Foreign Filer Report • Feb 17, 2009
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Download Source File6-K 1 ihg200902176k.htm FULL YEAR RESULTS TO 31 DECEMBER 2008 Created by EDGAR Ease Plus (EDGAR Ease+) Control Number: Rev Number: Client Name: Project Name: Firm Name:
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 AND 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934
For 17 February, 2009
InterContinental Hotels Group PLC (Registrant's name)
Broadwater Park, Denham, Buckinghamshire, UB9 5HJ, United Kingdom (Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F Form 40-F
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable
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InterContinental Hotels Group PLC
Full Year Results to 31 December 2008
| Financial
results | 2008 | 2007 | %
change | | % change
(CER) | |
| --- | --- | --- | --- | --- | --- | --- |
| | | | Total | Excluding
LDs 1 | Total | Excluding
LDs 1 |
| Continuing
revenue | $1,854m | $1,771m | 5% | 3% | 4% | 2% |
| Continuing operating
profit | $535m | $474m | 13% | 6% | 10% | 4% |
| Total adjusted
operating profit | $549m | $491m | 12% | 5% | 9% | 3% |
| Adjusted continuing
EPS | 117.8¢ | 93.8¢ | 26% | | | |
| Adjusted total
EPS | 120.9¢ | 97.2¢ | 24% | | | |
| Total basic
EPS 2 | 91.3¢ | 144.7¢ | (37)% | | | |
| Total
DPS 3 | 41.4¢ | 40.7¢ | 2% | | | |
| Net debt | $1,273m | $1,659m | | | | |
All figures are before exceptional items unless otherwise noted. See appendix 3 for analysis of financial headlines. Constant exchange rate comparatives shown in appendix 4. (% CER) = change in constant currency.
1 –excluding $33m of significant liquidated damages 2 –Total basic EPS after exceptional items
3 –The 2007 DPS excludes the 400¢ special interim dividend
| Business
headlines | |
| --- | --- |
| o | 34,757 net rooms
(237 hotels) added taking total system size to 619,851 rooms (4,186 hotels), up
6%. |
| o | 98,886 rooms signed,
including 25,058 rooms (173 hotels) in the fourth quarter. |
| o | Global constant
currency RevPAR growth of 0.9%. IHG brands outperformed in all major
markets. |
| o | Strong free cash
flow generation reduces net debt by $386m to $1.3bn. Long term debt facilities
refinanced. |
| o | Final dividend
maintained at 29.2¢, equivalent to 20.2p (+36%). Total dividend up 2% to
41.4¢. |
| o | Exceptional
operating charge of $132m including $19m severance costs and $96m impairment
charge. |
| Recent
trading | |
| --- | --- |
| o | Sharp deterioration
in fourth quarter trading. Global constant currency RevPAR down 6.5% in Q4. IHG
brands outperformed in each region. |
| o | January global
constant currency RevPAR decline of -12.2%; -11.7% in Americas, -11.8% in EMEA
and -14.8% in Asia Pacific. Forward bookings data shows no sign of improvement
in levels of demand. |
| o | January signings of
1,713 rooms (13 hotels); January openings of 3,969 rooms (27
hotels). |
| Priorities | |
|---|---|
| o | Open |
| rooms . | |
| Currently 85,000 rooms under construction, around 50,000 scheduled to open in | |
| 2009. | |
| o | Drive |
| share. The $1bn marketing | |
| and reservations system fund has been reprioritised. | |
| o | Holiday Inn |
| relaunch. 350 hotels operating | |
| under the new standards; c.220 expected conversions in remainder of Q1 2009. | |
| Early results from the first relaunched hotels show a RevPAR uplift of 5% | |
| compared to a control group. | |
| o | Reduce |
| costs . | |
| Major initiative to reduce costs which will keep 2009 regional and central | |
| costs $30m below 2008 levels on a constant currency basis, whilst still | |
| investing to support growth. |
| Commenting on the
results, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC
said: |
| --- |
| “ We produced good
results in 2008 and comfortably exceeded our three year target to add 50,000 to
60,000 net rooms by the end of 2008 - adding over 82,000
rooms. We opened 20% more rooms than in 2007 and signed almost 100,000 rooms
into our pipeline. “The $1 billion Holiday Inn relaunch
is progressing well. We will have almost 600 hotels operating under the new
standards by the end of the first quarter and are committed to completing the
global programme by the end of 2010. The first relaunched hotels show a strong
increase in revenue per available room which is a big motivation for other
owners to convert. “The trading
environment is very tough. The sharp deterioration that we reported on last
November has continued into 2009 and we see no signs of improvement at this
stage. It has been clear for some time that 2009 will be a challenging year and
we have taken action to prepare the business, including strict management of
cash and a significant reduction in costs. The actions we have taken to move
the business to an asset light model with strong brands, scale advantage and
leading technology and reservation systems position us well to grow market
share in the testing times ahead.” |
| Americas: RevPAR
outperformance across all brands |
| --- |
| Revenue
performance RevPAR declined
(0.2)% in 2008 with rate growth of 3.6% offset by occupancy declines. In the
fourth quarter the industry experienced a sharp deterioration in trading;
IHG’s RevPAR declined 7.2% with modest rate growth offset by occupancy
declines. In the year, IHG’s brands outperformed their market segments in
the US. Continuing revenues grew 2% to $920m. Excluding a $13m liquidated
damages receipt in the first quarter, continuing revenues grew 1%. Operating profit
performance Operating profit
from continuing operations increased 3% from $440m to $451m. Continuing owned
and leased hotels profit increased $1m to $41m driven by RevPAR growth of 0.8%
and an improved performance from the InterContinental San Francisco Mark
Hopkins. Managed hotel profit was $51m. Excluding the $13m liquidated damages
receipt managed hotel profit declined $3m due to a fall in occupancy rates and
a small guarantee payment on a new hotel. Franchised hotels profit increased
$1m to $426m driven by 5% growth in royalty fees offset by a $20m reduction in
fees received for new signings, changes in hotel ownership and hotels leaving
the system. |
| EMEA: Strong
performance in the Middle East |
| --- |
| Revenue
performance RevPAR increased
3.6% in the year, driven by strong rate growth of 5.4%; in line with the
industry RevPAR performance deteriorated in the fourth quarter, declining 5.3%.
Throughout the year the Middle East continued to perform strongly, raising
RevPAR by 20.2%. IHG hotels in the UK outperformed the market growing RevPAR by
1.2%. Continuing revenues grew 5% to $518m driven by 36% growth in franchised
revenues. Excluding the two liquidated damages receipts totalling $16m,
continuing revenues grew 2%. Operating profit
performance Operating profit
from continuing operations increased 28% (25% CER) from $134m to $171m.
Excluding the $16m liquidated damages receipts, continuing operating profit
increased 16% (13% CER). Continuing owned and leased hotel operations increased
$12m to $45m primarily due to
the increased contribution from the InterContinental London Park Lane. Excluding a $9m
liquidated damages receipt in the second quarter managed hotels profit declined
$1m. Strong growth across the Middle East and Europe was offset by a reduced
contribution from a portfolio of managed hotels in the UK. Franchised hotel
profit increased from $58m to $75m driven by a $7m liquidated damages receipt
in the third quarter and an 18% increase in royalty fee income. |
| Asia Pacific:
Solid revenue and profit growth |
| --- |
| Revenue
performance RevPAR increased
1.6%. Strong rate and occupancy growth in the first nine months of the year was
partly offset by a 6.1% decline in RevPAR in the fourth quarter with most
sub-regions impacted by the weaker global economy. Greater China RevPAR
declined 14% in the fourth quarter due partly to the impact of supply increases
in the major cities. Continuing revenues grew 12% (10% CER) to $290m driven by
10% growth in owned and leased revenues and 14% growth in managed revenues.
Excluding a $4m liquidated damages receipt in the third quarter from one
contract, franchised revenues were down $2m to $14m. Operating profit
performance Operating profit
from continuing operations grew 8% (13% CER) from $63m to $68m. Owned and
leased hotels operating profit increased 19% to $43m. Managed hotels profit
grew 20% to $55m. Franchised hotels profit increased 33% to $8m driven by a $4m
liquidated damages receipt in the third quarter. |
| Strengthening
Operating System | |
| --- | --- |
| Revenue delivery to
hotel owners through reservation channels and loyalty programmes continued to
improve: | |
| o | $7.6bn of rooms
revenue, 48% of total rooms revenue, was booked through IHG's channels, up
10%. |
| o | $5.9bn of rooms
revenue, 37% of total rooms revenue, was booked by Priority Club Rewards
members, up 13%. |
| o | Priority Club
Rewards members of 42m, up from 37m at the end of 2007. |
| o | Internet revenues
increased from 17% to 20% of total rooms revenue, 86% from IHG’s own
websites. |
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| Cash flow and net
debt |
| --- |
| $641m of cash was
generated from operating activities, up $176m on 2007. In addition $83m of cash
was generated from disposals including the sale of the Holiday Inn Jamaica for
$30m. Capital expenditure of $108m was $78m below 2007 levels. 9.2m shares were
repurchased under IHG’s buyback programme at a cost of $139m. The
completion of the remaining £30m of the £150m buyback program has
been deferred. This strong focus on cash generation and control of capital expenditure meant
IHG’s net debt reduced to $1.3bn at the end of the year, down $386m. This
net debt figure includes the $202m finance lease on the InterContinental
Boston. In May 2008 IHG refinanced $2.1bn of long term debt facilities. The new
syndicated bank facility consists of two tranches, a $1.6bn 5 year revolving
credit facility and a $0.5bn term loan with a 30 month maturity. |
| Overheads, Tax,
Interest and Exceptional items |
| --- |
| Regional overheads
in the Americas and EMEA were broadly flat. In Asia Pacific, after a further
$5m of the previously announced $10m investment to support the launch of the
ANA Crowne Plaza brand in Japan and the non-recurrence of a $2m favourable
legal settlement in 2007, regional overheads increased by $6m to support the
rapid growth in the region. Central overheads decreased $8m to $155m due to the
receipt of a $3m insurance settlement and the impact of weaker
sterling. The
effective tax rate for 2008 is 23% (2007: 22%); the underlying rate before the
impact of prior year items is 39% (2007: 36%). The reported tax
rate may continue to vary year-on-year in the foreseeable
future due to prior year settlements and other developments. The 2009 tax
rate is currently expected to be in the mid to high 20’s. The interest charge
for the year increased by $11m to $101m due to higher average net debt in the
year as a result of the £709m special dividend payment in June
2007. The $132m
exceptional operating charge includes (i) $35m of the previously announced $60m
cost to support the relaunch of the Holiday Inn brand; (ii) $19m severance
costs related to the redundancies arising from a review of the Group’s
cost base in light of the current economic climate; (iii) $96m impairment
charge including $84m relating to goodwill and intangibles in the managed
operations and $12m relating to the InterContinental Boston. |
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Appendix 1: Asset d isposal programme detail
| | Number of owned
hotels | Proceeds | Net book
value |
| --- | --- | --- | --- |
| Disposed since April
2003 | 183 | $5.5bn | $5.2bn |
| Remaining
hotels | 16 | | $1.7bn |
For a full list please visit www.ihg.com/Investors
Appendix 2: Rooms
| | Americas | EMEA | Asia
Pacific | Total |
| --- | --- | --- | --- | --- |
| Openings | 38,198 | 10,118 | 11,037 | 59,353 |
| Removals | (20,567) | (2,971) | (1,058) | (24,596) |
| Net
openings | 17,631 | 7,147 | 9,979 | 34,757 |
| Signings | 60,402 | 13,348 | 25,136 | 98,886 |
Appendix 3: Financial headlines
| Twelve months to 31 Dec
$m | Total — 200 8 | 200 7 | Americas — 200 8 | 200 7 | 200 8 | 200 7 | Asia Pacific — 200 8 | 200 7 | Central — 200 8 | 200 7 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Franchised operating profit | 509 | 489 | 426 | 425 | 75 | 58 | 8 | 6 | | |
| Managed operating profit | 201 | 174 | 51 | 41 | 95 | 87 | 55 | 46 | | |
| Continuing owned and leased operating
profit | 129 | 109 | 41 | 40 | 45 | 33 | 43 | 36 | | |
| Regional overheads | (149) | (135) | (67) | (66) | (44) | (44) | (38) | (25) | | |
| Continuing operating profit pre
central overheads | 690 | 637 | 451 | 440 | 171 | 134 | 68 | 63 | | |
| Central overheads | (155) | (163) | - | - | - | - | - | - | (155) | (163) |
| Continuing operating
profit | 535 | 474 | 451 | 440 | 171 | 134 | 68 | 63 | (155) | (163) |
| Discontinued owned and leased
operating profit | 14 | 17 | 14 | 16 | - | 1 | | | | |
| Total operating profit | 549 | 491 | 465 | 456 | 171 | 135 | 68 | 63 | (155) | (163) |
Appendix 4: Constant currency continuing operating profit growth before exceptional items.
| | Americas — Actual
currency | Constant
currency | EMEA — Actual
currency | Constant
currency | Asia
Pacific — Actual
currency | Constant Currency** | Total — Actual
currency | Constant
currency* |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Growth | 3% | 2% | 28% | 25% | 8% | 13% | 13% | 10% |
| Exchange
rates | GBP:USD | EUR:
USD |
| --- | --- | --- |
| 200 8 | 0.55 | 0.68 |
| 2007 | 0.50 | 0.73 |
Appendix 5: Definition of total gross revenue
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.
Appendix 6 : Investor information for 2008 final dividend
| Ex-dividend
Date: 25
March 2009 |
| --- |
| Record Date: 27 March
2009 |
| Payment Date: 5 June
2009 |
| Dividend payment:
Ordinary shares 20.2p per share; ADRs 29.2c per share |
For further information, please contact:
| Investor Relations
(Heather Wood; Catherine Dolton): | +44 (0) 1895 512
176 |
| --- | --- |
| Media Affairs
(Leslie McGibbon; Emma Corcoran): | +44 (0) 1895 512
425 |
| | +44 (0) 7808 094
471 |
High resolution images to accompany this announcement are available for the media to download free of charge from www.vismedia.co.uk . This includes profile shots of the key executives.
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 17 February at JPMorgan 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/prelims09 . 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 3037 9090
US Q&A conference call
There will also be a conference call, primarily for US investors and analysts, at 9.00am (Eastern Standard Time) on 17 February with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director). There will be an opportunity to ask questions.
| International dial-in | +44 (0)20 7019 0812 |
|---|---|
| US Toll Free | 877 818 6787 |
| Conference ID: | HOTEL |
A recording of the conference call will also be available for 7 days. To access this please dial the relevant number below and use the access number 1465
| International dial-in | +44 (0)20 7970 8448 |
|---|---|
| US Toll Free | 877 774 3459 |
Website
The full release and supplementary data will be available on our website from 7.00 am (London time) on Tuesday 17 February. The web address is www.ihg.com/prelims09
To watch a video of Andy Cosslett reviewing our results visit our YouTube channel at www.youtube.com/ihgplc
Notes to Editors:
InterContinental Hotels Group (IHG) [LON:IHG, NYSE:IHG (ADRs)] is the world's largest hotel group by number of rooms. IHG owns, manages, leases or franchises, through various subsidiaries, over 4,150 hotels and almost 620,000 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 ® Hotels & Resorts, Hotel Indigo ® , Crowne Plaza ® Hotels & Resorts, Holiday Inn ® Hotels and Resorts, Holiday Inn Express ® , Staybridge Suites ® and Candlewood Suites ® , and also manages the world's largest hotel loyalty programme, Priority Club ® Rewards with 42 million members worldwide.
IHG has more than 1,700 hotels in its development pipeline, which will create 200,000 jobs worldwide over the next few years.
InterContinental Hotels Group PLC is the Group's holding company and is incorporated in Great Britain and registered in England and Wales. IHG offers information and online reservations for all its hotel brands at www.ihg.com and information for the Priority Club Rewards programme at www.priorityclub.com . For the latest news from IHG, visit our online Press Office at www.ihg.com/media
Cautionary note regarding forward-looking statements
This announcement contains certain forward-looking statements as defined under US law (Section 21E of the Securities Exchange Act of 1934). These forward-looking statements can be identified by the fact that they do not relate to historical or current facts. Forward-looking statements often use words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’ or other words of similar meaning. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty. There are a number of factors that could cause actual results and developments to differ materially from those expressed in or implied by, such forward-looking statements. Factors that could affect the business and the financial results are described in ‘Risk Factors’ in the InterContinental Hotels Group PLC Annual report on Form 20-F filed with the United States Securities and Exchange Commission.
This business review (BR) provides a commentary on the performance of InterContinental Hotels Group PLC (the Group or IHG) for the financial year ended 31 December 2008.
Group Performance
| 12 months ended 31 December — 2008 | 2007 | % | |
|---|---|---|---|
| Group results | $m | $m | change |
| Revenue: | |||
| Americas | 920 | 902 | 2.0 |
| EMEA | 518 | 492 | 5.3 |
| Asia Pacific | 290 | 260 | 11.5 |
| Central | 126 | 117 | 7.7 |
| ____ | ____ | _____ | |
| Continuing operations | 1,854 | 1,771 | 4.7 |
| Discontinued operations | 43 | 79 | (45.6) |
| ____ | ____ | _____ | |
| 1,897 | 1,850 | 2.5 | |
| ____ | ____ | _____ | |
| Operating profit: | |||
| Americas | 451 | 440 | 2.5 |
| EMEA | 171 | 134 | 27.6 |
| Asia Pacific | 68 | 63 | 7.9 |
| Central | (155) | (163) | 4.9 |
| ____ | ____ | _____ | |
| Continuing operations | 535 | 474 | 12.9 |
| Exceptional operating items | (132) | 60 | - |
| ___ | ____ | ____ | |
| Operating profit | 403 | 534 | (24.5) |
| Discontinued operations | 14 | 17 | (17.6) |
| ____ | ____ | ____ | |
| 417 | 551 | (24.3) | |
| Net financial expenses | (101) | (90) | (12.2) |
| ___ | ____ | ____ | |
| Profit before tax* | 316 | 461 | (31.5) |
| ___ | ____ | ____ | |
| Analysed as: | |||
| Continuing operations | 302 | 444 | (32.0) |
| Discontinued operations | 14 | 17 | (17.6) |
| ____ | ____ | ____ | |
| Earnings per ordinary share: | |||
| Basic | 91.3 ¢ | 144.7¢ | (36.9) |
| Adjusted | 120.9 ¢ | 97.2¢ | 24.4 |
| Adjusted - continuing operations | 117.8 ¢ | 93.8¢ | 25.6 |
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Group results
On 30 May 2008, IHG announced its intention to change its reporting currency from sterling to US dollars reflecting the profile of its revenue and operating profit, which are primarily generated in US dollars or US dollar-linked currencies. This change was first introduced in the interim results for the six months to 30 June 2008, and these financial statements are IHG’s first annual financial statements to be presented in US dollars and all comparative information has been restated accordingly. Revenue from continuing operations increased by 4.7% to $1,854m and continuing operating profit before exceptional items increased by 12.9% to $535m during the 12 months ended 31 December 2008. The growth in revenues was driven by RevPAR gains in EMEA and Asia Pacific, continued expansion in China and the Middle East and the first full year of trading at the re-opened InterContinental London Park Lane. Growth was achieved in all regions in the first three quarters of the year however, the worldwide financial crisis had a significant impact on results in the final quarter. In the fourth quarter, RevPAR declined sharply across the Group falling by 6.5% globally, although IHG’s brands continued to outperform their segments in all key markets. Strong revenue conversion led to a 2.1 percentage point increase in the continuing operating profit margin to 28.9%. Included in these results is $33m of liquidated damages received by IHG in 2008 in respect of the settlement of two management contracts and two franchise contracts, including one portfolio franchise contract. Excluding these, revenue and operating profit before exceptional items from continuing operations increased by 2.8% and 5.9% respectively. Including discontinued operations, total revenue increased by 2.5% to $1,897m whilst operating profit before exceptional items increased by 11.8% to $549m. Discontinued operations included the results of owned and leased hotels that have been disposed of since 1 January 2007, or those classified as held for sale as part of the asset disposal programme that commenced in 2003. The weighted average US dollar exchange rate to sterling strengthened during 2008 (2008 $1=£0.55, 2007 $1=£0.50). Translated at constant currency, applying 2007 exchange rates, continuing revenue increased by 4.3% and continuing operating profit increased by 10.3%.
| 12 months ended 31 December — 2008 | 2007 | % | |
|---|---|---|---|
| Total gross revenue | $bn | $bn | change |
| InterContinental | 4.1 | 3.7 | 10.8 |
| Crowne Plaza | 3.2 | 2.8 | 14.3 |
| Holiday Inn | 6.8 | 6.7 | 1.5 |
| Holiday Inn Express | 3.9 | 3.5 | 11.4 |
| Staybridge Suites | 0.4 | 0.3 | 33.3 |
| Candlewood Suites | 0.3 | 0.3 | - |
| Other brands | 0.4 | 0.5 | (20.0) |
| ____ | ____ | ____ | |
| Total | 19.1 | 17.8 | 7.3 |
| ____ | ____ | ____ |
Total gross revenue
One measure of overall IHG hotel system performance is the growth in total gross revenue, defined as total room revenue from franchised hotels and total hotel revenue from managed, owned and leased hotels. Total gross revenue is not revenue attributable to IHG, as it is derived mainly from hotels owned by third parties. Total gross revenue increased by 7.3% from $17.8bn in 2007 to $19.1bn in 2008, with growth levels achieved across IHG’s key brands reflecting hotel performance and room growth. Translated at constant currency, total gross revenue increased by 6.2%.
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| Global hotel and room count at 31 December | Hotels — 2008 | Change over 2007 | Rooms — 2008 | Change over 2007 |
|---|---|---|---|---|
| Analysed by brand: | ||||
| InterContinental | 159 | 10 | 54,736 | 3,974 |
| Crowne Plaza | 342 | 43 | 93,382 | 10,212 |
| Holiday Inn | 1,353 | (28) | 249,691 | (7,008) |
| Holiday Inn Express | 1,932 | 124 | 173,794 | 17,263 |
| Staybridge Suites | 152 | 30 | 16,644 | 3,178 |
| Candlewood Suites | 204 | 46 | 20,641 | 3,816 |
| Hotel Indigo | 22 | 11 | 2,702 | 1,201 |
| Holiday Inn Club Vacations | 1 | 1 | 2,412 | 2,412 |
| Other | 21 | - | 5,849 | (291) |
| ____ | ____ | ______ | _____ | |
| Total | 4,186 | 237 | 619,851 | 34,757 |
| ____ | ____ | ______ | _____ | |
| Analysed by ownership type: | ||||
| Owned and leased | 16 | (2) | 5,644 | (752) |
| Managed | 585 | 46 | 148,240 | 13,357 |
| Franchised | 3,585 | 193 | 465,967 | 22,152 |
| ____ | ____ | ______ | _____ | |
| Total | 4,186 | 237 | 619,851 | 34,757 |
| ____ | ____ | ______ | _____ |
Global hotel and room count
During 2008, the IHG global system (the number of hotels and rooms which are owned, leased, managed or franchised by the Group) increased by 237 hotels (34,757 rooms; 5.9%) to 4,186 hotels (619,851 rooms). Openings of 430 hotels (59,353 rooms) were driven, in particular, by continued expansion in the US, the UK, the Middle East and China. As in recent years, system size growth was driven by brands in the midscale limited service and extended stay segments, with Holiday Inn Express representing over 50% of the total net movement (124 hotels, 17,263 rooms) and, Staybridge Suites and Candlewood Suites combined representing approximately 30% of total net hotel growth. The youngest brand in the IHG portfolio, Hotel Indigo, continues to grow, with 11 hotels (1,201 rooms) added during the year. In order to expand IHG’s global reach, brands established in the Americas have been transitioned to other regions, with the opening of Staybridge Suites hotels in Liverpool and Cairo, the opening of the Hotel Indigo London Paddington and the signing of a management contract for a Hotel Indigo in Shanghai. As a consequence of the continued drive to increase quality through the removal of non-brand conforming hotels, the Holiday Inn hotel and room count showed a net decline (28 hotels, 7,008 rooms). This strategy is further supported by the worldwide brand relaunch of the Holiday Inn brand family, which entails the consistent delivery of best-in-class service and physical quality in all Holiday Inn and Holiday Inn Express hotels. At the year end 274 hotels were open under the updated signage and brand standards.
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| Global pipeline at 31 December | Hotels — 2008 | Change over 2007 | Rooms — 2008 | Change over 2007 |
|---|---|---|---|---|
| Analysed by brand: | ||||
| InterContinental | 71 | 9 | 21,884 | 1,871 |
| Crowne Plaza | 133 | 15 | 41,469 | 5,107 |
| Holiday Inn | 387 | 22 | 64,261 | 7,316 |
| Holiday Inn Express | 719 | 7 | 70,270 | 128 |
| Staybridge Suites | 166 | 9 | 18,109 | 959 |
| Candlewood Suites | 242 | 35 | 21,790 | 3,185 |
| Hotel Indigo | 56 | 4 | 7,212 | 647 |
| Other | 1 | - | 90 | - |
| ____ | ____ | ______ | _____ | |
| Total | 1,775 | 101 | 245,085 | 19,213 |
| ____ | ____ | ______ | _____ | |
| Analysed by ownership type: | ||||
| Owned and leased | 1 | 1 | 185 | 185 |
| Managed | 300 | 53 | 87,941 | 16,127 |
| Franchised | 1,474 | 47 | 156,959 | 2,901 |
| ____ | ____ | ______ | _____ | |
| Total | 1,775 | 101 | 245,085 | 19,213 |
| ____ | ____ | ______ | _____ |
| Global pipeline signings | Hotels — 2008 | Change over 2007 | Rooms — 2008 | Change over 2007 |
|---|---|---|---|---|
| Total | 693 | (180) | 98,886 | (26,647) |
| ____ | ____ | _____ | ______ |
Global pipeline
At the end of 2008, the IHG pipeline totalled 1,775 hotels (245,085 rooms). The IHG pipeline represents hotels and rooms where a contract has been signed and the appropriate fees paid. Sometimes, a hotel will not open for reasons such as the financing being withdrawn. In the year, room signings across all regions of 98,886 rooms led to pipeline growth of 19,213 rooms. While signings were below the record level of 2007, the level of signings and pipeline growth demonstrates strong demand for IHG brands across all regions and represents a key driver of future profitability.
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THE AMERICAS
| 12 months ended 31 December — 2008 | 2007 | % | |
|---|---|---|---|
| Americas Results | $m | $m | change |
| Revenue: | |||
| Owned and leased | 257 | 257 | - |
| Managed | 168 | 156 | 7.7 |
| Franchised | 495 | 489 | 1.2 |
| ____ | ____ | _____ | |
| Continuing operations | 920 | 902 | 2.0 |
| Discontinued operations* | 43 | 62 | (30.6) |
| ____ | ____ | _____ | |
| Total | 963 | 964 | (0.1) |
| ____ | ____ | _____ | |
| Operating profit before exceptional items: | |||
| Owned and leased | 41 | 40 | 2.5 |
| Managed | 51 | 41 | 24.4 |
| Franchised | 426 | 425 | 0.2 |
| ____ | ____ | _____ | |
| 518 | 506 | 2.4 | |
| Regional overheads | (67) | (66) | (1.5) |
| ____ | ____ | _____ | |
| Continuing operations | 451 | 440 | 2.5 |
| Discontinued operations* | 14 | 16 | (12.5) |
| ____ | ____ | _____ | |
| Total | 465 | 456 | 2.0 |
| ____ | ____ | _____ |
| Americas Comparable RevPAR movement on previous year | 12 months ended 31 December 2008 |
|---|---|
| Owned and leased: | |
| InterContinental | 0.4% |
| Managed: | |
| InterContinental | 0.0% |
| Crowne Plaza | 1.5% |
| Holiday Inn | 5.4% |
| Staybridge Suites | 2.1% |
| Candlewood Suites | (1.5)% |
| Franchised: | |
| Crowne Plaza | (1.2)% |
| Holiday Inn | (1.9)% |
| Holiday Inn Express | 0.6% |
Americas results Revenue and operating profit before exceptional items from continuing operations increased by 2.0% to $920m and 2.5% to $451m respectively. Including discontinued operations, revenue decreased by 0.1% whilst operating profit before exceptional items increased by 2.0%. Included in these results is the receipt of $13m liquidated damages for one management contract. As a result of sharp falls in occupancy, RevPAR declined across all ownership types in the fourth quarter. In the full year, the region achieved RevPAR growth across the owned and managed estates, however RevPAR declined marginally across the franchised portfolio. In the US, for comparable hotels, all brands achieved premiums in RevPAR growth relative to their applicable market segment.
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Continuing owned and leased revenue remained flat on 2007 at $257m. Operating profit increased by 2.5% to $41m. Underlying trading was driven by RevPAR growth of 0.8%, with RevPAR growth in the InterContinental brand of 0.4%. The results were positively impacted by trading at the InterContinental Mark Hopkins, San Francisco, driven by robust RevPAR growth. The InterContinental New York was affected by a downturn in the market as a result of the global financial crisis, adversely impacting revenue and operating profit at the hotel. Managed revenues increased by 7.7% to $168m during the year, boosted by the receipt of $13m in liquidated damages for one hotel that had not commenced trading. Excluding these liquidated damages, managed revenues decreased by 0.6% to $155m. Growth remained strong in the Latin America region, where rate-led RevPAR growth exceeded 15%. Offsetting this was a fall in revenues from hotels in the US, driven by RevPAR declines in the fourth quarter. Managed operating profit increased by 24.4% to $51m. The $10m increase in profit principally reflects the $13m receipt of liquidated damages. Excluding this receipt, the managed estate experienced a $3m fall in operating profit. While the performance in Latin America resulted in growth in operating profit, this was more than offset by a decline in operating profit in the US due to a fall in occupancy rates, and a small guarantee payment for a newly opened hotel. Additional revenue investment was made to support operational standards in the region. Total operating profit margin in the managed estate increased by 4.1 percentage points to 30.4%. Results from managed operations include revenues of $88m (2007 $86m) and operating profit of $6m (2007 $6m) from properties that are structured, for legal reasons, as operating leases but with the same characteristics as management contracts. Excluding the results from these hotels and the $13m of liquidated damages, operating profit margin in the managed estate decreased by 2.2 percentage points to 47.8%. Franchised revenue and operating profit increased by 1.2% to $495m and 0.2% to $426m respectively, compared to 2007. The increase was driven by increased royalty fees as a result of net room count growth of 4.6%. Fees associated with signings and conversions declined as a result of lower real estate activity due to the adverse impact of the global financial crisis and lower liquidated damages collected on hotels exiting the system. Regional overheads were relatively flat on 2007.
| Americas hotel and room count at 31 December | Hotels — 2008 | Change over 2007 | Rooms — 2008 | Change over 2007 |
|---|---|---|---|---|
| Analysed by brand: | ||||
| InterContinental | 55 | 5 | 18,502 | 1,878 |
| Crowne Plaza | 187 | 15 | 51,124 | 3,231 |
| Holiday Inn | 920 | (32) | 168,777 | (9,222) |
| Holiday Inn Express | 1,722 | 107 | 146,024 | 11,473 |
| Staybridge Suites | 150 | 28 | 16,372 | 2,906 |
| Candlewood Suites | 204 | 46 | 20,641 | 3,816 |
| Hotel Indigo | 21 | 10 | 2,638 | 1,137 |
| Holiday Inn Club Vacations | 1 | 1 | 2,412 | 2,412 |
| ____ | ____ | ______ | _____ | |
| Total | 3,260 | 180 | 426,490 | 17,631 |
| ____ | ____ | ______ | _____ | |
| Analysed by ownership type: | ||||
| Owned and leased | 10 | (1) | 3,505 | (524) |
| Managed | 199 | 6 | 40,915 | 1,219 |
| Franchised | 3,051 | 175 | 382,070 | 16,936 |
| ____ | ____ | ______ | _____ | |
| Total | 3,260 | 180 | 426,490 | 17,631 |
| ____ | ____ | ______ | _____ |
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Americas hotel and room count
The Americas hotel and room count grew by 180 hotels (17,631 rooms) to 3,260 hotels (426,490 rooms). The growth included openings of 332 hotels (38,198 rooms) including Holiday Inn Express openings of 170 hotels (15,547 rooms), representing 51% of all hotel openings in the Americas. A further addition to the system was the new Holiday Inn Club Vacations (1 hotel, 2,412 rooms) which gives IHG its first presence in the timeshare market. The franchised business model continues to grow in the region, with franchised hotels contributing over 97% of net growth. Net growth also included removals of 152 hotels (20,567 rooms), with Holiday Inn hotels representing 55% (74% of rooms) of removals as the Group continued its efforts to improve quality and reinvigorate the brand.
| Americas pipeline at 31 December | Hotels — 2008 | Change over 2007 | Rooms — 2008 | Change over 2007 |
|---|---|---|---|---|
| Analysed by brand: | ||||
| InterContinental | 7 | (1) | 2,293 | (1,429) |
| Crowne Plaza | 43 | 6 | 9,647 | 611 |
| Holiday Inn | 263 | (2) | 32,852 | (177) |
| Holiday Inn Express | 639 | 25 | 56,465 | 2,186 |
| Staybridge Suites | 154 | 7 | 16,678 | 757 |
| Candlewood Suites | 242 | 35 | 21,790 | 3,185 |
| Hotel Indigo | 55 | 3 | 7,032 | 467 |
| ____ | ____ | ______ | _____ | |
| Total | 1,403 | 73 | 146,757 | 5,600 |
| ____ | ____ | ______ | _____ | |
| Analysed by ownership type: | ||||
| Owned and leased | 1 | 1 | 185 | 185 |
| Managed | 20 | (1) | 4,208 | (753) |
| Franchised | 1,382 | 73 | 142,364 | 6,168 |
| ____ | ____ | ______ | _____ | |
| Total | 1,403 | 73 | 146,757 | 5,600 |
| ____ | ____ | ______ | _____ |
Americas pipeline
The Americas pipeline continued at record high growth levels and totalled 1,403 hotels (146,757 rooms) at 31 December 2008. During the year, 60,402 room signings were completed, compared with 75,279 room signings in 2007. Signings levels declined on the record level in 2007 as a result of lower real estate and construction activity amid the current economic outlook. Demand in the key midscale sector remained positive, representing 61% of hotel signings.
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EUROPE, MIDDLE EAST AND AFRICA (EMEA)
| 12 months ended 31 December — 2008 | 2007 | % | |
|---|---|---|---|
| EMEA results | $m | $m | change |
| Revenue: | |||
| Owned and leased | 240 | 244 | (1.6) |
| Managed | 168 | 167 | 0.6 |
| Franchised | 110 | 81 | 35.8 |
| ____ | ____ | _____ | |
| Continuing operations | 518 | 492 | 5.3 |
| Discontinued operations* | - | 17 | - |
| ____ | ____ | _____ | |
| Total | 518 | 509 | 1.8 |
| ____ | ____ | _____ | |
| Operating profit before exceptional items: | |||
| Owned and leased | 45 | 33 | 36.4 |
| Managed | 95 | 87 | 9.2 |
| Franchised | 75 | 58 | 29.3 |
| ____ | ____ | _____ | |
| 215 | 178 | 20.8 | |
| Regional overheads | (44) | (44) | - |
| ____ | ____ | _____ | |
| Continuing operations | 171 | 134 | 27.6 |
| Discontinued operations* | - | 1 | - |
| ____ | ____ | _____ | |
| Total | 171 | 135 | 26.7 |
| ____ | ____ | _____ |
| EMEA comparable RevPAR movement on previous year | 12 months ended 31 December 2008 |
|---|---|
| Owned and leased: | |
| InterContinental | (7.8)% |
| All ownership types: | |
| UK | 1.2% |
| Continental Europe | 1.6% |
| Middle East | 20.2% |
EMEA results
Revenue and operating profit before exceptional items from continuing operations increased by 5.3% to $518m and 27.6% to $171m respectively. Including discontinued operations, revenue increased by 1.8% whilst operating profit before exceptional items increased by 26.7%. Included in these results were liquidated damages of $9m relating to one management contract and $7m for a portfolio of franchised hotels settled during the year. During the year, the region achieved RevPAR growth of 3.6% driven by gains across all brands operated under managed and franchise contracts. From a regional perspective, RevPAR growth in the Middle East was extremely strong at 20.2%, whilst smaller growth was experienced in Continental Europe. The region’s continuing operating profit margin increased by 5.8 percentage points to 33.0%. Excluding the two liquidated damages settlements, the margin on continuing operations grew 3.7 percentage points reflecting economies of scale in the managed business and strong revenue conversion at the InterContinental London Park Lane. In the owned and leased estate, continuing revenue decreased by 1.6% to $240m as a result of the expiry of a hotel lease in Continental Europe. The InterContinental London Park Lane, which had its first full year of trading since re-opening after refurbishment in 2007, grew strongly in revenues to a market leading position (source: STR). The InterContinental Le Grand Paris experienced tougher trading conditions leading to a RevPAR decline at the hotel. Strong revenue conversion at the InterContinental London Park Lane contributed to the continuing owned and leased operating profit increase of $12m to $45m.
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EMEA managed revenue increased by 0.6% to $168m and operating profit increased by 9.2% to $95m, driven by the receipt of $9m in liquidated damages relating to the renegotiation of a management contract, which remains in the system. Excluding these liquidated damages, revenue and operating profit declined 4.8% and 1.1% respectively in 2008, as a result of mixed trading conditions in the region. Growth in the Middle East continued through the addition of new rooms and strong RevPAR growth of 20.2%. Offsetting this was a reduced contribution from a portfolio of managed hotels in the UK. A reduction in the fees associated with signing hotels to the pipeline further impacted the operating profit in the region. Franchised revenue and operating profit increased by 35.8% to $110m and 29.3% to $75m respectively. The growth was principally driven by room count expansion and RevPAR growth in Continental Europe, with Germany and Russia showing RevPAR growth of 3.9% and 8.6% respectively. The region further benefited from the receipt of $7m of liquidated damages relating to the removal of a portfolio of Holiday Inn Express hotels in the UK. Regional overheads were in line with 2007, with a $2m increase in costs associated with the new head office offset through further efficiencies in sales and marketing activities.
| EMEA hotel and room count at 31 December | Hotels — 2008 | Change over 2007 | Rooms — 2008 | Change over 2007 |
|---|---|---|---|---|
| Analysed by brand: | ||||
| InterContinental | 64 | 2 | 20,836 | 824 |
| Crowne Plaza | 89 | 17 | 20,729 | 3,403 |
| Holiday Inn | 332 | (3) | 53,039 | 197 |
| Holiday Inn Express | 186 | 4 | 21,564 | 2,184 |
| Staybridge Suites | 2 | 2 | 272 | 272 |
| Hotel Indigo | 1 | 1 | 64 | 64 |
| Other | 1 | 1 | 203 | 203 |
| ____ | ____ | ______ | _____ | |
| Total | 675 | 24 | 116,707 | 7,147 |
| ____ | ____ | ______ | _____ | |
| Analysed by ownership type: | ||||
| Owned and leased | 4 | (1) | 1,446 | (228) |
| Managed | 179 | 8 | 41,185 | 2,112 |
| Franchised | 492 | 17 | 74,076 | 5,263 |
| ____ | ____ | ______ | _____ | |
| Total | 675 | 24 | 116,707 | 7,147 |
| ____ | ____ | ______ | _____ |
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EMEA hotel and room count
During 2008, EMEA hotel and room count increased by 24 hotels (7,147 rooms) to 675 hotels (116,707 rooms). The net room growth included the opening of 10,118 rooms (62 hotels), up 27% on 2007 resulting from hotels entering the system after the high signing levels in 2006 and 2007, and the removal of 38 hotels (2,971 rooms), including the removal of a portfolio of franchised Holiday Inn Express hotels in the UK. System growth was led by openings in the UK of 21 hotels (2,460 rooms). Further significant growth occurred in the Middle East, with 11 hotel openings (2,767 rooms), compared to four hotel openings (1,013 rooms) in 2007. Holiday Inn Express was the largest contributor of room openings, adding over 36% of the region’s total. Two new brands were introduced to the region during the year with the opening of Staybridge Suites hotels in Liverpool and Cairo and the Hotel Indigo London Paddington which opened in December 2008.
| EMEA pipeline at 31 December | Hotels — 2008 | Change over 2007 | Rooms — 2008 | Change over 2007 |
|---|---|---|---|---|
| Analysed by brand: | ||||
| InterContinental | 28 | 4 | 7,062 | 1,102 |
| Crowne Plaza | 25 | - | 7,287 | 989 |
| Holiday Inn | 50 | (1) | 10,204 | 658 |
| Holiday Inn Express | 57 | (19) | 7,790 | (1,976) |
| Staybridge Suites | 12 | 2 | 1,431 | 202 |
| Other | 1 | - | 90 | - |
| ____ | ____ | ______ | _____ | |
| Total | 173 | (14) | 33,864 | 975 |
| ____ | ____ | ______ | _____ | |
| Analysed by ownership type: | ||||
| Managed | 83 | 13 | 19,596 | 4,393 |
| Franchised | 90 | (27) | 14,268 | (3,418) |
| ____ | ____ | ______ | _____ | |
| Total | 173 | (14) | 33,864 | 975 |
| ____ | ____ | ______ | _____ |
EMEA pipeline
The pipeline in EMEA decreased by 14 hotels, but increased by 975 rooms, to 173 hotels (33,864 rooms). The growth included 13,348 room signings, with continued strong demand for IHG brands in the Middle East, which accounted for 43% of the region’s room signings. Across the region, all brands recorded positive signing levels, with demand particularly focussed in the midscale sector which represented 46% of room signings. The demand for the extended stay brand, Staybridge Suites, continued with signings in line with 2007, reflecting confidence from IHG’s owners in the extended stay model imported from the Americas region.
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ASIA PACIFIC
| 12 months ended 31 December — 2008 | 2007 | % | |
|---|---|---|---|
| Asia Pacific results | $m | $m | change |
| Revenue: | |||
| Owned and leased | 159 | 145 | 9.7 |
| Managed | 113 | 99 | 14.1 |
| Franchised | 18 | 16 | 12.5 |
| ____ | ____ | _____ | |
| Total | 290 | 260 | 11.5 |
| ____ | ____ | _____ | |
| Operating profit before exceptional items: | |||
| Owned and leased | 43 | 36 | 19.4 |
| Managed | 55 | 46 | 19.6 |
| Franchised | 8 | 6 | 33.3 |
| ____ | ____ | _____ | |
| 106 | 88 | 20.5 | |
| Regional overheads | (38) | (25) | (52.0) |
| ____ | ____ | _____ | |
| Total | 68 | 63 | 7.9 |
| ____ | ____ | _____ |
| Asia Pacific comparable RevPAR movement on previous year | 12 months ended 31 December 2008 |
|---|---|
| Owned and leased: | |
| InterContinental | 7.2% |
| All ownership types: | |
| Greater China | (1.6)% |
Asia Pacific results
Asia Pacific revenue and operating profit before exceptional items increased by 11.5% to $290m and 7.9% to $68m respectively. The region achieved strong RevPAR growth across all brands, with the strongest growth in the owned and leased portfolio, and continued its strategic expansion in China. Good profit growth was achieved, although the continuing operating profit margin declined by 0.8 percentage points to 23.4% as a result of further investment to support expansion. In the owned and leased estate, revenue increased by 9.7% to $159m as RevPAR growth continued at the InterContinental Hong Kong despite a slowdown during the fourth quarter. The hotel’s revenue growth combined with profit margin gains drove the estate’s operating profit growth of 19.4% to $43m.
Managed revenue increased by 14.1% to $113m as a result of the increased room count in Greater China and comparable RevPAR growth of 10.7% in Beijing boosted by the Olympic period. Further strong growth occurred in South East Asia with RevPAR growth of 9.9% in the region, and the joint venture with All Nippon Airways (ANA) further increased revenues. Operating profit increased by 19.6% to $55m as revenue gains were partially offset by continued infrastructure investment in China and Southern Asia. Franchised revenues increased from $16m to $18m driven by the receipt of $4m of liquidated damages relating to the settlement of one franchise contract in the region. Excluding this receipt, operating profit declined by $2m, primarily as a result of reduced fee income in India due to the removal of non-brand compliant hotels. After a further $5m of the previously announced $10m investment to support the launch of the ANA Crowne Plaza brand in Japan and the non-recurrence of a $2m favourable legal settlement in 2007, Asia Pacific regional overheads increased by $6m to support the rapid growth in the region.
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| Asia Pacific hotel and room count at 31 December | Hotels — 2008 | Change over 2007 | Rooms — 2008 | Change over 2007 |
|---|---|---|---|---|
| Analysed by brand: | ||||
| InterContinental | 40 | 3 | 15,398 | 1,272 |
| Crowne Plaza | 66 | 11 | 21,529 | 3,578 |
| Holiday Inn | 101 | 7 | 27,875 | 2,017 |
| Holiday Inn Express | 24 | 13 | 6,206 | 3,606 |
| Other | 20 | (1) | 5,646 | (494) |
| ____ | ____ | ______ | _____ | |
| Total | 251 | 33 | 76,654 | 9,979 |
| ____ | ____ | ______ | _____ | |
| Analysed by ownership type: | ||||
| Owned and leased | 2 | - | 693 | - |
| Managed | 207 | 32 | 66,140 | 10,026 |
| Franchised | 42 | 1 | 9,821 | (47) |
| ____ | ____ | ______ | _____ | |
| Total | 251 | 33 | 76,654 | 9,979 |
| ____ | ____ | ______ | _____ |
Asia Pacific hotel and room count
Asia Pacific hotel and room count increased by 33 hotels (9,979 rooms) to 251 hotels (76,654 rooms). The net growth included 31 hotels (9,806 rooms) in Greater China reflecting continued expansion in one of IHG’s strategic markets, including the opening of IHG’s 100th hotel in China, the Crowne Plaza Beijing Zhongguancun.
| Asia Pacific pipeline at 31 December | Hotels — 2008 | Change over 2007 | Rooms — 2008 | Change over 2007 |
|---|---|---|---|---|
| Analysed by brand: | ||||
| InterContinental | 36 | 6 | 12,529 | 2,198 |
| Crowne Plaza | 65 | 9 | 24,535 | 3,507 |
| Holiday Inn | 74 | 25 | 21,205 | 6,835 |
| Holiday Inn Express | 23 | 1 | 6,015 | (82) |
| Hotel Indigo | 1 | 1 | 180 | 180 |
| ____ | ____ | ______ | _____ | |
| Total | 199 | 42 | 64,464 | 12,638 |
| ____ | ____ | ______ | _____ | |
| Analysed by ownership type: | ||||
| Managed | 197 | 41 | 64,137 | 12,487 |
| Franchised | 2 | 1 | 327 | 151 |
| ____ | ____ | ______ | _____ | |
| Total | 199 | 42 | 64,464 | 12,638 |
| ____ | ____ | ______ | _____ |
Asia Pacific pipeline
The pipeline in Asia Pacific increased by 42 hotels (12,638 rooms) to 199 hotels (64,464 rooms). Pipeline growth was again centred on the Greater China market with 70% of the region’s room signings. There was also significant demand in India, where signings more than doubled compared to 2007. From a brand perspective, Holiday Inn was the largest contributor to signings, with 39% of the region’s room signings.
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Central
| 12 months ended 31 December — 2008 | 2007 | % | |
|---|---|---|---|
| Central results | $m | $m | change |
| Revenue | 126 | 117 | 7.7 |
| Gross central costs | (281) | (280) | (0.4) |
| ____ | ____ | _____ | |
| Net central costs | (155) | (163) | 4.9 |
| _____ | ____ | _____ |
Central Results
During 2008, net central costs reduced by 4.9% from $163m to $155m due to the receipt of a favourable $3m insurance settlement and the impact of weaker sterling.
SYSTEM FUNDS
| 12 months ended 31 December — 2008 | 2007 | % | |
|---|---|---|---|
| System fund r esults | $m | $m | change |
| Assessments | 990 | 930 | 6.5 |
| ____ | ____ | ____ |
Hotels operated under IHG brands are, pursuant to terms within their contracts, subject to cash assessments for brand marketing, reservations systems and Priority Club membership stays. These assessments, typically based upon room revenue, are pooled within the system funds for the collective benefit of all hotels by brand or geography. The assessments are used for revenue generating activities including the costs of call centres, frequency program points, websites, sales teams, advertising and brand development and affiliate marketing programmes. The Company acts on behalf of hotel owners with regard to the funds and all assessments are designated for specific purposes and result in no profit for the Group. Accordingly, the revenues, expenses and cash flows of the funds are not included in the Consolidated Income Statement or Consolidated Cash Flow Statement. The funds are planned to operate at break even with any short term timing surplus or deficit carried on IHG’s balance sheet within working capital. The Owner’s Association, the IAHI, endorses the budgeted spend of the funds and provides a governance overview of the operation of the funds. In the year to 31 December 2008, system fund revenues increased by 6.5% to $990m primarily as a result of the growth in system size and affiliate marketing programmes.
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OTHER FINANCIAL INFORMATION
Exceptional operating items
Exceptional operating costs of $132m consisted of:
| · | $35m in relation to the Holiday Inn relaunch; |
|---|---|
| · | $19m of cost savings-related severance costs; |
| · | $96m of non-cash asset impairment reflecting the poorer trading environment |
| expected in 2009; and | |
| · | other items including gains on asset sales, which netted to an $18m credit |
Exceptional operating items are treated as exceptional by reason of their size or nature and are excluded from the calculation of adjusted earnings per share in order to provide a more meaningful comparison of performance.
Net financial expenses
Net financial expenses increased from $90m in 2007 to $101m in 2008. Average net debt levels in 2008 were higher than 2007 primarily as a result of the payment of the special dividend of £709m in June 2007. Net debt levels remained stable in the first half of 2008, reducing slightly in the second half of the year. Financing costs included $12m (2007 $21m) of interest costs associated with Priority Club Rewards where interest is charged on the accumulated balance of cash received in advance of the redemption points awarded. Financing costs in 2008 also included $18m (2007 $18m) in respect of the InterContinental Boston finance lease.
Taxation
The effective rate of tax on the combined profit from continuing and discontinued operations, excluding the impact of exceptional items, was 23% (2007 22%). By also excluding the impact of prior year items, which are included wholly within continuing operations, the equivalent tax rate would be 39% (2007 36%). This rate is higher than the UK statutory rate of 28% due mainly to certain overseas profits (particularly in the US) being subject to statutory rates higher than the UK statutory rate, unrelieved foreign taxes and disallowable expenses. Taxation within exceptional items totalled a credit of $42m (2007 $60m) in respect of continuing operations. This represented, primarily, the release of exceptional provisions relating to tax matters which were settled during the year, or in respect of which the statutory limitation period had expired, together with tax relief on exceptional costs.
Net tax paid in 2008 totalled $2m (2007 $138m) including $3m (2007 $64m) in respect of disposals. Tax paid is lower than the current period income tax charge, primarily due to the receipt of refunds in respect of prior years, together with provisions for tax for which no payment of tax has currently been made.
Earnings per share
Basic earnings per share in 2008 was 91.3¢, compared with 144.7¢ in 2007. Adjusted earnings per share was 120.9¢, against 97.2¢ in 2007. Adjusted continuing earnings per share was 117.8¢, 25.6% up on last year.
Dividends
The Board has proposed a final dividend per share of 29.2¢ (20.2p). With the interim dividend per share of 12.2¢ (6.4p), the full year dividend per share for 2008 will total 41.4¢ (26.6p).
Share price and market capitalisation
The IHG share price closed at £5.62 on 31 December 2008, down from £8.84 on 31 December 2007. The market capitalisation of the Group at the year end was £1.6bn.
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Cash flow
In response to the challenging economic environment the Group increased its focus on cash management during 2008. In the year, $641m of cash was generated from operating activities an increase of $176m on 2007. Overall, net debt decreased by $386m to $1,273m with the other key elements of the cash flow being:
| proceeds from the disposal of hotels and equity investments of $86m; | |
|---|---|
| · | capital expenditure of $108m; and |
| · | $139m returned to shareholders as part of the fourth share buyback |
| programme. |
As part of the focus on cash management the remaining £30m of the fourth £150m share buyback programme was deferred.
Capital structure and liquidity management
Net debt at 31 December 2008 was $1,273m and included $202m in respect of the finance lease commitment for the InterContinental Boston.
| 2008 | 2007* | |
|---|---|---|
| Net debt at 31 December | $m | $m |
| Borrowings: | ||
| Sterling | 152 | 553 |
| US Dollar | 889 | 882 |
| Euro | 224 | 243 |
| Other | 90 | 98 |
| Cash | (82) | (117) |
| ____ | ____ | |
| Net debt | 1,273 | 1,659 |
| ____ | ____ | |
| Average debt levels | 1,498 | 1,075 |
| ____ | ____ |
| 2008 | 2007 | |
|---|---|---|
| Facilities at 31 December | $m | $m |
| Committed | 2,107 | 2,321 |
| Uncommitted | 25 | 50 |
| ____ | ____ | |
| Total | 2,132 | 2,371 |
| ____ | ____ |
Interest risk profile of gross debt for major currencies
| at 31 December | 2007 % | |
|---|---|---|
| At fixed rates | 53 | 45 |
| At variable rates | 47 | 55 |
| * | Including the impact of currency swaps |
In the second quarter, the Group successfully refinanced $2.1bn of long-term debt facilities. The new syndicated bank facility consists of two tranches, a $1.6bn five-year revolving credit facility and a $0.5bn term loan with a 30-month maturity. Terms are broadly unchanged from the previous facility.
Treasury policy is to manage financial risks that arise in relation to underlying business needs. The activities of the treasury function are carried out in accordance with Board approved policies and are subject to regular audit. The treasury function does not operate as a profit centre.
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Return of funds programme
| Timing | Total return | Returned to date | Still to be returned | |
|---|---|---|---|---|
| £501m special dividend | Paid in December 2004 | £501m | £501m | Nil |
| First £250m share buyback | Completed in 2004 | £250m | £250m | Nil |
| £996m capital return | Paid in July 2005 | £996m | £996m | Nil |
| Second £250m share buyback | Completed in 2006 | £250m | £250m | Nil |
| £497m special dividend | Paid in June 2006 | £497m | £497m | Nil |
| Third £250m share buyback | Completed in 2007 | £250m | £250m | Nil |
| £709m special dividend | Paid in June 2007 | £709m | £709m | Nil |
| £150m share buyback | Under way | £150m | £120m | £30m |
| ______ | _____ | ____ | ||
| Total | £3,603m | £3,573m | £30m | |
| ______ | _____ | ____ |
During the year, IHG returned $139m to shareholders through share buybacks, taking the total returned since March 2004 to more than £3.5bn. At IHG’s third quarter results announcement the deferral of the remaining £30m of the fourth share buyback programme was announced in order to preserve cash and maintain balance sheet strength. The return of funds programme is denominated in sterling as all returns were announced prior to the change to US Dollar reporting.
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InterContinental Hotels Group PLC GROUP INCOME STATEMENT For the year ended 31 December 2008
| Year ended 31 December 2008 — Before exceptional items | Exceptional items (note 5 ) | Total | Year ended 31 December 2007 — Before exceptional items | Exceptional items (note 5 ) | Total | |
|---|---|---|---|---|---|---|
| $ m | $ m | $ m | $ m | $ m | $ m | |
| Continuing operations | ||||||
| Revenue (note 3) | 1,854 | - | 1,854 | 1,771 | - | 1,771 |
| Cost of sales | (823) | - | (823) | (825) | - | (825) |
| Administrative expenses | (400) | (59) | (459) | (377) | (14) | (391) |
| Other operating income and expenses | 14 | 25 | 39 | 16 | 70 | 86 |
| _____ | ____ | ____ | ____ | ____ | ____ | |
| 645 | (34) | 611 | 585 | 56 | 641 | |
| Depreciation and amortisation | (110) | (2) | (112) | (111) | (2) | (113) |
| Impairment (note 5) | - | (96) | (96) | - | 6 | 6 |
| _____ | ____ | ____ | ____ | ____ | ____ | |
| Operating profit (note 4) | 535 | (132) | 403 | 474 | 60 | 534 |
| Financial income | 12 | - | 12 | 18 | - | 18 |
| Financial expenses | (113) | - | (113) | (108) | - | (108) |
| _____ | ____ | ____ | ____ | ____ | ____ | |
| Profit before tax | 434 | (132) | 302 | 384 | 60 | 444 |
| Tax (note 6) | (96) | 42 | (54) | (84) | 60 | (24) |
| _____ | ____ | ____ | ____ | ____ | ____ | |
| Profit for the year from continuing operations | 338 | (90) | 248 | 300 | 120 | 420 |
| Profit for the year from discontinued operations (note 7) | 9 | 5 | 14 | 11 | 32 | 43 |
| _____ | ____ | ____ | ____ | ____ | ____ | |
| Profit for the year attributable to the equity holders of the | ||||||
| parent | 347 | (85) | 262 | 311 | 152 | 463 |
| ==== | ==== | ==== | ==== | ==== | ==== | |
| Ear nings per ordinary share (note 8): | ||||||
| Continuing operations: | ||||||
| Basic | 86.4 ¢ | 131.3 ¢ | ||||
| Diluted | 83.8 ¢ | 127.7 ¢ | ||||
| Adjusted | 117.8 ¢ | 93.8 ¢ | ||||
| Adjusted diluted | 114.2 ¢ | 91.2 ¢ | ||||
| Total operations: | ||||||
| Basic | 91.3 ¢ | 144.7 ¢ | ||||
| Diluted | 88.5 ¢ | 140.7 ¢ | ||||
| Adjusted | 120.9 ¢ | 97.2 ¢ | ||||
| Adjusted diluted | 117.2 ¢ | 94.5 ¢ |
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InterContinental Hotels Group PLC GROUP STATEMENT of recognised income and expense For the year e nded 31 December 2008
| 2008 $ m | 2007 restated* $ m | |
|---|---|---|
| Income and expense recognised directly in equity | ||
| (Losses)/gains on valuation of available-for-sale assets | (4) | 8 |
| Losses on cash flow hedges | (14) | (2) |
| Actuarial (losses)/gains on defined benefit pension plans, net of asset | ||
| restriction | (50) | 8 |
| Exchange differences on retranslation of foreign operations | (57) | 23 |
| ____ | ____ | |
| (125) | 37 | |
| ____ | ____ | |
| Transfers to the income statement | ||
| On cash flow hedges: financial expenses | 2 | (2) |
| On disposal of available-for-sale assets: other operating income and | ||
| expenses | (17) | (20) |
| ____ | ____ | |
| (15) | (22) | |
| ____ | ____ | |
| Tax | ||
| Tax on items above taken directly to or transferred from equity | 22 | 11 |
| Tax related to share schemes recognised directly in equity | 2 | (4) |
| ____ | ____ | |
| 24 | 7 | |
| ____ | ____ | |
| Net (expense)/income recognised directly in equity | (116) | 22 |
| Profit for the year | 262 | 463 |
| ____ | ____ | |
| Total recognised income and expense for the year attributable to the | ||
| equity holders of the parent | 146 | 485 |
| ==== | ==== |
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InterContinental Hotels Group PLC GROUP CASH FLOW STATEMENT For the year ended 31 December 2008
| 2008 $ m | 2007 $ m | |
|---|---|---|
| Profit for the year | 262 | 463 |
| Adjustments for: | ||
| Net financial expenses | 101 | 90 |
| Income tax charge | 59 | 30 |
| Depreciation and amortisation | 112 | 116 |
| Impairment | 96 | (6) |
| Other exceptional operating items | 34 | (56) |
| Gain on disposal of assets, net of tax | (5) | (32) |
| Equity-settled share-based cost, net of payments | 31 | 48 |
| Other non-cash items | 3 | (4) |
| ____ | ____ | |
| Operating cash flow before movements in working capital | 693 | 649 |
| Increase in net working capital | 123 | 22 |
| Retirement benefit contributions, net of cost | (27) | (66) |
| Cash flows relating to exceptional operating items | (49) | - |
| ____ | ____ | |
| Cash flow from operations | 740 | 605 |
| Interest paid | (112) | (84) |
| Interest received | 12 | 18 |
| Tax received/(paid) on operating activities | 1 | (74) |
| ____ | ____ | |
| Net cash from operating activities | 641 | 465 |
| ____ | ____ | |
| Cash flow from investing activities | ||
| Purchases of property, plant and equipment | (53) | (114) |
| Purchases of intangible assets | (49) | (40) |
| Investment in associates and other financial assets | (6) | (32) |
| Disposal of assets, net of costs and cash disposed of | 25 | 97 |
| Proceeds from associates and other financial assets | 61 | 114 |
| Tax paid on disposals | (3) | (64) |
| ____ | ____ | |
| Net cash from investing activities | (25) | (39) |
| ____ | ____ | |
| Cash flow from financing activities | ||
| Proceeds from the issue of share capital | 2 | 32 |
| Purchase of own shares | (139) | (162) |
| Purchase of own shares by employee share trusts | (22) | (138) |
| Proceeds on release of own shares by employee share trusts | 2 | 21 |
| Dividends paid to shareholders | (118) | (1,524) |
| (Decrease)/increase in borrowings | (316) | 1,108 |
| ____ | ____ | |
| Net cash from financing activities | (591) | (663) |
| ____ | ____ | |
| Net movement in cash and cash equivalents in the year | 25 | (237) |
| Cash and cash equivalents at beginning of the year | 105 | 351 |
| Exchange rate effects | (48) | (9) |
| ____ | ____ | |
| Cash and cash equivalents at end of the year | 82 | 105 |
| ==== | ==== |
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InterContinental Hotels Group PLC GROUP BALANCE SHEET
31 December 2008
| 2008 $ m | 2007 restated* $ m | |
|---|---|---|
| ASSETS | ||
| Property, plant and equipment | 1,684 | 1,934 |
| Goodwill | 143 | 221 |
| Intangible assets | 302 | 335 |
| Investment in associates | 43 | 65 |
| Retirement benefit assets | 40 | 49 |
| Other financial assets | 152 | 188 |
| ____ | ____ | |
| Total non-current assets | 2,364 | 2,792 |
| ____ | ____ | |
| Inventories | 4 | 6 |
| Trade and other receivables | 412 | 472 |
| Current tax receivable | 36 | 109 |
| Cash and cash equivalents | 82 | 105 |
| Other financial assets | 10 | 18 |
| ____ | ____ | |
| Total current assets | 544 | 710 |
| Non-current assets classified as held for sale | 210 | 115 |
| ____ | ____ | |
| Total assets | 3,118 | 3,617 |
| ==== | ==== | |
| LIABILITIES | ||
| Loans and other borrowings | (21) | (16) |
| Trade and other payables | (746) | (784) |
| Current tax payable | (374) | (426) |
| ____ | ____ | |
| Total current liabilities | (1,141) | (1,226) |
| ____ | ____ | |
| Loans and other borrowings | (1,334) | (1,748) |
| Retirement benefit obligations | (129) | (112) |
| Trade and other payables | (392) | (279) |
| Deferred tax payable | (117) | (148) |
| ____ | ____ | |
| Total non-current liabilities | (1,972) | (2,287) |
| Liabilities classified as held for sale | (4) | (6) |
| ____ | ____ | |
| Total liabilities | (3,117) | (3,519) |
| ==== | ==== | |
| Net assets (note 12 ) | 1 | 98 |
| ==== | ==== | |
| EQUITY | ||
| Equity share capital | 118 | 163 |
| Capital redemption reserve | 10 | 10 |
| Shares held by employee share trusts | (49) | (83) |
| Other reserves | (2,890) | (2,918) |
| Unrealised gains and losses reserve | 9 | 38 |
| Currency translation reserve | 172 | 233 |
| Retained earnings | 2,624 | 2,649 |
| ____ | ____ | |
| IHG shareholders’ equity (note 13) | (6) | 92 |
| Minority equity interest | 7 | 6 |
| ____ | ____ | |
| Total equity | 1 | 98 |
| ==== | ==== |
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InterContinental Hotels Group plc Notes to the financial statements
| 1. |
| --- |
| The audited consolidated financial statements of
InterContinental Hotels Group PLC (IHG) for the year ended 31 December 2008
have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union and as applied in accordance
with the provisions of the Companies Act 1985. The consolidated financial statements are
presented in US dollars following a management decision to change the reporting
currency from sterling during the year. The change lowers the Group’s
exposure to currency translation risks as its revenue and profits are now
primarily generated in US dollars or US dollar linked currencies. All
comparative information has been restated into US dollars. The Group early adopted IFRIC 14 ‘IAS 19 – The limit
on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction’ for the first time at 31 December 2007. IFRIC 14 provides
guidance on assessing the limit in IAS 19 ‘Employee Benefits’ on
the amount of the surplus that can be recognised as an asset. It also explains
how the pension asset or liability may be affected by a statutory or
contractual minimum funding requirement. The 31 December 2007 balance sheet has subsequently been amended to show the retirement benefit
assets net of tax previously recorded within deferred tax payable. There is no change to previously reported net
assets. There have been corresponding
changes to the actuarial gains and related tax reported in the restated Group
Statement of Recognised Income and Expense for the year ended 31 December
2007. In all other respects, these preliminary financial statements have been
prepared on a consistent basis using the accounting policies set out in the IHG
Annual Report and Financial Statements for the year ended 31 December 2007. |
| 2. |
| --- |
| The results of operations have been translated
into US dollars at the average rates of exchange for the year. In the case of
the pound sterling, the translation rate is $1= £0.55 (2007
$1=£0.50). In the case of the euro, the translation rate is $1 =
€0.68 (2007 $1 = €0.73). Assets and liabilities have been translated into US dollars at the rates of
exchange on the balance sheet date. In the case of the pound sterling, the
translation rate is $1=£0.69 (2007 $1 = £0.50). In the case of the
euro, the translation rate is $1 = €0.71 (2007 $1 = €0.68). |
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| 3. | 2008 $ m | 2007 $ m |
|---|---|---|
| Continuing operations: | ||
| Americas | 920 | 902 |
| EMEA | 518 | 492 |
| AsiaPacific | 290 | 260 |
| Central | 126 | 117 |
| ____ | ____ | |
| 1,854 | 1,771 | |
| Discontinued operations (note 7) | 43 | 79 |
| ____ | ____ | |
| 1,897 | 1,850 | |
| ==== | ==== |
| 4. | 2008 $ m | 2007 $ m |
|---|---|---|
| Continuing operations: | ||
| Americas | 451 | 440 |
| EMEA | 171 | 134 |
| Asia Pacific | 68 | 63 |
| Central | (155) | (163) |
| ____ | ____ | |
| 535 | 474 | |
| Exceptional operating items (note 5) | (132) | 60 |
| ____ | ____ | |
| 403 | 534 | |
| Discontinued operations (note 7) | 14 | 17 |
| ____ | ____ | |
| 417 | 551 | |
| ==== | ==== |
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| 5. | 2008 $ m | 2007 $ m |
|---|---|---|
| Continuing operations: | ||
| Exceptional operating items | ||
| Administrative expenses: | ||
| Holiday Inn brand relaunch (a) | (35) | - |
| Office reorganisations (b) | (5) | (14) |
| Severance costs (c) | (19) (59) | - (14) |
| Other operating income and expenses: | ||
| Gain on sale of associate investments | 13 | 22 |
| Gain on sale of other financial assets | 14 | 36 |
| Loss on disposal of hotels* | (2) | - |
| Office reorganisations (b) | - 25 | 12 70 |
| Depreciation and amortisation: | ||
| Office reorganisations (b) | (2) | (2) |
| Impairment: | ||
| Property, plant and equipment (d) | (12) | 6 |
| Goodwill (e) | (63) | - |
| Intangible assets (f) | (21) | - |
| ____ | ____ | |
| (96) | 6 | |
| ____ | ____ | |
| (132) | 60 | |
| ==== | ==== | |
| Tax | ||
| Tax on exceptional operating items | 17 | - |
| Exceptional tax credit (g) | 25 | 60 |
| ____ | ____ | |
| 42 | 60 | |
| ==== | ==== | |
| Discontinued operations: | ||
| Gain on disposal of assets (note 7) | ||
| Gain on disposal of hotels** | - | 40 |
| Tax charge | 5 5 ==== | (8) 32 ==== |
| * | Relates to hotels classified as continuing operations. |
|---|---|
| ** | Relates to hotels classified as discontinued operations. |
| The above items are treated as exceptional by reason of their size or | |
| nature. | |
| a) | Relates to costs incurred in support of the worldwide relaunch of the Holiday |
| Inn brand family that was announced on 24 October 2007. | |
| b) | Relates to further costs incurred on the relocation of the Group’s head |
| office and the closure of its Aylesbury facility. | |
| c) | Severance costs relate to redundancies arising from a review of the |
| Group’s cost base in light of the current economic climate. | |
| d) | Relates to a North American hotel and arises from year-end value in use |
| calculations, taking into account the current economic climate. Estimated | |
| future cash flows have been discounted at 13.5%. | |
| e) | Arises in respect of the Americas managed cash-generating unit and reflects |
| revised fee expectations in light of the current economic climate. Estimated | |
| future cash flows have been discounted at 12.5%. | |
| f) | Relates to the capitalised value of management contracts accounted for as |
| intangible assets and arises from a revision to expected fee income. Estimated | |
| future cash flows have been discounted at 12.5% (previous valuation: 10.0%). | |
| The charge relates to the EMEA business segment. | |
| g) | Relates to the release of provisions which are exceptional by reason of their |
| size or nature relating to tax matters which have been settled or in respect of | |
| which the relevant statutory limitation period has expired. |
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| 6. |
| --- |
| The effective tax rate on the combined profit from continuing and discontinued
operations, excluding the impact of exceptional items (note 5), is 23% (2007
22%). |
By also excluding the effect of prior year items, the equivalent effective tax rate is 39% (2007 36%). Prior year items have been treated as relating wholly to continuing operations.
| 2008 | 2008 | 2008 | 2007 | 2007 | 2007 | |
|---|---|---|---|---|---|---|
| Year ended 31 December | Profit $ m | Tax $ m | Tax rate | Profit $ m | Tax $ m | Tax r ate |
| Before exceptional items | ||||||
| Continuing operations | 434 | (96) | 384 | (84) | ||
| Discontinued operations | 14 | (5) | 17 | (6) | ||
| ____ | ____ | ____ | ____ | |||
| 448 | (101) | 23% | 401 | (90) | 22% | |
| Exceptional items | ||||||
| Continuing operations | (132) | 42 | 60 | 60 | ||
| Discontinued operations | - | 5 | 40 | (8) | ||
| ____ | ____ | ____ | ____ | |||
| 316 | (54) | 501 | (38) | |||
| ==== | ==== | ==== | ==== | |||
| Analysed as: | ||||||
| UK tax | (5) | (6) | ||||
| Foreign tax | (49) | (32) | ||||
| ____ | _____ | |||||
| (54) | (38) | |||||
| ==== | ==== |
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| 7. | ||
|---|---|---|
| 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: | ||
| 2008 $ m | 2007 $ m | |
| Revenue | 43 | 79 |
| Cost of sales | (29) | (59) |
| ____ | ____ | |
| 14 | 20 | |
| Depreciation and amortisation | - | (3) |
| ____ | ____ | |
| Operating profit | 14 | 17 |
| Tax | (5) | (6) |
| ____ | ____ | |
| Profit after tax | 9 | 11 |
| Gain on disposal of assets, net of tax (note 5) | 5 | 32 |
| ____ | ____ | |
| Profit for the year from discontinued operations | 14 | 43 |
| ==== | ==== |
| 2008 cents per share | 2007 cents per share | |
|---|---|---|
| Earnings per share from discontinued operations | ||
| Basic | 4.9 | 13.4 |
| Diluted | 4.7 | 13.0 |
| ==== | ==== |
| 2008 $ m | 2007 $ m | |
|---|---|---|
| Cash flows attributable to discontinued operations | ||
| Operating profit before interest, depreciation and amortisation | 14 | 20 |
| Investing activities | - | (2) |
| ____ | ____ | |
| 14 | 18 | |
| ==== | ==== |
The effect of discontinued operations on segmental results is shown in the Business Review.
PAGE BREAK EEDocs PBStart
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| 8 . |
| --- |
| Basic earnings per ordinary share is calculated by dividing the profit for the
year available for IHG equity holders by the weighted average number of
ordinary shares, excluding investment in own shares, in issue during the
year. 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 year. 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. |
| 2008 Continuing operations | 2008 Total | 2007 Continuing o perations | 2007 Total | |
|---|---|---|---|---|
| Basic earnings per share | ||||
| Profit available for equity holders ($m) | 248 | 262 | 420 | 463 |
| Basic weighted average number of ordinary shares (millions) | 287 | 287 | 320 | 320 |
| Basic earnings per share (cents) | 86.4 | 91.3 | 131.3 | 144.7 |
| ==== | ==== | ==== | ==== | |
| Diluted earnings per share | ||||
| Profit available for equity holders ($m) | 248 | 262 | 420 | 463 |
| Diluted weighted average number of ordinary shares (millions) | 296 | 296 | 329 | 329 |
| Diluted earnings per share (cents) | 83.8 | 88.5 | 127.7 | 140.7 |
| ==== | ==== | ==== | ==== | |
| Adjusted earnings per share | ||||
| Profit available for equity holders ($m) | 248 | 262 | 420 | 463 |
| Adjusting items (note 5): | ||||
| Exceptional operating items ($m) | 132 | 132 | (60) | (60) |
| Tax on exceptional operating items ($m) | (17) | (17) | - | - |
| Exceptional tax credit ($m) | (25) | (25) | (60) | (60) |
| Gain on disposal of assets, net of tax ($m) | - | (5) | - | (32) |
| ____ | ____ | ____ | ____ | |
| Adjusted earnings ($m) | 338 | 347 | 300 | 311 |
| Basic weighted average number of ordinary shares (millions) | 287 | 287 | 320 | 320 |
| Adjusted earnings per share (cents) | 117.8 | 120.9 | 93.8 | 97.2 |
| ==== | ==== | ==== | ==== | |
| Diluted weighted average number of ordinary shares (millions) | 296 | 296 | 329 | 329 |
| Adjusted diluted earnings per share (cents) | 114.2 | 117.2 | 91.2 | 94.5 |
| ==== | ==== | ==== | ==== |
| The diluted weighted average number of ordinary shares is calculated as: | 2008 millions | 2007 millions |
|---|---|---|
| Basic weighted average number of ordinary shares | 287 | 320 |
| Dilutive potential ordinary shares – employee share options | 9 | 9 |
| ____ | ____ | |
| 296 | 329 | |
| ==== | ==== |
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| 9 . | 2008 cents per share | 2007 cents per share | 2008 $m | 2007 $m |
|---|---|---|---|---|
| Paid during the year: | ||||
| Final (declared in previous year) | 29.2 | 25.9 | 86 | 92 |
| Interim | 12.2 | 11.5 | 32 | 35 |
| Special interim | - | 400.0 | - | 1,397 |
| ____ | ____ | ____ | ____ | |
| 41.4 | 437.4 | 118 | 1,524 | |
| ==== | ==== | ==== | ==== | |
| Proposed for approval at the Annual General Meeting (not recognised as a | ||||
| liability at 31 December): | ||||
| Final | 29.2 | 29.2 | 83 | 86 |
| ==== | ==== | ==== | ==== |
The proposed final dividend is payable on the shares in issue at 27 March 2009.
| 10. | 2008 $ m | 2007 $ m |
|---|---|---|
| Cash and cash equivalents | 82 | 105 |
| Loans and other borrowings – current | (21) | (16) |
| Loans and other borrowings – non-current | (1,334) | (1,748) |
| ____ | ____ | |
| Net debt | (1,273) | (1,659) |
| ==== | ==== | |
| Finance lease liability included above | (202) | (200) |
| ==== | ==== |
| 11 . | 2008 $ m | 2007 $ m |
|---|---|---|
| Net increase/(decrease) in cash and cash equivalents | 25 | (237) |
| Add back cash flows in respect of other components of net debt: | ||
| Decrease/(increase) in borrowings | 316 | (1,108) |
| ____ | ____ | |
| Decrease/(increase) in net debt arising from cash flows | 341 | (1,345) |
| Non-cash movements: | ||
| Finance lease liability | (2) | (18) |
| Exchange and other adjustments | 47 | (33) |
| ____ | ____ | |
| Decrease/(increase) in net debt | 386 | (1,396) |
| Net debt at beginning of the year | (1,659) | (263) |
| ____ | ____ | |
| Net debt at end of the year | (1,273) | ( 1,659 ) |
| ==== | ==== |
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| 12 . | 2008 $ m | 2007 restated* $ m |
|---|---|---|
| Americas | 598 | 780 |
| EMEA | 488 | 739 |
| Asia Pacific | 454 | 536 |
| Central | 189 | 167 |
| ____ | ____ | |
| 1,729 | 2,222 | |
| Net debt | (1,273) | (1,659) |
| Unallocated assets and liabilities | (455) | (465) |
| ____ | ____ | |
| 1 | 98 | |
| ==== | ==== |
| 13 . | 2008 $ m | 2007 $ m |
|---|---|---|
| At beginning of the year | 92 | 1,330 |
| Total recognised income and expense for the year | 146 | 485 |
| Equity dividends paid (note 9) | (118) | (1,524) |
| Issue of ordinary shares | 2 | 32 |
| Purchase of own shares | (139) | (162) |
| Movement in shares in employee share trusts | (22) | (117) |
| Equity settled share-based cost, net of payments | 33 | 48 |
| ____ | ____ | |
| At end of the year | (6) | 92 |
| ==== | ==== |
| 14 . |
| --- |
| At 31 December 2008, the amount contracted for but not provided for in the
financial statements for expenditure on property, plant and equipment was $40m
(2007 $20m). At 31 December 2008, the Group had contingent liabilities of $12m (2007 $10m),
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 $249m (2007 $243m). 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 material financial
loss to the Group. The Group has given warranties in respect of the disposal of certain of its
former subsidiaries and hotels. 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 material financial
loss to the Group. |
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| 1 5. |
| --- |
| 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 was made on 31 January 2008
and the final commitment of £10m has been met through the funding of an
enhanced pension transfer arrangement in January 2009. The enhanced pension
transfer arrangement will result in an exceptional income statement charge in
the first quarter of 2009, estimated at $22m. On 24 October 2007, the Group announced a worldwide relaunch of its Holiday Inn
brand family. In support of this relaunch, IHG will make a non-recurring
revenue investment of $60m which will be charged to the income statement as an
exceptional item. $35m has been charged in 2008. |
| 1 6. |
| --- |
| The preliminary statement of results was approved by the Board on 16 February
2009. The preliminary statement does not represent the full Group financial
statements of InterContinental Hotels Group PLC and its subsidiaries which will
be delivered to the Registrar of Companies in due course. The financial
information for the year ended 31 December 2007 has been extracted from the IHG
Annual Report and Financial Statements for that year, as filed with the
Registrar of Companies, and converted to US dollars and restated as described
in note 1. |
| Auditors’ review |
| --- |
| The auditors, Ernst & Young LLP, have given an unqualified report under
Section 235 of the Companies Act 1985, as amended, in respect of the full Group
financial statements for both years referred to above. |
EEDocs PBStart
EEDocs PBEnd
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | InterContinental Hotels
Group PLC |
| --- | --- |
| | (Registrant) |
| By: | /s/ C.
Cox |
| Name: | C. COX |
| Title: | COMPANY SECRETARIAL
OFFICER |
| Date: | 17 February,
2009 |
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