as applicable
to group reorganisations. The consolidated financial statements are therefore presented as if the Company
had been the parent company of the Group throughout the periods presented. Following this capital
reorganisation InterContinental Hotels Group PLC changed its name to InterContinental Hotels PLC and was
re-registered as a private limited company, named InterContinental Hotels Limited, and New
InterContinental Hotels Group PLC changed its name to InterContinental Hotels Group PLC.
In the information for the year ended 31 December 2004 and the interim quarters of 2004, financial assets
and financial liabilities are accounted for on the basis of UK GAAP. The effect of adopting IAS 39 at 1
January 2005 is shown in the statement of changes in equity for 2005.
Details of the accounting policies applied in the period ended 30 September 2005 are set out in the
International Financial Reporting Information in the 2004 IHG Annual Report and Financial Statements. The
policies assume that the amendments to IAS 19 'Employee Benefits' published in December 2004 by the IASB,
allowing actuarial gains and losses to be recognised in full through equity, will be endorsed by the EU.
These interim financial statements are unaudited and do not constitute statutory accounts of the Group
within the meaning of Section 240 of the Companies Act 1985. The Annual Report and Financial Statements
for the year ended 31 December 2004 which contain an unqualified audit report have been filed with the
Registrar of Companies.
Transition to International Financial Reporting Standards
An explanatory note setting out IHG's accounting policies under IFRS, the major differences between UK
GAAP and IFRS for IHG, and reconciliations of UK GAAP to IFRS for the Income statement for the year ended
31 December 2004 and Balance sheets at 1 January 2004 and 31 December 2004 are included within the 2004
Annual Report and Financial Statements. The reconciliations for the 2004 interim period included in this
report are set out below:
2004 2004
3 months 9 months
ended 30 September ended 30 September
£m £m
Profit for the period under UK GAAP 87 369
Adjustments:
Goodwill amortisation 3 8
Pension costs (2) (6)
Share-based payments (1) (3)
Deferred taxation - 7
____ ____
Profit for the period under IFRS 87 375
==== ====
2004
30 September
£m
IHG shareholders' equity under UK GAAP 2,650
Adjustments:
Dividend accrual 30
Pension costs (125)
Deferred taxation (174)
Goodwill amortisation 7
_____
IHG shareholders' equity under IFRS 2,388
=====
Reclassifications which reduce non-current assets by £4m, current assets by £7m and current liabilities by
£11m have been made to the Balance sheet at 31 December 2004 as presented in the 2004 Annual Report and
Financial Statements. A reclassification has also been made of £19m, reducing shareholders' equity and
increasing minority interests, in respect of dividends to minority shareholders.
2. Exchange rates
The results of overseas operations have been translated into sterling at the weighted average rates of
exchange for the period. In the case of the US dollar, the translation rate for the nine months ended 30
September is £1= $1.85 (2005 3 months, £1 = $1.79; 2004 9 months, £1 = $1.82; 2004 3 months, £1 = $1.82).
In the case of the euro, the translation rate for the nine months ended 30 September is £1 = €1.46 (2005 3
months, £1 = €1.46; 2004 9 months, £1 = €1.49; 2004 3 months, £1 = €1.49).
Foreign currency denominated assets and liabilities have been translated into sterling at the rates of
exchange on the last day of the period. In the case of the US dollar, the translation rate is £1=$1.76
(2004 30 September £1 = $1.80; 31 December £1 = $1.93). In the case of the euro, the translation rate is
£1 = €1.46 (2004 30 September £1 = €1.46; 31 December £1= €1.41).
Revenue
3.
2005 2004 2005 2004
3 months* 3 months* 9 months** 9 months**
ended 30 Sept ended 30 Sept ended 30 Sept ended 30 Sept
£m £m £m £m
Hotels
Americas (note 5) 111 125 335 371
EMEA (note 6) 124 212 498 616
Asia Pacific (note 7) 35 31 107 95
Central 10 9 30 30
____ ____ ____ ____
280 377 970 1,112
Soft Drinks 174 186 544 552
____ ____ ____ ____
454 563 1,514 1,664
==== ==== ==== ====
All discontinued operations relate to the Hotels business.
* Other than for Soft Drinks which reflects 12 weeks ended 2 October 2005 (2004 13 weeks ended 1
October).
** Other than for Soft Drinks which reflects 40 weeks ended 2 October 2005 (2004 41 weeks ended 1
October).
4. Operating profit
2005 2004 2005 2004
3 months* 3 months* 9 months** 9 months**
ended 30 Sept ended 30 Sept ended 30 Sept ended 30 Sept
£m £m £m £m
Hotels
Americas (note 5) 53 48 150 130
EMEA (note 6) 20 34 93 84
Asia Pacific (note 7) 7 5 22 16
Central (16) (11) (48) (39)
____ ____ ____ ____
64 76 217 191
Soft Drinks 23 26 62 63
____ ____ ____ ____
87 102 279 254
Other operating income and (9) (5) (17) 1
expenses (note 8)
____ ____ ____ ____
Operating profit 78 97 262 255
==== ==== ==== ====
All discontinued operations relate to the Hotels business.
* Other than for Soft Drinks which reflects 12 weeks ended 2 October 2005 (2004 13 weeks ended 1
October).
** Other than for Soft Drinks which reflects 40 weeks ended 2 October 2005 (2004 41 weeks ended 1
October).
5 Americas
2005 2004 2005 2004
3 months 3 months 9 months 9 months
ended 30 Sept ended 30 Sept ended 30 Sept ended 30 Sept
$m $m $m $m
Revenue
Owned & Leased 54 40 161 121
Managed 29 14 86 41
Franchised 109 99 294 272
____ ____ ____ ____
Continuing operations 192 153 541 434
Discontinued operations - Owned &
Leased
5 73 77 240
____ ____ ____ ____
Total $m 197 226 618 674
==== ==== ==== ====
Sterling equivalent £m 111 125 335 371
==== ==== ==== ====
Operating profit
Owned & Leased 6 1 18 4
Managed 7 7 26 11
Franchised 98 86 260 234
____ ____ _____ ____
Continuing operations 111 94 304 249
Discontinued operations - Owned &
Leased
2 5 19 24
____ ____ _____ ____
113 99 323 273
Regional overheads (17) (12) (46) (36)
____ ____ _____ ____
Total $m 96 87 277 237
==== ==== ==== ====
Sterling equivalent £m 53 48 150 130
==== ==== ==== ====
6. EMEA
2005 2004 2005 2004
3 months 3 months 9 months 9 months
ended 30 Sept ended 30 Sept ended 30 Sept ended 30 Sept
£m £m £m £m
Revenue
Owned & Leased 88 85 250 241
Managed 15 9 36 33
Franchised 8 8 28 21
____ ____ ____ ____
Continuing operations 111 102 314 295
Discontinued operations - Owned &
Leased
13 110 184 321
____ ____ ____ ____
Total 124 212 498 616
==== ==== ==== ====
Operating profit
Owned & Leased 7 4 14 9
Managed 9 4 22 19
Franchised 6 7 22 16
____ ____ ____ ____
Continuing operations 22 15 58 44
Discontinued operations - Owned &
Leased
3 25 50 58
____ ____ ____ ____
25 40 108 102
Regional overheads (5) (6) (15) (18)
____ ____ ____ ____
Total 20 34 93 84
==== ==== ==== ====
7. Asia Pacific
2005 2004 2005 2004
3 months 3 months 9 months 9 months
ended 30 Sept ended 30 Sept ended 30 Sept ended 30 Sept
$m $m $m $m
Revenue
Owned & Leased 21 18 70 57
Managed 11 9 32 26
Franchised 1 1 4 4
____ ____ _____ ____
Continuing operations 33 28 106 87
Discontinued operations - Owned &
Leased
30 28 92 85
____ ____ _____ ____
Total $m 63 56 198 172
==== ==== ==== ====
Sterling equivalent £m 35 31 107 95
==== ==== ==== ====
Operating profit
Owned & Leased 1 2 10 9
Managed 6 7 22 19
Franchised 1 1 3 3
____ ____ ____ ____
Continuing operations 8 10 35 31
Discontinued operations - Owned &
Leased
8 4 18 10
____ ____ ____ ____
16 14 53 41
Regional overheads (4) (5) (12) (11)
____ ____ ____ ____
Total $m 12 9 41 30
==== ==== ==== ====
Sterling equivalent £m 7 5 22 16
==== ==== ==== ====
8. Special items
2005 2004 2005 2004
3 months 3 months 9 months 9 months
ended 30 Sept ended 30 Sept ended 30 Sept ended 30 Sept
£m £m £m £m
Other operating income and expenses
Restructuring costs (note a) - - (8) -
Property damage (note b) (9) - (9) -
Adjustment to market value (note c) - (5) - 1
____ ____ ____ ____
(9) (5) (17) 1
==== ==== ==== ====
Financing
Financial income (note d) - - - 12
Financial expenses (note e) - - - (6)
____ ____ ____ ____
- - - 6
==== ==== ==== ====
Taxation
Property damage 2 - 2 -
Financing - - - (2)
Special tax credit (note f) - 12 8 150
____ ____ ____ ____
2 12 10 148
==== ==== ==== ====
All special items relate to continuing operations.
a Restructuring costs relate to the delivery of the further restructuring of the Hotels business.
b Damage to properties related to fire and natural disasters.
c Following adoption of IAS 39 at 1 January 2005, adjustments to market value are recorded directly in
equity. In 2004 under UK GAAP the adjustment is a (provision for impairment)/reversal of previously
recorded provisions.
d Interest on special tax refunds.
e Cost of closing out currency swaps.
f Represents the release of provisions which are special by reason of their size or incidence relating to
tax matters which have been settled or in respect of which the relevant statutory limitation period has
expired and, in 2004, the recognition of a deferred tax asset in respect of capital losses.
9. Tax
The tax charge on profit before tax, excluding the impact of special items (note 8), has been calculated
using an estimated effective annual tax rate of 29%.
By also excluding the effect of prior year items, the equivalent effective tax rate would be approximately
35%. Prior year items have been treated as relating wholly to continuing operations.
10. Earnings per share
2005 2004
Continuing Continuing
operations Total operations Total
£m £m £m £m
3 months ended 30 September
Basic earnings per share
Profit available for equity shareholders 38 44 57 78
Weighted average number of ordinary shares
(millions)
441 441 703 703
Basic earnings per share (pence) 8.6 10.0 8.1 11.1
==== ===== ==== =====
Adjusted earnings per share
Profit available for equity shareholders 38 44 57 78
Less adjusting items:
Other operating income and expenses (note 8) 9 9 5 5
Taxation (note 8) (2) (2) (12) (12)
____ --_____ ____ _____
Adjusted earnings 45 51 50 71
Weighted average number of ordinary shares
(millions)
441 441 703 703
Adjusted earnings per share (pence) 10.2 11.6 7.1 10.1
==== ===== ==== =====
9 months ended 30 September
Basic earnings per share
Profit available for equity shareholders 106 168 277 352
Weighted average number of ordinary shares
(millions)
551 551 719 719
Basic earnings per share (pence) 19.2 30.5 38.5 49.0
==== ===== ==== =====
Adjusted earnings per share
Profit available for equity shareholders 106 168 277 352
Less adjusting items:
Other operating income and expenses (note 8) 17 17 (1) (1)
Financing (note 8) - - (6) (6)
Taxation (note 8) (10) (10) (148) (148)
Gain on disposal of assets, net of tax - (14) - (23)
____ --_____ ____ _____
Adjusted earnings 113 161 122 174
Weighted average number of ordinary shares
(millions)
551 551 719 719
Adjusted earnings per share (pence) 20.5 29.2 17.0 24.2
==== ===== ==== =====
Diluted earnings per share
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. The resulting weighted average number of ordinary shares for the nine
months to 30 September 2005 is 563m (9 months to 30 September 2004, 727m) and for the three months to 30
September 2005 is 453m (3 months to 30 September 2004, 712m).
11. Cash flow from operations
2005 2004
9 months 9 months
ended 30 September ended 30 September
£m £m
Profit for the period 187 375
Adjustments for:
Finance costs 26 9
Income tax expense/(credit) 63 (106)
Depreciation and amortisation 97 144
Equity settled share-based cost, net of payments 7 12
Gain on disposal of assets, net of tax (14) (23)
Special items (note 8) 17 (1)
____ ____
Operating cash flow before movements in working capital
383 410
(Increase)/decrease in stocks (1) 2
Decrease in debtors 11 27
(Decrease)/increase in creditors (63) 10
Movement in pension obligation (27) (6)
____ ____
Cash flow from operations 303 443
==== ====
Hotels 239 309
Soft Drinks 64 134
____ ____
303 443
==== ====
Included in cash from operations are inflows of £73m (2004 £132m) of operating profit before interest and
depreciation and amortisation related to discontinued operations. Included in cash from investing
activities are inflows of £1,423m (2004 £65m) related to discontinued operations.
12. Net debt
Cash and cash
equivalents
Borrowings Total
£m £m £m
At 1 January 2005 72 (1,188) (1,116)
Cash flow 74 155 229
Exchange and other adjustments (14) (4) (18)
_____ _____ _____
At 30 September 2005 132 (1,037) (905)
===== ===== =====
At 1 January 2004 411 (980) (569)
Cash flow 45 (4) 41
Exchange and other adjustments (5) 42 37
_____ _____ _____
At 30 September 2004 451 (942) (491)
===== ===== =====
13. Net assets
2005 2004 2004
30 September 30 September 31 December
£m £m £m
Hotels 2,088 3,520 3,514
Soft Drinks 196 171 168
____ ____ ____
2,284 3,691 3,682
Net debt (905) (491) (1,116)
Other net non-operating liabilities (560) (688) (628)
____ ____ ____
819 2,512 1,938
==== ==== ====
14. Contingent liabilities
At 30 September 2005 the Group had contingent liabilities of £9m (2004 31 December, £9m; 2004 30
September, £10m), mainly comprising guarantees given in the ordinary course of business. IHG has entered
into management contract arrangements in the ordinary course of business that include performance
guarantees. Management does not anticipate any material funding under these arrangements.
15. Post balance sheet events
On 14 November 2005 IHG announced its intention to proceed with a flotation of Britvic, and a circular was
posted to shareholders on 16 November 2005.
This information is provided by RNS
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