Interim Results
InterContinental Hotels Group PLC
14 August 2007
14 August 2007
InterContinental Hotels Group PLC
First Half Results to 30 June 2007
Headlines
• Continuing revenue up 12% from £377m to £422m, up 20% at constant currency.
• Continuing operating profit up 5% from £106m to £111m, up 17% at constant currency.
• Operating profit including discontinued operations of £116m.
• Global constant currency RevPAR growth of 7.0%.
• Total gross revenue* from all hotels in IHG's system up 12% at constant currency to $8.3bn.
• Franchised operating profit of £122m, up 13% at constant currency. Managed operating profit of £42m, up 2% at
constant currency (up 8% excluding one hotel in the Americas.)
• Adjusted continuing earnings per share up 16% from 19.2p to 22.3p. Basic earnings per share of 32.2p.
• Interim dividend up 12% to 5.7p.
• Room count up by 7,430 rooms to 563,676. Room openings of 20,713, room removals of 13,283.
• Signings up 32% to 54,246 rooms. Development pipeline up by 29,496 rooms to 187,487 (1,414 hotels).
* Total gross revenue is defined as 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.
All figures and movements unless otherwise noted are at actual exchange rates and before other operating income
and expenses.
See appendix 3 for analysis of financial headlines. Constant exchange rate comparatives shown in appendix 4.
Commenting on the results and trading, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:
"The company has had a good first half. Signings continue to run at record levels with almost 55,000 rooms signed into
our development pipeline. Strong demand with relatively low levels of new supply is driving up room rates and our brands
continue to outperform the market in most of our major regions and geographies. Our outlook for the year is positive."
Increase in development pipeline and rooms open
In the first half a record 54,246 rooms were signed and 7,430 net rooms added, with a closing pipeline of 187,487
rooms, giving IHG further confidence that it will exceed its target of 50,000-60,000 net organic room additions by
the end of 2008 from the 30 June 2005 starting position.
• 54,246 rooms were signed in the first half; 32,220 in the Americas, 9,324 in EMEA and 12,702 in Asia Pacific.
• 187,487 rooms are now in the pipeline, up 29,496 (19%) since the start of the year, at 1,414 hotels.
• IHG's development activity in EMEA gained pace, with 9,324 room signings (51 hotels) and 3,181 room openings.
• IHG's development activity in Asia Pacific continues to be successful. In Greater China 32 hotels, 10,370
rooms, were signed in the first half, these were two InterContinentals, 15 Crowne Plazas, six Holiday Inns and
nine Holiday Inn Expresses.
• IHG's presence in the upscale segment was further enhanced with record signings. InterContinental signings
maintained momentum from 2006 with 16 hotels signed (4,597 rooms) including nine in EMEA. The
InterContinental pipeline of hotels to be opened now stands at 50. Crowne Plaza signed 39 hotels (12,117
rooms) in the first half, and maintains its position as the fastest growing upscale brand in Asia.
IHG maintains its focus on enhancing the quality of its portfolio, in conjunction with growth.
• 20,713 rooms opened; 14,727 in the Americas, 3,181 in EMEA and 2,805 in Asia Pacific.
• 13,283 rooms exited; 9,574 in the Americas, 2,672 in EMEA and 1,037 in Asia Pacific.
• The room count at the end of the period increased by 7,430 rooms to 563,676, more than double the net room
additions in the first six months of 2006.
Americas: strong performance across all brands
Revenue performance
RevPAR increased 6.3% with rate generating all of the increase. InterContinental, Crowne Plaza, Holiday Inn and Holiday
Inn Express each outperformed their market segments, with RevPAR up 9.5%, 7.4%, 4.9% and 7.8% respectively. Staybridge
Suites and Candlewood Suites also showed continued growth, with RevPAR up 4.0% and 2.0% respectively,
Operating profit performance
Operating profit from continuing operations increased 12% from $197m to $220m. Continuing owned and leased hotel
operating profit improved from $13m to $16m. The improvement was driven by increased occupancy and rate at the
InterContinental New York, which benefited from robust market conditions and growth in market share. The
InterContinental Boston made a small loss in the first half, as trading continues to improve post its November 2006
opening. Managed hotels profit fell $2m to $25m after a $3m impact from lower ancillary revenues and higher costs at
one hotel, and increased revenue investment to support new signings and openings. Franchised hotels profit increased
13% to $209m reflecting RevPAR growth of 6.2%, net room count growth of 4.1%, and higher fees associated with changes in
hotel and room count.
EMEA: solid RevPAR and profit growth
Revenue performance
RevPAR increased 8.1%, driven by increased occupancy and 5.4% rate growth. The Middle East continued to perform
strongly, growing RevPAR by 15.7%. Continental Europe delivered a RevPAR increase of 6.5%, with slower growth in
Germany due to the benefit of the football World Cup last year. In the UK, Holiday Inn and Express by Holiday Inn
outperformed their market segment, recording RevPAR growth of 7.9%.
Operating profit performance
Operating profit from continuing operations increased 33% from £18m to £24m. Continuing owned and leased hotel
operations improved £2m to £1m after the impact of refurbishments. The performance of the InterContinental Le Grand
Paris continued to improve with a 17.8% RevPAR increase. The InterContinental London Park Lane is now fully operational
and trading is encouraging. Managed hotels profit was up 12% from £17m to £19m, benefiting from improved underlying
trading and retained management contracts on assets disposed. Franchised hotels profit increased from £12m to £14m
reflecting RevPAR growth of 6.8% and net room count growth of 4.9%.
Asia Pacific: outperformance in China
Revenue performance
IHG's market leading positions in the region have led to further strong growth. RevPAR increased 9.1%, mainly driven by
rate. InterContinental, Crowne Plaza and Holiday Inn all performed strongly, with RevPAR up 11.1%, 7.9% and 8.4%
respectively. Greater China RevPAR increased 6.2%, driven by rate increases.
Operating profit performance
Operating profit from continuing operations was $27m. Owned and leased hotel operating profit increased 7% to $15m,
after the impact of refurbishment activity at the InterContinental Hong Kong. Managed hotels profit was stable at $19m.
The contribution from the increasing number of hotels under IHG management was offset by integration costs associated
with the ANA joint venture in Japan and continued infrastructure investment in China.
Strengthening Operating System
IHG continues to demonstrate the strength of its revenue delivery to hotel owners through its reservation channels and
loyalty programme, Priority Club Rewards:
• $3.2bn of rooms revenue booked through IHG's reservation channels, up 21% and representing 46% of total rooms
revenue.
• $2.5bn of rooms revenue from Priority Club Rewards members, up 15% and representing 35% of total rooms revenue.
• Internet revenues increased from 15.6% to 16.8% of total rooms revenue, 85% of which was from IHG's own
websites.
Overheads, Interest and Tax
Total regional overheads increased £1m to £32m, wholly attributable to Asia Pacific after continued infrastructure
investment in China. Central overheads increased 3% to £38m, in line with inflation.
The net interest charge of £12m was significantly ahead of last year, driven by the InterContinental Boston finance
lease charge and higher bank borrowings.
The effective tax rate applied for the first half of 2007 is 23%. IHG's tax rate may be more volatile in the immediate
future due to changes in tax legislation, tax case law developments and possible settlements of prior year issues but in
the longer term is expected, as previously indicated, to trend upwards.
Disposals and returns of funds
In the first half disposal proceeds of £58m were received. This included the sale of IHG's 33.3% interest in Crowne
Plaza London The City for £19m, and the disposal of Crowne Plaza Santiago for £11m. After the period end, IHG's 74.11%
interest in the InterContinental Montreal was sold for £17m. During the period 2.5m shares were repurchased under
IHG's ongoing buyback programme at a cost of £31m. There were 299m shares outstanding at the end of June, 306m on a
fully diluted basis. IHG's net debt at the period end was £872m including the $198m (£99m) finance lease on the
InterContinental Boston. During the first half £709m was paid to shareholders by way of a special dividend with share
consolidation and the third £250m share buyback was completed. A previously announced £150m share buyback programme
will commence in the second half of this year.
Appendix 1: Asset disposal programme detail
Number of hotels Proceeds Net book value
Disposed since April 2003 178 £3.0bn £2.9bn
Remaining hotels* 21 £0.9bn
* As at 14 August 2007, post disposal of InterContinental Montreal, announced 12
July 2007
For a full list please visit www.ihg.com/Investors
Appendix 2: Return of funds programme as at 30 June 2007
Timing Total return Returned Still to be returned
£501m special dividend Paid December 2004 £501m £501m Nil
First £250m share Completed in 2004 £250m £250m Nil
buyback
£996m capital return Paid 8 July 2005 £996m £996m Nil
Second £250m share Completed in 2006 £250m £250m Nil
buyback
£497m special dividend Paid 22 June 2006 £497m £497m Nil
Third £250m share Completed in 2007 £250m £250m Nil
buyback
£700m special dividend Paid 15 June 2007 £709m £709m Nil
£150m share buyback Yet to commence £150m Nil £150m
Total £3.60bn £3.45bn £0.15bn
Appendix 3: Financial headlines
Six months to 30 Jun £m Total Americas EMEA Asia Pacific Central
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
Franchised operating profit 122 117 106 103 14 12 2 2
Managed operating profit 42 43 13 15 19 17 10 11
Continuing owned and leased 17 14 8 7 1 (1) 8 8
operating profit
Regional overheads (32) (31) (16) (16) (10) (10) (6) (5)
Continuing operating profit pre 149 143 111 109 24 18 14 16
central overheads
Central overheads (38) (37) - - - - - (38) (37)
Continuing operating profit 111 106 111 109 24 18 14 16
Discontinued owned and leased 5 21 5 3 - 18 - -
operating profit
Total operating profit 116 127 116 112 24 36 14 16
Appendix 4: Constant currency continuing operating profits before other
operating income and expenses.
Americas EMEA Asia Pacific Total***
Actual Constant Actual Constant Actual Constant Actual Constant
currency* currency** currency* currency** currency* currency* currency**
currency**
Growth 2% 12% 33% 39% (13)% -% 5% 17%
Exchange rates USD:GBP EUR:GBP
2007 1.97 1.48
2006 1.80 1.46
* Sterling actual currency
** Translated at constant 2006 exchange rates
*** After Central Overheads
Appendix 5: Investor information for 2007 interim dividend
Ex-dividend Date: 29 August 2007
Record Date: 31 August 2007
Payment Date: 5 October 2007
Dividend payment: Ordinary shares 5.7p per share: ADRs 11.5c per ADR
For further information, please contact:
Investor Relations (Paul Edgecliffe-Johnson; Heather Ward): +44 (0) 1753 410 176
Media Affairs (Leslie McGibbon; Claire Williams): +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.
Presentation for Analysts and Shareholders
A presentation with Andrew Cosslett (Chief Executive) and Richard Solomons
(Finance Director) will commence at 9.30am (London time) on 14 August at
Cazenove, 20 Moorgate, London, EC2R 6DA. There will be an opportunity to ask
questions. The presentation will conclude at approximately 10.30am (London
time).
There will be a live audio webcast of the results presentation on the web
address www.ihg.com/interims07. The archived webcast of the presentation is
expected to be on this website later on the day of the results and will remain
on it for the foreseeable future. There will also be a live dial-in facility
International dial-in +44 (0)20 7863 6164
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 14 August with Richard Solomons (Finance
Director). There will be an opportunity to ask questions.
International dial-in +44 (0)1452 562716
US Toll Free 1866 832 0717
Conference ID: 10201520
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 10201520#
International dial-in +44 (0)1452 550000
US Toll Free 1866 247 4222
Website
The full release and supplementary data will be available on our website from
7.00 am (London time) on Tuesday 14 August. The web address is www.ihg.com/
interims07
Note to Editors:
InterContinental Hotels Group PLC (IHG) of the United Kingdom (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 3,800 hotels
and almost 564,000 guest rooms in nearly 100 countries and territories around
the world. IHG 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 Indigo(R), and also manages the
world's largest hotel loyalty programme, Priority Club(R) Rewards with over 33
million members worldwide.
The company pioneered the travel industry's first collaborative response to
environmental issues as founder of the International Hotels and Environment
Initiative (IHEI). The IHEI formed the foundations of the Tourism Partnership
launched by the International Business Leaders Forum in 2004, of which IHG is
still a member today. The environment and local communities remain at the heart
of IHG's global corporate responsibility focus.
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.
Operating Review
This operating review discusses the performance of the InterContinental Hotels
Group (IHG) for the six months ended 30 June 2007.
Three months ended Six months ended
30 June 30 June 30 June 30 June
2007 2006 % 2007 2006 %
Group summary £m £m change £m £m change
Revenue:
Americas 122 110 10.9 224 210 6.7
EMEA 61 49 24.5 110 89 23.6
Asia Pacific 29 27 7.4 61 54 13.0
Central 14 12 16.7 27 24 12.5
____ ____ ____ ____ ____ ____
Continuing operations 226 198 14.1 422 377 11.9
Discontinued operations 13 62 (79.0) 23 122 (81.1)
____ ____ ____ ____ ____ ____
Total 239 260 (8.1) 445 499 (10.8)
____ ____ ____ ____ ____ ____
Operating profit:
Americas 63 60 5.0 111 109 1.8
EMEA 17 14 21.4 24 18 33.3
Asia Pacific 7 9 (22.2) 14 16 (12.5)
Central (21) (20) 5.0 (38) (37) 2.7
____ ____ ____ ____ ____ ____
Continuing operations 66 63 4.8 111 106 4.7
Discontinued operations 4 18 (77.8) 5 21 (76.2)
____ ____ ____ ____ ____ ____
Operating profit before other
income and expenses
70 81 (13.6) 116 127 (8.7)
Other operating income and
expenses
10 - - 26 25 4.0
____ ____ ____ ____ ____ ____
Operating profit 80 81 (1.2) 142 152 (6.6)
Net financial expenses (7) - - (12) (1) -
____ ____ ____ ____ ____ ____
Profit before tax* 73 81 (9.9) 130 151 (13.9)
____ ____ ____ ____ ____ ____
Adjusted earnings per ordinary
share:
Continuing operations 14.5p 12.1p 19.8 22.3p 19.2p 16.1
____ ____ ____ ____ ____ ____
* Profit before tax includes the results of discontinued operations.
Revenue from continuing operations increased by 11.9% to £422m and continuing
operating profit increased by 4.7% to £111m during the six months ended 30 June
2007. Due to the relative strength of sterling to the US dollar (six months
ended June 2007, £1 = $1.97; six months ended June 2006, £1 = $1.80), continuing
operating profit growth was 17.0% at constant exchange rates.
Including discontinued operations, revenue and operating profit decreased by
10.8% and 8.7% respectively as asset disposals impact the comparability of the
results under review. Discontinued operations include the results of owned and
leased hotels that have been disposed of since 1 January 2006 or are on the
market as at 30 June 2007.
Profit before tax decreased by 13.9% to £130m and adjusted earnings per ordinary
share for continuing operations increased by 16.1% to 22.3p.
Three months ended Six months ended
30 June 30 June 30 June 30 June
2007 2006 % 2007 2006 %
Americas $m $m change $m $m change
Revenue:
Owned and leased 65 49 32.7 122 93 31.2
Managed 42 37 13.5 80 73 9.6
Franchised 134 116 15.5 240 212 13.2
____ ____ ____ ____ ____ ____
Continuing operations 241 202 19.3 442 378 16.9
Discontinued operations* 21 20 5.0 38 36 5.6
____ ____ ____ ____ ____ ____
Total $m 262 222 18.0 480 414 15.9
____ ____ ____ ____ ____ ____
Sterling equivalent £m 132 121 9.1 243 230 5.7
____ ____ ____ ____ ____ ____
Operating profit before other operating
income and expenses:
Owned and leased 12 9 33.3 16 13 23.1
Managed 14 16 (12.5) 25 27 (7.4)
Franchised 116 100 16.0 209 185 13.0
____ ____ ____ ____ ____ ____
142 125 13.6 250 225 11.1
Regional overheads (15) (14) 7.1 (30) (28) 7.1
____ ____ ____ ____ ____ ____
Continuing operations 127 111 14.4 220 197 11.7
Discontinued operations* 7 4 75.0 9 5 80.0
____ ____ ____ ____ ____ ____
Total $m 134 115 16.5 229 202 13.4
____ ____ ____ ____ ____ ____
Sterling equivalent £m 67 62 8.1 116 112 3.6
____ ____ ____ ____ ____ ____
*Discontinued operations are all owned and leased.
Revenue and operating profit from continuing operations increased by 16.9% to
$442m and 11.7% to $220m respectively during the six months ended 30 June 2007.
Strong underlying hotel trading was delivered as IHG's core brands
outperformed their respective US market segments.
Including discontinued operations, US dollar revenue increased by 15.9% to $480m
whilst US dollar operating profit increased by 13.4% to $229m. Due to the
relative strength of sterling to the US dollar total sterling reported profit
growth was only 3.6%.
Continuing owned and leased revenue increased by 31.2% to $122m and operating
profit increased by 23.1% to $16m. The InterContinental New York benefited from
robust market conditions and growth in market share. During the first half of
the year, the InterContinental Boston became fully operational and generated a
marginal loss in the period.
Managed revenues grew by 9.6% to $80m as strong RevPAR growth across
InterContinental and Crowne Plaza hotels drove top line management fees. RevPAR
performance in the Holiday Inn and extended stay brands was impacted by lower
occupancy levels as the first half of 2006 benefited from displacement following
Hurricane Katrina. Managed revenues were also impacted by the exit of certain
underperforming hotels, as initiated by IHG.
Managed operating profit decreased by $2m to $25m principally due to increased
revenue investment to support new hotel signings and openings, together with a
lower contribution from one hotel, structured as an operating lease, which was
adversely impacted by higher fixed charges and lower ancillary revenues. The
managed results include $44m (2006 $42m) of revenue and $4m (2006 $8m) of
operating profit from four properties that are structured, for legal reasons, as
operating leases but with the same characteristics as management contracts.
During the first half of 2007, franchised revenues and operating profit
increased by 13.2% to $240m and 13.0% to $209m respectively, compared to the
same period in 2006. This increase was driven by RevPAR growth of 6.2%, net
room count growth of 4.1% and significantly higher fees associated with changes
in hotel and room count, including $5m from the termination of one hotel
contract.
Regional overheads were favourably impacted in the comparable period by lower
claims in the Group-funded employee healthcare programme. Excluding this,
regional overheads were in line with the prior period.
Hotels Rooms
Change over Change over
2007 2006 2007 2006
Americas hotel and room count 30 June 31 December 30 June 31 December
Analysed by brand:
InterContinental 49 - 16,301 (224)
Crowne Plaza 163 8 44,839 2,235
Holiday Inn 965 (22) 181,292 (4,775)
Holiday Inn Express 1,555 49 128,662 4,944
Staybridge Suites 112 15 12,417 1,464
Candlewood Suites 142 12 15,426 1,277
Hotel Indigo 8 2 1,125 232
____ ____ ______ _____
Total 2,994 64 400,062 5,153
____ ____ ______ _____
Analysed by ownership type:
Owned and leased 12 (1) 4,386 (293)
Managed 190 1 39,594 337
Franchised 2,792 64 356,082 5,109
____ ____ ______ _____
Total 2,994 64 400,062 5,153
____ ____ ______ _____
Hotels Rooms
Change over Change over
2007 2006 2007 2006
Americas pipeline 30 June 31 December 30 June 31 December
Analysed by brand:
InterContinental 7 1 3,486 551
Crowne Plaza 28 4 7,033 1,194
Holiday Inn 238 26 29,706 3,140
Holiday Inn Express 530 27 46,216 2,666
Staybridge Suites 119 4 12,925 898
Candlewood Suites 171 43 15,292 3,569
Hotel Indigo 36 12 4,712 1,667
____ ____ ______ _____
Total 1,129 117 119,370 13,685
____ ____ ______ _____
Analysed by ownership type:
Managed 19 5 4,281 571
Franchised 1,110 112 115,089 13,114
____ ____ ______ _____
Total 1,129 117 119,370 13,685
____ ____ ______ _____
The Americas system (the number of hotels and rooms which are owned, leased,
managed or franchised) increased in the first half of 2007 by a net 64 hotels
(5,153 rooms), with 133 hotels (14,727 rooms) joining the system and 69 hotels
(9,574 rooms) leaving.
The Americas pipeline (contracts signed for hotels and rooms yet to enter the
system) at 30 June 2007 included 1,129 hotels (119,370 rooms) representing room
growth of 13% over the pipeline at 31 December 2006.
Three months ended Six months ended
30 June 30 June 30 June 30 June
2007 2006 % 2007 2006 %
Europe, Middle East and £m £m change £m £m change
Africa (EMEA)
Revenue:
Owned and leased 29 25 16.0 54 44 22.7
Managed 22 16 37.5 38 30 26.7
Franchised 10 8 25.0 18 15 20.0
____ ____ ____ ____ ____ ____
Continuing operations 61 49 24.5 110 89 23.6
Discontinued operations* 3 51 (94.1) 4 102 (96.1)
____ ____ ____ ____ ____ ____
Total £m 64 100 (36.0) 114 191 (40.3)
____ ____ ____ ____ ____ ____
Dollar equivalent $m 127 186 (31.7) 225 345 (34.8)
____ ____ ____ ____ ____ ____
Operating profit before other operating
income and expenses:
Owned and leased 3 3 - 1 (1) -
Managed 11 9 22.2 19 17 11.8
Franchised 8 7 14.3 14 12 16.7
____ ____ ____ ____ ____ ____
22 19 15.8 34 28 21.4
Regional overheads (5) (5) - (10) (10) -
____ ____ ____ ____ ____ ____
Continuing operations 17 14 21.4 24 18 33.3
Discontinued operations* - 16 - - 18 -
____ ____ ____ ____ ____ ____
Total £m 17 30 (43.3) 24 36 (33.3)
____ ____ ____ ____ ____ ____
Dollar equivalent $m 33 54 (38.9) 47 65 (27.7)
____ ____ ____ ____ ____ ____
*Discontinued operations are all owned and leased.
Revenue and operating profit from continuing operations increased by 23.6% to
£110m and 33.3% to £24m respectively during the first half of 2007. Including
discontinued operations, revenue decreased by 40.3% to £114m whilst operating
profit decreased by 33.3% to £24m.
In the owned and leased estate, continuing revenues increased by 22.7% to £54m
as a result of the recently reopened InterContinental London Park Lane and
strong trading at the InterContinental Le Grand Paris. Although profitability
in the owned and leased estate improved, the InterContinental London Park Lane
contributed a £2m loss as the hotel only became fully operational over the first
half of the year.
Managed revenue increased by 26.7% to £38m as a result of management contracts
negotiated in 2006 as part of the hotel disposal programme in Europe and strong
RevPAR growth from comparable hotels in the Middle East and the UK. Operating
profit increased by 11.8% to £19m as revenue growth was partly offset by
increased investment in enhanced development capability.
Franchised revenue and operating profit increased by 20.0% to £18m and 16.7% to
£14m respectively. The growth was principally driven by RevPAR gains and room
count expansion in the UK and Continental Europe.
Regional overheads remained in line with 2006 levels.
Hotels Rooms
Change over Change over
2007 2006 2007 2006
EMEA hotel and room count 30 June 31 December 30 June 31 December
Analysed by brand:
InterContinental 64 (2) 20,641 (782)
Crowne Plaza 69 1 16,687 247
Holiday Inn 330 13 51,458 830
Holiday Inn Express 176 4 18,323 214
____ ____ ______ ____
Total 639 16 107,109 509
____ ____ ______ ____
Analysed by ownership type:
Owned and leased 8 (2) 2,569 (519)
Managed 169 (5) 38,755 (1,920)
Franchised 462 23 65,785 2,948
____ ____ ______ ____
Total 639 16 107,109 509
____ ____ ______ ____
Hotels Rooms
Change over Change over
2007 2006 2007 2006
EMEA pipeline 30 June 31 December 30 June 31 December
Analysed by brand:
InterContinental 19 9 4,858 2,309
Crowne Plaza 20 5 5,067 1,400
Holiday Inn 45 (9) 8,161 343
Holiday Inn Express 70 11 9,108 1,663
Staybridge Suites 8 3 968 390
Other 1 1 90 90
____ ____ ______ ____
Total 163 20 28,252 6,195
____ ____ ______ ____
Analysed by ownership type:
Managed 55 16 11,825 4,136
Franchised 108 4 16,427 2,059
____ ____ ______ ____
Total 163 20 28,252 6,195
____ ____ ______ ____
During the first half of 2007, EMEA added 16 hotels (509 rooms) to its
portfolio. The growth was primarily driven by a conversion deal in the UK of 11
hotels which have been rebranded as Holiday Inn hotels under 20 year franchise
agreements. The region's room pipeline grew by 28% in the first half of the
year and included 163 hotels (28,252 rooms) at 30 June 2007.
Three months ended Six months ended
30 June 30 June 30 June 30 June
2007 2006 % 2007 2006 %
Asia Pacific $m $m change $m $m change
Revenue:
Owned and leased 31 31 - 67 63 6.3
Managed 22 17 29.4 44 30 46.7
Franchised 4 2 100.0 8 4 100.0
____ ____ ____ ____ ____ ____
Total $m 57 50 14.0 119 97 22.7
____ ____ ____ ____ ____ ____
Sterling equivalent £m 29 27 7.4 61 54 13.0
____ ____ ____ ____ ____ ____
Operating profit before other operating
income and expenses:
Owned and leased 7 6 16.7 15 14 7.1
Managed 10 11 (9.1) 19 19 -
Franchised 2 2 - 4 3 33.3
____ ____ ____ ____ ____ ____
19 19 - 38 36 5.6
Regional overheads (5) (5) - (11) (9) 22.2
____ ____ ____ ____ ____ ____
Total $m 14 14 - 27 27 -
____ ____ ____ ____ ____ ____
Sterling equivalent £m 7 9 (22.2) 14 16 (12.5)
____ ____ ____ ____ ____ ____
Total revenue increased by 22.7% to $119m whilst total operating profit remained
flat at $27m.
In the owned and leased estate, revenues increased by 6.3% to $67m as a result
of strong trading at the InterContinental Hong Kong despite the impact of
ongoing renovation works.
Managed revenue increased by 46.7% to $44m as a result of the contribution from
the All Nippon Airways (ANA) hotel contracts negotiated in October 2006,
continued expansion in China and RevPAR growth across China, South Asia and
Australia. Managed profits remained stable as integration and ongoing costs
associated with the ANA investment, together with continued infrastructure
investment in China, offset revenue growth.
Franchised revenues increased by $4m to $8m driven by royalties from non-IHG
branded hotels in the IHG-ANA joint venture and RevPAR gains in Southern Asia.
Similar to the managed operations, growth in profitability was impacted by ANA
integration and ongoing costs.
Regional overheads increased by $2m to $11m primarily due to investment in
technology and the corporate infrastructure for Japan, India and China.
Hotels Rooms
Change over Change over
2007 2006 2007 2006
Asia Pacific hotel and room count 30 June 31 December 30 June 31 December
Analysed by brand:
InterContinental 34 1 12,190 539
Crowne Plaza 51 (1) 16,478 (110)
Holiday Inn 89 (2) 23,850 75
Holiday Inn Express 10 2 3,019 1,264
Other 4 - 968 -
____ ____ _____ _____
Total 188 - 56,505 1,768
____ ____ _____ _____
Analysed by ownership type:
Owned and leased 2 - 693 -
Managed 157 8 48,771 3,489
Franchised 29 (8) 7,041 (1,721)
____ ____ _____ _____
Total 188 - 56,505 1,768
____ ____ _____ _____
Hotels Rooms
Change over Change over
2007 2006 2007 2006
Asia Pacific pipeline 30 June 31 December 30 June 31 December
Analysed by brand:
InterContinental 24 4 8,428 701
Crowne Plaza 39 18 13,995 6,388
Holiday Inn 40 7 12,057 1,667
Holiday Inn Express 19 7 5,385 860
____ ____ _____ _____
Total 122 36 39,865 9,616
____ ____ _____ _____
Analysed by ownership type:
Managed 122 36 39,865 9,616
____ ____ _____ _____
Total 122 36 39,865 9,616
____ ____ _____ _____
The number of Asia Pacific hotels remained unchanged in the period. Room count
increased by 1,768 rooms. Hotel and room count totals currently exclude non-IHG
branded franchised hotels in the IHG-ANA joint venture. The pipeline in Asia
Pacific increased by 36 hotels (9,616 rooms) over 31 December 2006 with the
majority of growth achieved in mainland China.
Central
Net central costs increased by £1m to £38m during the six months ended 30 June
2007.
Other Operating Income and Expenses
Other operating income and expenses, a credit of £26m in the six months ended 30
June 2007, comprises a £15m gain on the sale of financial assets and an £11m
gain on the sale of associate investments.
Taxation
The tax charge on the combined profit from continuing and discontinued
operations, excluding the impact of exceptional items has been calculated using
an estimated rate of 23%. By also excluding the effect of prior year items, the
equivalent effective tax rate would be approximately 31%. Prior year items,
arising from settlement of tax liabilities and other changes in estimates, have
been treated as relating wholly to continuing operations.
Treasury
The net movement in cash and cash equivalents in the six months ended 30 June
2007 was an outflow of £142m. This included a net cash inflow from operations of
£90m. The overall net cash inflow from investing activities was £4m reflecting
£58m received from asset disposals and capital expenditure of £54m. The net cash
outflow from financing activities was £212m including £709m in respect of the
payment of a special dividend on 15 June 2007.
Net debt at 30 June 2007 was £872m comprising cash and cash equivalents of £41m
and loans and other borrowings of £913m. Net financial expenses increased by
£11m to £12m during the six months ended 30 June 2007 as a result of a £5m
finance lease charge on the InterContinental Boston and higher debt levels
during the first half of 2007.
Asset Disposal Programme
On 16 May 2007, IHG sold the Crowne Plaza Santiago for $21m before transaction
costs, approximately $9m above net book value. Under the agreement, IHG
retained a 10 year franchise contract.
On 12 July 2007, IHG announced an agreement to sell its 74.11% share of the
InterContinental Montreal for £17m before transaction costs, approximately £5m
above book value. Under the agreement, IHG will retain a 30 year management
contract on the hotel.
These transactions are a continuation of IHG's strategy to grow its management
and franchise businesses whilst reducing asset ownership. Since 2003, 178 hotels
with a net book value in excess of £2.9bn have been disposed, generating
aggregate proceeds of £3.0bn.
Return of Funds
IHG's return of funds continued during the first half of the year, with the
completion of the third £250m share buyback programme and the payment of a £709m
special interim dividend on 15 June 2007. A fourth share buyback programme of
£150m which was announced in February 2007 has yet to commence. On its
completion, IHG will have returned £3.6bn to shareholders since March 2004, with
£3.45bn paid as at 30 June 2007.
InterContinental Hotels Group PLC
GROUP INCOME STATEMENT
For the three months ended 30 June 2007
3 months ended 30 June 2007 3 months ended 30 June 2006
Before Exceptional Before Exceptional
exceptional items exceptional items
items (note 5) Total items (note 5) Total
£m £m £m £m £m £m
Continuing operations
Revenue (note 3) 226 - 226 198 - 198
Cost of sales (99) - (99) (79) - (79)
Administrative expenses (46) - (46) (42) - (42)
_____ ____ ____ ____ ____ ____
81 - 81 77 - 77
Depreciation and amortisation (15) - (15) (14) - (14)
Other operating income and
expenses (note 5)
- 10 10 - - -
_____ ____ ____ ____ ____ ____
Operating profit (note 4) 66 10 76 63 - 63
Financial income 3 - 3 8 - 8
Financial expenses (10) - (10) (8) - (8)
_____ ____ ____ ____ ____ ____
Profit before tax 59 10 69 63 - 63
Tax (note 6) (10) - (10) (13) 96 83
_____ ____ ____ ____ ____ ____
Profit for the period from
continuing operations
49 10 59 50 96 146
Profit for the period from
discontinued operations (note
7) 2 3 5 11 7 18
_____ ____ ____ ____ ____ ____
Profit for the period 51 13 64 61 103 164
==== ==== ==== ==== ==== ====
Attributable to:
Equity holders of the
parent
51 13 64 61 103 164
Minority equity interest - - - - - -
_____ ____ ____ ____ ____ ____
Profit for the period 51 13 64 61 103 164
==== ==== ==== ==== ==== ====
Earnings per ordinary share
(note 8)
Continuing operations:
Basic 17.5p 35.4p
Adjusted 14.5p 12.1p
Diluted 17.1p 34.4p
Total operations:
Basic 19.0p 39.8p
Adjusted 15.1p 14.8p
Diluted 18.5p 38.7p
InterContinental Hotels Group PLC
GROUP INCOME STATEMENT
For the six months ended 30 June 2007
6 months ended 30 June 2007 6 months ended 30 June 2006
Before Exceptional Before Exceptional
exceptional items exceptional items
items (note 5) Total items (note 5) Total
£m £m £m £m £m £m
Continuing operations
Revenue (note 3) 422 - 422 377 - 377
Cost of sales (196) - (196) (163) - (163)
Administrative expenses (86) - (86) (81) - (81)
_____ ____ ____ ____ ____ ____
140 - 140 133 - 133
Depreciation and amortisation (29) - (29) (27) - (27)
Other operating income and
expenses (note 5) - 26 26 - 25 25
_____ ____ ____ ____ ____ ____
Operating profit (note 4) 111 26 137 106 25 131
Financial income 6 - 6 17 - 17
Financial expenses (18) - (18) (18) - (18)
_____ ____ ____ ____ ____ ____
Profit before tax 99 26 125 105 25 130
Tax (note 6) (22) 2 (20) (24) 89 65
_____ ____ ____ ____ ____ ____
Profit for the period from
continuing operations 77 28 105 81 114 195
Profit for the period from
discontinued operations (note
7) 3 3 6 13 9 22
_____ ____ ____ ____ ____ ____
Profit for the period 80 31 111 94 123 217
==== ==== ==== ==== ==== ====
Attributable to:
Equity holders of the
parent
80 31 111 94 123 217
Minority equity interest - - - - - -
_____ ____ ____ ____ ____ ____
Profit for the period 80 31 111 94 123 217
==== ==== ==== ==== ==== ====
Earnings per ordinary share
(note 8)
Continuing operations:
Basic 30.4p 46.3p
Adjusted 22.3p 19.2p
Diluted 29.7p 45.0p
Total operations:
Basic 32.2p 51.5p
Adjusted 23.2p 22.3p
Diluted 31.4p 50.1p
Dividends per ordinary share:
Final paid in the period 13.3p 10.7p
Special interim paid 200.0p 118.0p
Interim proposed 5.7p 5.1p
InterContinental Hotels Group PLC
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the six months ended 30 June 2007
2007 2006
6 months 6 months
ended 30 June ended 30 June
£m £m
Income and expense recognised directly in equity
Gains on valuation of available-for-sale assets 5 2
Gains on cash flow hedges - 2
Exchange differences on retranslation of foreign operations 3 (11)
Actuarial (losses)/gains on defined benefit pension plans (12) 9
____ ____
(4) 2
____ ____
Transfers to the income statement
On cash flow hedges - (1)
On disposal of foreign operations - 1
On disposal of available-for-sale assets (7) (15)
____ ____
(7) (15)
____ ____
Tax
Tax on items above taken directly to or transferred from equity 4 4
Tax related to share schemes recognised directly in equity 5 4
____ ____
9 8
____ ____
Net expense recognised directly in equity (2) (5)
Profit for the period 111 217
____ ____
Total recognised income and expense for the period 109 212
==== ====
Attributable to:
Equity holders of the parent 109 212
Minority equity interest - -
____ ____
109 212
==== ====
InterContinental Hotels Group PLC
GROUP CASH FLOW STATEMENT
For the six months ended 30 June 2007
2007 2006
6 months 6 months
ended 30 June ended 30 June
£m £m
Profit for the period 111 217
Adjustments for:
Net financial expenses 12 1
Income tax charge/(credit) 22 (57)
Gain on disposal of assets, net of tax (3) (9)
Other operating income and expenses (26) (25)
Depreciation and amortisation 30 33
Equity settled share-based cost, net of payments 4 5
____ ____
Operating cash flow before movements in working capital 150 165
Increase in receivables (19) (30)
Decrease in trade and other payables (16) (7)
Retirement benefit contributions, net of charge (25) -
____ ____
Cash flow from operations 90 128
Interest paid (13) (18)
Interest received 7 16
Tax paid (18) (23)
____ ____
Net cash from operating activities 66 103
____ ____
Cash flow from investing activities
Purchases of property, plant and equipment (35) (35)
Purchases of intangible assets (9) (8)
Purchases of associates and other financial assets (10) (3)
Disposal of assets, net of costs and cash disposed of 14 237
Proceeds from associates and other financial assets 44 115
____ ____
Net cash from investing activities 4 306
____ ____
Cash flow from financing activities
Proceeds from the issue of share capital 13 8
Purchase of own shares (29) (111)
Purchase of own shares by employee share trusts (54) (29)
Proceeds on release of own shares by employee share trusts 10 10
Dividends paid to shareholders (756) (543)
Dividends paid to minority interests - (1)
Increase in borrowings 604 38
____ ____
Net cash from financing activities (212) (628)
____ ____
Net movement in cash and cash equivalents in the period (142) (219)
Cash and cash equivalents at beginning of the period 179 324
Exchange rate effects 4 8
____ ____
Cash and cash equivalents at end of the period 41 113
==== ====
InterContinental Hotels Group PLC
GROUP BALANCE SHEET
As at 30 June 2007
2007 2006 2006
30 June 30 June 31 December
£m £m £m
ASSETS
Property, plant and equipment 942 942 997
Goodwill 109 112 109
Intangible assets 160 121 154
Investment in associates 33 39 32
Other financial assets 92 108 96
____ ____ ____
Total non-current assets 1,336 1,322 1,388
____ ____ ____
Inventories 3 3 3
Trade and other receivables 238 239 237
Current tax receivable 17 17 23
Cash and cash equivalents 41 113 179
Other financial assets 12 5 13
____ ____ ____
Total current assets 311 377 455
Non-current assets classified as held for sale 81 405 50
____ ____ ____
Total assets 1,728 2,104 1,893
==== ==== ====
LIABILITIES
Loans and other borrowings (7) (5) (10)
Trade and other payables (367) (428) (402)
Current tax payable (236) (231) (231)
____ ____ ____
Total current liabilities (610) (664) (643)
____ ____ ____
Loans and other borrowings (906) (428) (303)
Retirement benefit obligations (57) (64) (71)
Trade and other payables (112) (103) (109)
Deferred tax payable (58) (115) (79)
____ ____ ____
Total non-current liabilities (1,133) (710) (562)
Liabilities classified as held for sale (4) (86) (2)
____ ____ ____
Total liabilities (1,747) (1,460) (1,207)
==== ==== ====
Net (liabilities)/assets (note 11) (19) 644 686
==== ==== ====
EQUITY
Equity share capital 79 56 66
Capital redemption reserve 4 2 4
Shares held by employee share trusts (28) (18) (17)
Other reserves (1,528) (1,528) (1,528)
Unrealised gains and losses reserve 25 18 27
Currency translation reserve - 9 (3)
Retained earnings 1,421 2,092 2,129
____ ____ ____
IHG shareholders' equity (note 12) (27) 631 678
Minority equity interest 8 13 8
____ ____ ____
Total equity (19) 644 686
==== ==== ====
InterContinental Hotels Group plc
Notes to the interim financial statements
1. Basis of preparation
These interim financial statements have been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting' using, on a consistent basis, the accounting policies set out in the 2006
InterContinental Hotels Group PLC (the Group or IHG) Annual Report and Financial Statements.
In the current year, the Group will adopt International Financial Reporting Standard 7 'Financial
instruments: Disclosures' (IFRS 7) for the first time. As IFRS 7 is a disclosure standard only, there is
no impact from the adoption of this standard on these interim financial statements.
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 auditors have carried out a review of the
financial information in accordance with the guidance contained in Bulletin 1999/4 'Review of interim
financial information' issued by the Auditing Practices Board.
The financial information for the year ended 31 December 2006 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.
Amounts that have previously been disclosed as special items have now been called exceptional items in
accordance with market practice. There has been no change to the Group's accounting policy for identifying
these items.
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 six months ended 30
June is £1 = $1.97 (2007 3 months, £1=$1.99; 2006 6 months, £1=$1.80; 2006 3 months, £1=$1.85). In the
case of the euro, the translation rate for the six months ended 30 June is £1=€1.48 (2007 3 months, £1=€
1.47; 2006 6 months, £1=€1.46; 2006 3 months, £1=€1.45).
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=$2.01
(2006 31 December £1=$1.96; 30 June £1=$1.84). In the case of the euro, the translation rate is £1=€1.49
(2006 31 December £1=€1.49; 30 June £1=€1.44).
3. Revenue
2007 2006 2007 2006
3 months 3 months 6 months 6 months
ended 30 June ended 30 June ended 30 June ended 30 June
£m £m £m £m
Continuing operations:
Americas 122 110 224 210
EMEA 61 49 110 89
Asia Pacific 29 27 61 54
Central 14 12 27 24
____ ____ ____ ____
226 198 422 377
Discontinued operations (note 13 62 23 122
7)
____ ____ ____ ____
239 260 445 499
==== ==== ==== ====
4. Operating profit
2007 2006 2007 2006
3 months 3 months 6 months 6 months
ended 30 June ended 30 June ended 30 June ended 30 June
£m £m £m £m
Continuing operations:
Americas 63 60 111 109
EMEA 17 14 24 18
Asia Pacific 7 9 14 16
Central (21) (20) (38) (37)
____ ____ ____ ____
66 63 111 106
Other operating income and
expenses (note 5) 10 - 26 25
____ ____ ____ ____
76 63 137 131
Discontinued operations (note 4 18 5 21
7)
____ ____ ____ ____
80 81 142 152
==== ==== ==== ====
5. Exceptional items
2007 2006 2007 2006
3 months 3 months 6 months 6 months
ended 30 June ended 30 June ended 30 June ended 30 June
£m £m £m £m
Other operating income and
expenses*
Gain on sale of associate
investments - - 11 -
Gain on sale of investment in
FelCor Lodging Trust, Inc. - - - 25
Gain on sale of other financial
assets 10 - 15 -
____ ____ ____ ____
10 - 26 25
==== ==== ==== ====
Taxation*
Tax on other operating income
and expenses - - 2 (7)
Exceptional tax credit - 96 - 96
____ ____ ____ ____
- 96 2 89
==== ==== ==== ====
Gain on disposal of assets
Gain on disposal of assets 4 13 4 14
Tax charge (1) (6) (1) (5)
____ ____ ____ ____
3 7 3 9
==== ==== ==== ====
* Relates to continuing operations.
The exceptional tax credit related to the release of provisions which were exceptional by reason of their size
or incidence relating to tax matters which had been settled or in respect of which the relevant statutory
limitation period expired, together with a credit in respect of previously unrecognised losses.
6. Tax
The tax charge on the combined profit from continuing and discontinued operations, excluding the impact of
exceptional items (note 5), has been calculated using an estimated effective annual tax rate of 23% (2006
25%).
By also excluding the effect of prior year items, the equivalent effective tax rate would be approximately
31% (2006 31%). Prior year items, arising from settlement of tax liabilities and other changes in
estimates, have been treated as relating wholly to continuing operations.
2007 2007 2007 2006 2006 2006
3 months ended 30 June Profit Tax Tax Profit Tax Tax
£m £m rate £m £m rate
Before exceptional items
Continuing operations 59 (10) 63 (13)
Discontinued operations 4 (2) 18 (7)
____ ____ ____ ____
63 (12) 19% 81 (20) 25%
Exceptional items
Continuing operations 10 - - 96
Discontinued operations 4 (1) 13 (6)
____ ____ ____ ____
77 (13) 94 70
==== ==== ==== ====
Analysed as:
UK tax (7) 7
Foreign tax (6) 63
____ _____
(13) 70
==== ====
2007 2007 2007 2006 2006 2006
6 months ended 30 June Profit Tax Tax Profit Tax Tax
£m £m rate £m £m rate
Before exceptional items
Continuing operations 99 (22) 105 (24)
Discontinued operations 5 (2) 21 (8)
____ ____ ____ ____
104 (24) 23% 126 (32) 25%
Exceptional items
Continuing operations 26 2 25 89
Discontinued operations 4 (1) 14 (5)
____ ____ ____ ____
134 (23) 165 52
==== ==== ==== ====
Analysed as:
UK tax (11) 5
Foreign tax (12) 47
____ _____
(23) 52
==== ====
7. Discontinued operations
Discontinued operations are those relating to hotels sold or those classified as held for sale as part
of the asset disposal programme that commenced in 2003. These disposals underpin IHG's strategy of
growing its managed and franchised business whilst reducing asset ownership.
The results of discontinued operations which have been included in the consolidated income statement
are as follows:
2007 2006 2007 2006
3 months 3 months 6 months 6 months
ended ended ended ended
30 June 30 June 30 June 30 June
£m £m £m £m
Revenue 13 62 23 122
Cost of sales (9) (43) (17) (95)
____ ____ ____ ____
4 19 6 27
Depreciation and amortisation - (1) (1) (6)
____ ____ ____ ____
Operating profit 4 18 5 21
Tax (2) (7) (2) (8)
____ ____ ____ ____
Profit after tax 2 11 3 13
Gain on disposal of assets, net of tax (note 3 7 3 9
5)
____ ____ ____ ____
Profit for the period from discontinued
operations 5 18 6 22
==== ==== ==== ====
2007 2006 2007 2006
3 months 3 months 6 months 6 months
ended ended ended ended
30 June 30 June 30 June 30 June
£m £m £m £m
Cash flows attributable to discontinued
operations
Operating profit before interest, depreciation
and amortisation 4 19 6 27
Investing activities - (5) - (7)
Financing activities - (24) - (25)
____ ____ ____ ____
4 (10) 6 (5)
==== ==== ==== ====
The effect of discontinued operations on segment results is shown in the Operating review.
8. 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.
On 1 June 2007, shareholders approved a share capital consolidation on the basis of 47 new ordinary shares
for every 56 existing ordinary shares, together with a special dividend of 200 pence per existing ordinary
share. The overall effect of the transaction was that of a share repurchase at fair value, therefore no
adjustment has been made to comparative data.
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.
2007 2007 2006 2006
Continuing Continuing
3 months ended 30 June operations Total operations Total
Basic earnings per share
Profit available for equity holders (£m) 59 64 146 164
Basic weighted average number of ordinary
shares (millions) 337 337 412 412
Basic earnings per share (pence) 17.5 19.0 35.4 39.8
==== ==== ==== ====
Diluted earnings per share
Profit available for equity holders (£m) 59 64 146 164
Diluted weighted average number of ordinary
shares (millions) (see next page) 346 346 424 424
Diluted earnings per share (pence) 17.1 18.5 34.4 38.7
==== ==== ==== ====
Adjusted earnings per share
Profit available for equity holders (£m) 59 64 146 164
Less adjusting items (note 5):
Other operating income and
expenses (£m) (10) (10) - -
Tax (£m) - - (96) (96)
Gain on disposal of assets (£m) - (3) - (7)
____ ____ ____ ____
Adjusted earnings (£m) 49 51 50 61
Basic weighted average number of ordinary
shares (millions)
337 337 412 412
Adjusted earnings per share (pence) 14.5 15.1 12.1 14.8
==== ==== ==== ====
8. Earnings per ordinary share (continued)
2007 2007 2006 2006
Continuing Continuing
6 months ended 30 June operations Total operations Total
Basic earnings per share
Profit available for equity holders (£m) 105 111 195 217
Basic weighted average number of ordinary
shares (millions) 345 345 421 421
Basic earnings per share (pence) 30.4 32.2 46.3 51.5
==== ==== ==== ====
Diluted earnings per share
Profit available for equity holders (£m) 105 111 195 217
Diluted weighted average number of ordinary
shares (millions) (see below) 354 354 433 433
Diluted earnings per share (pence) 29.7 31.4 45.0 50.1
==== ==== ==== ====
Adjusted earnings per share
Profit available for equity holders (£m) 105 111 195 217
Less adjusting items (note 5):
Other operating income and
expenses (£m) (26) (26) (25) (25)
Tax (£m) (2) (2) (89) (89)
Gain on disposal of assets (£m) - (3) - (9)
____ ____ ____ ____
Adjusted earnings (£m) 77 80 81 94
Basic weighted average number of ordinary
shares (millions) 345 345 421 421
Adjusted earnings per share (pence) 22.3 23.2 19.2 22.3
==== ==== ==== ====
The diluted weighted average number of ordinary shares is calculated as:
2007 2006 2007 2006
3 months 3 months 6 months 6 months
ended ended ended ended
30 June 30 June 30 June 30 June
millions millions millions millions
Basic weighted average number of ordinary
shares 337 412 345 421
Dilutive potential ordinary shares - employee
share options 9 12 9 12
____ ____ ____ ____
346 424 354 433
==== ==== ==== ====
9. Net debt
2007 2006 2006
30 June 30 June 31 December
£m £m £m
Cash and cash equivalents 41 113 179
Loans and other borrowings - current (7) (5) (10)
Loans and other borrowings - non-current (906) (428) (303)
____ ____ ____
Net debt (872) (320) (134)
==== ==== ====
Finance lease liability included above (99) - (97)
==== ==== ====
10. Movement in net debt
2007 2006 2006
6 months ended 6 months ended 12 months
30 June 30 June ended
£m £m 31 December
£m
Net decrease in cash and cash equivalents (142) (219) (152)
Add back cash flows in respect of other components
of net debt:
(Increase)/decrease in borrowings (604) (38) 172
____ ____ ____
(Increase)/decrease in net debt arising from cash (746) (257) 20
flows
Non-cash movements:
Finance lease liability (4) - (103)
Exchange and other adjustments 12 25 37
____ ____ ____
Increase in net debt (738) (232) (46)
Net debt at beginning of the period (134) (88) (88)
____ ____ ____
Net debt at end of the period (872) (320) (134)
==== ==== ====
11. Net (liabilities)/assets
2007 2006 2006
30 June 30 June 31 December
£m £m £m
Americas 425 267 390
EMEA 358 664 359
Asia Pacific 276 279 285
Central 71 83 73
____ ____ ____
1,130 1,293 1,107
Net debt (872) (320) (134)
Unallocated assets and liabilities (277) (329) (287)
____ ____ ____
(19) 644 686
==== ==== ====
12. Movement in IHG shareholders' equity
2007 2006 2006
6 months ended 6 months 12 months
30 June ended ended
£m 30 June 31 December
£m £m
At beginning of the period 678 1,084 1,084
Total recognised income and expense for the period 109 212 409
Equity dividends paid (756) (543) (561)
Issue of ordinary shares 13 8 20
Purchase of own shares (31) (116) (260)
Movement in shares in employee share trusts (44) (19) (32)
Equity settled share-based cost, net of payments 4 5 18
____ ____ ____
At end of the period (27) 631 678
==== ==== ====
13. Capital commitments and contingencies
At 30 June 2007, the amount contracted for but not provided for in the financial statements for expenditure
on property, plant and equipment was £20m (2006 31 December £24m; 30 June £34m).
At 30 June 2007, the Group had contingent liabilities of £5m (2006 31 December £11m; 30 June £20m), mainly
comprising guarantees given in the ordinary course of business.
In limited cases, the Group may provide performance guarantees to third-party owners to secure management
contracts. The maximum exposure under such guarantees is £115m (2006 31 December £142m; 30 June £133m).
It is the view of the Directors that, other than to the extent that liabilities have been provided for in
these financial statements, such guarantees are not expected to result in financial loss to the Group.
The Group has 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 warranties are not expected to result in financial loss to the Group.
14. Pension commitments
In March and June 2007, the Company made the first two payments of £10m under the agreement to make special
pension contributions of £40m to the UK pension plan. A further payment of £10m will be paid in both 2008
and 2009.
INDEPENDENT REVIEW REPORT TO InterContinental Hotels Group pLC
Introduction
We have been instructed by the Company to review the financial information for the three months and six
months ended 30 June 2007 which comprises the Group income statement, Group statement of recognised income
and expense, Group cash flow statement, Group balance sheet and the related notes 1 to 14. We have read
the other information contained in the Interim Report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
This report is made solely to the Company in accordance with guidance contained in Bulletin 1999/4 'Review
of interim financial information' 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 Report, including the financial information contained therein, is the responsibility of, and
has been approved by, the Directors. The Directors are responsible for preparing the Interim Report in
accordance with the Listing Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent with those applied in
preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4 'Review of interim
financial information' issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of management and applying analytical procedures to the financial
information and underlying financial data, and based thereon, assessing whether the accounting policies and
presentation have been consistently applied, unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with International Standards on Auditing
(UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the
financial information as presented for the three months and six months ended 30 June 2007.
Ernst & Young LLP
London
13 August 2007
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