Intercontinental Hotels Group PLC — Interim / Quarterly Report 2017

Aug 8, 2017

6-K 1 a3934n.htm HALF-YEAR REPORT Document created using Blueprint(R) - powered by Issuer Direct - www.issuerdirect.com Copyright 2017 Issuer Direct Corporation Blueprint

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 08 August 2017

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

EXHIBIT INDEX

99.1 Half-year Report dated 08 August 2017

Exhibit No: 99.1

InterContinental Hotels Group PLC

Half Year Results to 30 June 2017

Financial summary 1	Reported — 2017	2016	% Change	Underlying 2 — 2017	2016	% Change
Revenue	$857m	$838m	2%	$788m	$756m	4%
Fee Revenue 3	$686m	$673m	2%	$697m	$673m	4%
Operating profit	$370m	$344m	8%	$365m	$340m	7%
Adjusted EPS	113.3¢	89.0¢	27%	111.7¢	87.7¢	27%
Basic EPS 4	111.7¢	87.7¢	27%
Interim dividend per share	33.0¢	30.0¢	10%
Net debt	$2,056m	$1,829m

1 All figures before exceptional items unless otherwise noted. 2 Excluding owned asset disposals, managed leases and significant liquidated damages; at constant H1 2016 exchange rates (CER). Underlying adjusted EPS based on underlying EBIT, effective tax rate, and reported interest at actual exchange rates 5 . 3 Group revenue excluding owned & leased hotels, managed leases and significant liquidated damages. 4 After exceptional items.

| Keith Barr, Chief Executive of InterContinental Hotels Group PLC,
said: |
| --- |
| "We
have had a good first half. RevPAR growth of 2.1% and net system
size growth of 3.7% delivered a 7% increase in underlying operating
profit and a 27% increase in underlying EPS, underpinning the
Board's decision to increase the interim dividend by
10%. We
continue to make good progress in executing our well-established
strategy to deliver high quality sustainable growth, and during the
half we passed the landmark of over 1 million open or pipeline
rooms. In June, we announced a new, midscale brand to address
a $20 billion underserved segment in the US. We believe this will
become another brand of scale for IHG that will deliver superior
returns to our owners. Other highlights include the continued
roll-out of new design formats across our Holiday Inn Brand Family
and the ongoing repositioning of Crowne Plaza. Leveraging our
technological capabilities, we are on track to begin roll out of
our next generation cloud-based Guest Reservation System in late
2017. I feel
privileged to be the new CEO of IHG and to have the opportunity to
build on the strong performance we have delivered. My focus is on
driving an acceleration in our growth rate, by increasing the
resources dedicated behind the highest opportunity markets and
segments, strengthening our brand portfolio, building on our
leading loyalty proposition, and enhancing our competitive
advantage through prioritising digital and technological
innovation. We will continue to focus on enhancing our cost
efficiency to generate funds for reinvestment. This, combined
with our cash-generative business model and disciplined approach to
capital allocation, will drive superior returns to
shareholders. While
we will always face macro-economic and geopolitical uncertainties,
we remain confident in the outlook for 2017." |
| Financial Highlights |
| ● Solid revenue growth driven
by both RevPAR and rooms - Global comparable H1 RevPAR growth of 2.1%, led by occupancy up
0.9%pts. Q2 RevPAR up 1.5%, including a decline of -0.4% in the US,
adversely impacted by the timing of Easter. - 3.7% net room growth year on year,
with 23k room openings, up 31% year on year, which includes 3.5k
rooms in Makkah, Saudi Arabia, signed in 2015. ● High-quality business model,
focused on disciplined execution, capital allocation and
shareholder returns - Group fee margin of 51.0%, up 2.4%pts (1.5%pts CER); favourable
cost phasing and efficiency improvements. - Focused investment and asset recycling
led to net capital expenditure 5 of $162m (gross: $186m). - $0.4bn returned to shareholders in May via a $2.025 per share
special dividend with 45 for 47 share consolidation. - 10%
increase in interim dividend to 33.0¢ reflects confidence in
our long-term sustainable growth. |
| Strategic Progress |
| ● Strengthening our portfolio of
preferred brands - Launch, in June, of a high quality
midscale brand in the US, leveraging our expertise across the
mainstream 6 segment where we already have a 21% share of
supply and 24% share of pipeline, to build another brand of scale
for IHG. Early interest in the brand from our ~2,000 existing
franchisees has been highly encouraging. - Continued to roll out innovative guest room and public area
enhancements for the Holiday Inn Brand Family; new designs now in
more than 400 hotels across US and Europe, driving mid-single digit
increases in guest satisfaction. - Positive response to Crowne Plaza US Accelerate programme, with
owner capital commitments of ~$190m in the last year in hotel
purchases and major refurbishment in addition to ~30 hotels
committing to renovating guest rooms. - Growing our boutique footprint, with the opening of our second
Kimpton outside the US, in Amsterdam, and six more US openings
planned this year; and our Hotel Indigo open and pipeline hotels
reaching over 150 globally, with openings in Bali and Los Angeles
and signings in Beijing and London's Leicester Square. |
| ● Growing through targeted hotel
distribution - Signed 32k rooms into the pipeline, taking it to 230k rooms. ~45%
of the pipeline is under construction. |
| ● Driving revenue delivery through
technology and loyalty -
Innovative cloud-based Guest Reservation System on track for
roll-out in 2017, with full deployment expected by late 2018/early
2019. Positive feedback on transformational
user-interface. -
Continued focus on driving direct bookings with the completion of
the global roll out of 'Your Rate by IHG Rewards Club' following
the Q1 launch in Greater China. Loyalty contribution up
0.4%pts YoY and enrolments up 12% YoY. |
| 5 For definition of non-GAAP measures and reconciliation to
GAAP measures refer to the Interim Management Report. 6 Mainstream includes
STR midscale and upper midscale segments. |

| Americas - RevPAR growth slows in second quarter as Easter benefit
reverses |
| --- |
| Comparable
RevPAR increased 1.1% (Q2: 0.1%), driven by 1.1% rate growth. US
RevPAR grew 0.7%, with a decline of -0.4% in Q2, adversely impacted
by the shift in timing of Easter. Holiday Inn and Holiday Inn
Express RevPAR grew 1.1% (Q2: 0.2%) and 0.6% (Q2: -0.1%)
respectively. Combined these brands delivered a 6% absolute
RevPAR premium to the upper midscale segment. Outside
of the US, RevPAR grew 4.6%. Canada's 150 th anniversary
celebrations generated solid demand in urban markets with RevPAR
growth of 4.3%, whilst growth in the Mexican economy, buoyed by a
relatively weak Peso, contributed to RevPAR growth of
9.1%. Reported
revenue increased 2% (2% CER) and reported operating profit
pre-exceptional items increased 3% (3% CER), whilst on an
underlying 1 basis both revenue
and operating profit increased 3%. On an
underlying 1 basis, franchised
operating profit grew 1% as incremental royalties from RevPAR and
net rooms growth were partly offset by lower revenues from hotel
signings and the annualisation of our $7m investment in the
Americas development team, $4m of which was incurred in H2
2016. Underlying 1 managed operating profit increased 7% benefitting from the
continued ramp up of the InterContinental New York Barclay,
following its refurbishment and lower costs associated with our 20%
interest in the hotel. Underlying 1 owned revenue and operating profit increased 12% and 25%
respectively as the Holiday Inn Aruba benefitted from increased
North American inbound business. We
opened 11k rooms (95 hotels), including the 900 room
InterContinental Los Angeles Downtown. 9k rooms (63 hotels) were
removed primarily across the Holiday Inn, Holiday Inn Express and
Crowne Plaza brands as we continue to focus on high quality brand
representation. We
signed 16k rooms, including the first Kimpton in Mexico and more
than 11k rooms (112 hotels) for the Holiday Inn Brand
Family. |
| Europe - Strong trading drives double digit profit
growth |
| Comparable
RevPAR increased 6.2% (Q2: 5.5%), driven equally by rate and
occupancy. UK RevPAR increased by 6.7%, with strong trading in both
London (9.0%) and the provinces (5.4%). In Germany, RevPAR growth
for the half was 2.3%, Q2 RevPAR declined -3.6% as the estate
lapped very strong comparables relating to trade show activity in
2016 in Dusseldorf and Munich. Trading in Paris continues to
recover with RevPAR up 11.6% in H1 driven by occupancy gains
(8.0%pts). Reported
revenue increased 4% (8% CER) and reported operating profit was up
12% (12% CER). On an
underlying 1 basis revenue
increased 11% and operating profit increased
12%. We
opened 1k rooms (8 hotels) including the Kimpton De Witt in
Amsterdam, our first Kimpton hotel in Europe, and signed 3k rooms
(20 hotels) including a Hotel Indigo in London's Leicester
Square. In
Germany, we signed 10 hotels and opened three, taking the total
open and pipeline hotels to 112. |
| AMEA - Solid trading in key markets offset by weakness in the
Middle East |
| Comparable
RevPAR increased 1.4% (Q2: 2.7%). Performance outside the Middle
East continued to be strong, with 4.2% RevPAR growth. India was up
14.3%, whilst Japan, Australasia and South-East Asia were up low to
mid-single digits. In the
Middle East, RevPAR declined -3.7% due to the ongoing impact of low
oil prices and industry wide supply growth. RevPAR growth was flat
in Q2, due to the favourable timing of Ramadan as well as improved
royal business in Saudi Arabia. We expect trading conditions for
the rest of the year to remain challenging. The
increasing mix of new rooms opening in developing markets meant
that total RevPAR declined -1.9% in the half (Q2:
-1.0%). Reported
revenue was flat (2% CER) and operating profit was up 5% (10%
CER). On an
underlying 1 basis, revenue was
up 1% and operating profit increased 11% benefitting from the
favourable phasing of costs. We still expect managed profit in 2017
to be broadly in line with 2016. We
opened 7k rooms (9 hotels) in the half, including the first Hotel
Indigo resort, in Bali, the first Staybridge Suites in Saudi Arabia
and 3.5k rooms in Makkah, Saudi Arabia. The rooms in Makkah relate
to the remaining portion of the 5k room signing that we announced
in 2015 and, on an annualised basis, are expected to generate ~$1m
in fees. We
signed 3k rooms (15 hotels) including three deals in Australia and
1.3k rooms for the Holiday Inn Brand Family. |
| 1 Excluding owned asset disposals, managed leases,
significant liquidated damages at constant H1 16 exchange rates
(CER). See the Interim Management Report for definition of
non-GAAP measures and reconciliation to GAAP measures. |

| Greater China - Strong mainland trading and 9% rooms growth drive
15% profit growth |
| --- |
| Comparable
RevPAR increased 4.1% (Q2: 4.4%), with growth of 5.1% in mainland
China. RevPAR growth in Hong Kong was flat whilst Macau increased
2.1%. Mainland tier 1 cities continued to trade well, with
RevPAR up 5.4% in the half driven by strong meeting and corporate
demand, particularly in Shanghai. Tier 2-4 cities also
benefitted from solid meeting demand, leisure groups and the
benefit of hotels still ramping up, with occupancy gains driving
RevPAR growth of 5.2%. Our
strategy to maximise our long-term growth potential by using our
mainstream brands to penetrate less developed cities impacted total
RevPAR, which declined -0.3% for the region. Reported
revenue and operating profit increased by 6% (11% CER) and 15% (15%
CER) respectively. Underlying 1 revenue increased 11% and underlying operating profit grew 15%,
driven by strong trading in mainland China, 9% rooms growth and
increased revenues from signing and opening hotels. We
opened 4k rooms (16 hotels) in the half, including our
300 th hotel (the 340 room HUALUXE Zhangjiakou), our 40 th InterContinental in
the region (the 370 room InterContinental Jinan City Centre), and
the first two Holiday Inn Express Franchise Plus
properties. Signings
for the half totalled 10k rooms, or 46 hotels, the highest number
on record. This included the 420 room InterContinental Guangzhou
Downtown and the 255 room InterContinental Zhengzhou, and 34
Holiday Inn Express hotels, including 24 on Franchise Plus
contracts. |
| Highly cash generative business with disciplined approach to
capital allocation |
| ● Consistent fee margin
growth - Reported central overheads declined
$9m, or $4m on a constant currency basis, benefiting from a $4m
increase in central revenues and efficiency
improvements. - Group fee margin of 51.0%, up 2.4%pts (1.5%pts CER), benefiting
from efficiency improvements and favourable cost phasing.
Full year margin growth currently expected to be in the region of
the long-term average of ~135bps. ● Significant free cash flow
from operations - Free cash flow 2 of $204m compares to $241m in H1 2016 (excluding
the $95m benefit from renegotiation of long term partnership
agreements), impacted by movement in system fund
balances. |
| ● Investing for
growth - $186m gross capital expenditure in first half: $44m maintenance
capex 2 and
key money; $80m recyclable investments 2 (including $43m in
relation to associates and joint ventures); and $62m system funded
capital investments. $7m proceeds received from asset
recycling and $17m system fund depreciation released from the
system fund surplus, resulting in $162m of net capital
expenditure. - Gross capex guidance remains unchanged at up to $350m p.a. into the
medium term. ● Shareholder
returns - 10%
increase in the interim dividend to 33.0¢. - $0.4bn returned to shareholders in May via a $2.025 per share
special dividend, in conjunction with a 45 for 47 share
consolidation. |
| ● Efficient balance sheet
provides flexibility - Robust
financial position, with on-going commitment to an efficient
balance sheet and investment grade credit rating. - Net
debt 2 of
$2,056m (including $228m finance lease on InterContinental Boston),
up $0.6bn on the 2016 close following the payment of the $0.4bn
special dividend in May. Net debt to EBITDA now stands at
2.5x (LTM). |
| Foreign exchange - minimal impact on reported profit |
| Revenue
impacts of the strong dollar against a number of currencies were
offset by cost benefits from the devaluation of sterling against
the dollar compared to H1 2016, increasing reported profit by
$1m. If the closing June 2017 exchange rates had existed
through H2 2016, there would have been no impact on reported
operating profit for that period. A full
breakdown of constant currency vs. actual currency RevPAR by region
is set out in Appendix 2. |
| Interest, tax, and exceptional items |
| Interest: Net financial expenses reduced by $1m to $40m due
to a reduction in the cost of debt following the bond refinancing
in 2016 and the favourable impact of a weaker pound on translation
of sterling interest expense, offset by higher average net debt
levels following the payment of the 2016 $1.5bn special dividend. |
| Tax: Based on the position at the end of the half, the tax
charge has been calculated using an interim effective tax rate of
33% (H1 2016: 33%). We continue to expect the full year 2017
tax rate to be in the low 30s (%). |
| Exceptional operating items: $4m exceptional operating
charge (2016: $5m charge) relating to the Kimpton
integration. |
| 1 Excluding owned asset disposals, managed leases and
significant liquidated damages; at constant H1 16 exchange rates
(CER). 2 For definition of non-GAAP measures and reconciliation to
GAAP measures see the Interim Management Report. |

Appendix 1: Comparable RevPAR Movement Summary
	Half Year 2017			Q2 2017
	RevPAR	Rate	Occ.	RevPAR	Rate	Occ.
Group	2.1%	0.8%	0.9%pts	1.5%	0.9%	0.4%pts
Americas	1.1%	1.1%	0.0%pts	0.1%	0.9%	(0.6)%pts
Europe	6.2%	3.2%	2.0%pts	5.5%	3.3%	1.6%pts
AMEA	1.4%	(1.2)%	1.9%pts	2.7%	0.2%	1.7%pts
G.
China	4.1%	(1.1)%	3.2%pts	4.4%	(0.8)%	3.4%pts

| Appendix 2: RevPAR movement summary at constant exchange rates
(CER) vs. actual exchange rates (AER) | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | Half Year 2017 | | | Q2 2017 | | |
| | CER | AER | Difference | CER | AER | Difference |
| Group | 2.1% | 0.6% | 1.5%pts | 1.5% | 0.0% | 1.5%pts |
| Americas | 1.1% | 0.9% | 0.2%pts | 0.1% | (0.2)% | 0.3%pts |
| Europe | 6.2% | (0.4)% | 6.6%pts | 5.5% | (0.1)% | 5.6%pts |
| AMEA | 1.4% | 0.4% | 1.0%pts | 2.7% | 1.0% | 1.7%pts |
| G.
China | 4.1% | 0.0% | 4.1%pts | 4.4% | 0.3% | 4.1%pts |

	System					Pipeline
	Openings	Removals	Net	Total	YoY%*	Signings	Total
Group	22,857	(12,317)	10,540	777,675	3.7%	31,773	229,526
Americas	10,618	(8,662)	1,956	489,949	1.6%	15,814	102,578
Europe	1,443	(1,150)	293	110,362	3.6%	3,128	23,974
AMEA	6,910	(1,029)	5,881	81,932	11.6%	3,003	34,807
G.
China	3,886	(1,476)	2,410	95,432	9.3%	9,828	68,167

• compared to H1 2016

Appendix 4: Half Year financial headlines — Operating Profit $m	Total		Americas		Europe		AMEA		G. China		Central
	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016
Franchised	343	340	298	295	37	37	7	6	1	2	-	-
Managed	120	113	33	32	12	10	43	42	32	29	-	-
Owned
& leased	16	13	15	12	0	0	1	1	0	0	-	-
Regional
overheads	(56)	(60)	(25)	(26)	(11)	(13)	(10)	(10)	(10)	(11)	-	-
Profit pre central overheads	423	406	321	313	38	34	41	39	23	20	-	-
Central
overheads	(53)	(62)	-	-	-	-	-	-	-	-	(53)	(62)
Group Operating profit ex. Exceptional items	370	344	321	313	38	34	41	39	23	20	(53)	(62)
Exceptional
Items	(4)	(5)	(4)	(5)	-	-	-	-	-	-	-	-
Group Operating profit	366	339	317	308	38	34	41	39	23	20	(53)	(62)

Appendix 5: Constant exchange rate (CER) and underlying operating profit movement before exceptional items

Reported	Total** — Actual	CER**	Americas — Actual*	CER**	Europe — Actual*	CER**	AMEA — Actual*	CER**	G. China — Actual*	CER**
Growth
/ (decline)	8%	7%	3%	3%	12%	12%	5%	10%	15%	15%
Underlying**** Growth
/ (decline)	Total***		Americas		Europe		AMEA		G. China
	7%		3%		12%		11%		15%
Exchange rates:	GBP:USD	EUR:USD	* US
dollar actual currency
H1 2017	0.79	0.92	**
Translated at constant H1 2016 exchange rates 1
H1 2016	0.70	0.90	***
After central overheads

| Appendix 6: Definitions |
| --- |
| CER: constant exchange rates with H1 2016 exchange rates
applied to H1 2017. Comparable RevPAR: Revenue per available room for hotels
that have traded for all of 2016 and 2017, reported at
CER. Fee revenue: Group revenue excluding owned and leased
hotels, managed leases and significant liquidated
damages. Fee margin: adjusted for owned and leased hotels, managed
leases and significant liquidated damages. Managed lease hotels: properties structured for legal
reasons as operating leases but with the same characteristics as
management contracts Americas:
Revenue H1 2017 $18m; H1 2016 $20m; EBIT H1 2017 $1m, H1 2016 $1m.
Europe: Revenue H1 2017 $38m; H1 2016 $38m; EBIT H1 2017 $1m, H1
2016 $1m. AMEA: Revenue H1 2017 $24m; H1 2016 $24m; EBIT H1 2017
$2m, H1 2016 $2m. Significant liquidated damages: $nil in H1 2017; $nil in H1
2016. Total gross revenue: total rooms revenue from franchised
hotels and total hotel revenue from managed, owned and leased
hotels. Other than owned and leased hotels, it is not revenue
attributable to IHG, as it is derived mainly from hotels owned by
third parties. Total RevPAR: Revenue per available room including hotels
that have opened or exited in either 2016 or 2017, reported at
CER. |

| Appendix 7: Investor information for 2017 interim
dividend — Ex-dividend date: | 31
August 2017 |
| --- | --- |
| Dividend payment: | ADRs:
33.0 cents per ADR; The corresponding amount in Pence Sterling per
ordinary share will be announced on 20 th September 2017,
calculated based on the
average of the market exchange rates for the three working days
commencing 15 th September . |

| For further information, please contact: — Investor
Relations (Heather Wood; Neeral Morzaria; Tom Yates): | +44
(0)1895 512 176 | +44
(0)7808 098 724 |
| --- | --- | --- |
| Media
Relations (Yasmin Diamond; Mark Debenham): | +44
(0)1895 512 097 | +44
(0)7527 424 046 |
| Webcast for Analysts and Shareholders: A conference call and webcast presented by Keith Barr, Chief
Executive Officer and Paul Edgecliffe-Johnson, Chief Financial
Officer will commence at 9:30am London time on 8 th August on the web address www.ihgplc.com/interims17 .
For those wishing to ask questions please use the dial in details
below which will have a Q&A facility. The
webcast replay will be available on the website later on the day of
the results and will remain on it for the foreseeable
future. | | |
| International
dial-in: US
dial-in: Passcode: | +44
(0)203 059 8125 +1 724
928 9460 IHG
Investor | |
| A
replay of the conference call will also be available following the
event - details are below. | | |
| Replay: Pin: | +44
(0)121 260 4861 6653618# | |
| US conference call and Q&A: An
additional conference call, primarily for US investors and
analysts, at 9:00am New York Time on 8 th August. There will
be an opportunity to ask questions. | | |
| International
dial-in: US
dial-in: Passcode: | +44
(0)203 059 8125 +1 724
928 9460 IHG
Investor | |
| A
replay of the conference call will also be available following the
event - details are below. | | |
| Replay: Pin: | +44
(0)121 260 4861 6654548# | |
| Website: The full release and supplementary data will be available on our
website from 7:00am (London time) on 8 th August. The web address is www.ihgplc.com/interims17 | | |

| Notes to Editors: IHG® (InterContinental
Hotels Group) [LON:IHG,
NYSE:IHG (ADRs)] is a global organisation with a broad portfolio of
hotel brands, including InterContinental® Hotels &
Resorts , Kimpton® Hotels &
Restaurants , Hotel
Indigo® , EVEN® Hotels , HUALUXE® Hotels and
Resorts , Crowne Plaza® Hotels &
Resorts , Holiday Inn® , Holiday
Inn Express® , Holiday Inn Club
Vacations® , Holiday Inn
Resort® , Staybridge Suites® and Candlewood Suites® . IHG franchises, leases, manages or owns more than 5,200 hotels and
nearly 780,000 guest rooms in almost 100 countries, with more than
1,500 hotels in its development pipeline. IHG also manages IHG® Rewards
Club , our global loyalty
programme, which has more than 100 million enrolled
members. InterContinental Hotels Group PLC is the Group's holding company and is
incorporated in Great Britain and registered in England and Wales.
More than 350,000 people work across IHG's hotels and corporate
offices globally. Visit www.ihg.com for hotel information and
reservations and www.ihgrewardsclub.com for more on IHG Rewards Club. For our latest
news, visit: www.ihgplc.com/media and follow us on social media at: www.twitter.com/ihg , www.facebook.com/ihg and www.youtube.com/ihgplc . |
| --- |
| Cautionary note regarding forward-looking statements: This
announcement contains certain forward-looking statements as defined
under United States law (Section 21E of the Securities Exchange Act
of 1934) and otherwise. These forward-looking statements can
be identified by the fact that they do not relate only 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. These statements are based on assumptions and
assessments made by InterContinental Hotels Group PLC's management
in light of their experience and their perception of historical
trends, current conditions, expected future developments and other
factors they believe to be appropriate. 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. The main factors that could
affect the business and the financial results are described in the
'Risk Factors' section in the current InterContinental Hotels Group
PLC's Annual report and Form 20-F filed with the United States
Securities and Exchange Commission. |

INTERIM MANAGEMENT REPORT

This Interim Management Report discusses the performance of InterContinental Hotels Group PLC

(the Group or IHG) for the six months ended 30 June 2017.

GROUP

Group results	6 months ended 30 June — 2017	2016	%
	$m	$m	change
Revenue
Americas	499	490	1.8
Europe	113	109	3.7
AMEA	115	115	-
Greater
China	58	55	5.5
Central	72	69	4.3
	____	____	____
Total	857	838	2.3
	____	____	____
Operating profit before exceptional items
Americas	321	313	2.6
Europe	38	34	11.8
AMEA	41	39	5.1
Greater
China	23	20	15.0
Central	(53)	(62)	14.5
	____	____	____
	370	344	7.6
Exceptional
operating items	(4)	(5)	20.0
	____	____	____
Operating
profit	366	339	8.0
Net
financial expenses	(40)	(41)	2.4
	____	____	____
Profit
before tax	326	298	9.4
	____	____	____
Earnings per ordinary share
Basic	111.7¢	87.7¢	27.4
Adjusted	113.3¢	89.0¢	27.3
Average US dollar to sterling exchange rate	$1 : £0.79	$1 :
£0.70	12.9

During the six months ended 30 June 2017, revenue increased by $19m (2.3%) to $857m and operating profit increased by $27m (8.0%) to $366m.

Underlying 1 Group revenue and underlying 1 Group operating profit increased by $32m (4.2%) and $25m (7.4%) respectively.

The net central operating loss before exceptional items decreased by $9m (14.5%) to $53m compared to 2016 and by $4m (6.5%) to $58m at constant currency.

Profit before tax increased by $28m to $326m. Basic earnings per ordinary share increased by 27.4% to 111.7¢, whilst adjusted earnings per ordinary share increased by 27.3% to 113.3¢.

1 Underlying excludes significant liquidated damages and the results from managed-lease hotels, translated at constant currency by applying

prior-year exchange rates (see the Use of Non-GAAP measures section later in this Interim Management Report).

| Global hotel and room count | Hotels | Change
over | Rooms | Change
over |
| --- | --- | --- | --- | --- |
| | 2017 30 June | 2016 31
December | 2017 30 June | 2016 31
December |
| Analysed
by brand | | | | |
| InterContinental | 188 | 1 | 64,572 | 922 |
| Kimpton | 60 | (1) | 11,374 | 136 |
| HUALUXE | 5 | 1 | 1,436 | 340 |
| Crowne
Plaza | 410 | 2 | 114,027 | 224 |
| Hotel
Indigo | 79 | 4 | 9,515 | 610 |
| EVEN
Hotels | 6 | - | 1,010 | - |
| Holiday
Inn 1 | 1,217 | (24) | 226,941 | (4,815) |
| Holiday
Inn Express | 2,542 | 45 | 253,904 | 6,895 |
| Staybridge
Suites | 245 | 9 | 26,612 | 1,002 |
| Candlewood
Suites | 374 | 12 | 35,251 | 1,059 |
| Other | 95 | (2) | 33,033 | 4,167 |
| | _ | | __ | |
| Total | 5,221 | 47 | 777,675 | 10,540 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 4,352 | 31 | 543,049 | 399 |
| Managed | 861 | 16 | 232,268 | 10,195 |
| Owned
and leased | 8 | - | 2,358 | (54) |
| | _ | | ___ | _ |
| Total | 5,221 | 47 | 777,675 | 10,540 |
| | | _ | | |

1 Includes 46 Holiday Inn Resort properties (11,653 rooms) and 26 Holiday Inn Club Vacations properties (7,676 rooms)

(2016: 46 Holiday Inn Resort properties (11,652 rooms) and 26 Holiday Inn Club Vacations properties (7,601 rooms)).

| Global pipeline | Hotels | Change
over | Rooms | Change
over |
| --- | --- | --- | --- | --- |
| | 2017 30 June | 2016 31
December | 2017 30 June | 2016 31
December |
| Analysed
by brand | | | | |
| InterContinental | 63 | 1 | 17,044 | (436) |
| Kimpton | 17 | (1) | 2,863 | (235) |
| HUALUXE | 21 | (1) | 6,556 | (400) |
| Crowne
Plaza | 85 | (5) | 23,748 | (788) |
| Hotel
Indigo | 76 | 1 | 10,486 | (107) |
| EVEN
Hotels | 7 | 1 | 1,065 | 285 |
| Holiday
Inn 1 | 270 | 9 | 53,501 | 823 |
| Holiday
Inn Express | 702 | 26 | 86,451 | 2,569 |
| Staybridge
Suites | 151 | 11 | 16,454 | 1,133 |
| Candlewood
Suites | 107 | (1) | 9,608 | 4 |
| Other | 14 | 2 | 1,750 | (3,398) |
| | _ | | __ | |
| Total | 1,513 | 43 | 229,526 | (550) |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 1,097 | 58 | 124,944 | 7,250 |
| Managed | 416 | (15) | 104,582 | (7,800) |
| | _ | | ___ | _ |
| Total | 1,513 | 43 | 229,526 | (550) |
| | | _ | | |

1 Includes 14 Holiday Inn Resort properties (3,601 rooms) (2016: 14 Holiday Inn Resort properties (3,531 rooms)).

THE AMERICAS

Americas Results	6 months ended 30 June — 2017	2016	%
	$m	$m	change
Revenue
Franchised	343	338	1.5
Managed	82	86	(4.7)
Owned
and leased	74	66	12.1
	____	____	____
Total	499	490	1.8
	____	____	____
Operating profit before exceptional items
Franchised	298	295	1.0
Managed	33	32	3.1
Owned
and leased	15	12	25.0
Regional
overheads	(25)	(26)	3.8
	____	____	____
	321	313	2.6
Exceptional
items	(4)	(5)	20.0
	____	____	____
Operating
profit	317	308	2.9
	____	____	____

Americas Comparable RevPAR movement on previous year	6 months ended 30 June 2017
Franchised
Crowne
Plaza	0.2%
Holiday
Inn	1.8%
Holiday
Inn Express	0.8%
All
brands	1.1%
Managed
InterContinental	(2.0)%
Kimpton	2.1%
Crowne
Plaza	1.4%
Holiday
Inn	(1.1)%
Staybridge
Suites	(1.3)%
Candlewood
Suites	(0.4)%
All
brands	0.5%
Owned
and leased
All
brands	7.6%

Franchised revenue increased by $5m (1.5%) to $343m and operating profit increased by $3m (1.0%) to $298m. On a constant currency basis, revenue increased by $5m (1.5%) to $343m and operating profit increased by $4m (1.4%) to $299m. Royalties 1 growth of 2.1% was driven by 1.6% rooms growth year-on-year and comparable RevPAR growth of 1.1%.

Managed revenue decreased by $4m (4.7%) to $82m, and operating profit increased by $1m (3.1%) to $33m. Revenue and operating profit included $18m (2016: $20m) and $1m (2016: $1m) respectively from one managed lease property 2 . Excluding results from this managed lease hotel, and on a constant currency basis, revenue remained flat and operating profit increased by $2m (6.5%).

Owned and leased revenue increased by $8m (12.1%) to $74m, and operating profit increased by $3m (25.0%) to $15m. On a constant currency basis, owned and leased revenue increased by $8m (12.1%), and operating profit increased by $3m (25.0%), as one hotel benefited from increased North Americas inbound business.

1 Royalties are fees, based on rooms revenue, that a franchisee pays to the brand owner for use of the brand name.

2 A property that is structured for legal reasons as an operating lease but has the same characteristics as a management contract.

| Americas hotel and room count | Hotels | Change
over | Rooms | Change
over |
| --- | --- | --- | --- | --- |
| | 2017 30 June | 2016 31
December | 2017 30 June | 2016 31
December |
| Analysed
by brand | | | | |
| InterContinental | 49 | 1 | 17,302 | 894 |
| Kimpton | 59 | (2) | 11,100 | (138) |
| Crowne
Plaza | 161 | (3) | 42,748 | (1,368) |
| Hotel
Indigo | 48 | 2 | 6,418 | 486 |
| EVEN
Hotels | 6 | - | 1,010 | - |
| Holiday
Inn 1 | 762 | (12) | 134,283 | (2,461) |
| Holiday
Inn Express | 2,183 | 29 | 196,033 | 3,662 |
| Staybridge
Suites | 234 | 8 | 25,110 | 925 |
| Candlewood
Suites | 374 | 12 | 35,251 | 1,059 |
| Other | 81 | (3) | 20,694 | (1,103) |
| | _ | | __ | |
| Total | 3,957 | 32 | 489,949 | 1,956 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 3,665 | 32 | 431,648 | 782 |
| Managed | 286 | - | 56,476 | 1,174 |
| Owned
and leased | 6 | - | 1,825 | - |
| | _ | | ___ | _ |
| Total | 3,957 | 32 | 489,949 | 1,956 |
| | | _ | | |

1 Includes 25 Holiday Inn Resort properties (6,787 rooms) and 26 Holiday Inn Club Vacations (7,676 rooms)

(2016: 25 Holiday Inn Resort properties (6,791 rooms) and 26 Holiday Inn Club Vacations (7,601 rooms)).

| Americas pipeline | Hotels | Change
over | Rooms | Change
over |
| --- | --- | --- | --- | --- |
| | 2017 30 June | 2016 31
December | 2017 30 June | 2016 31
December |
| Analysed
by brand | | | | |
| InterContinental | 6 | (1) | 1,642 | (890) |
| Kimpton | 16 | (1) | 2,714 | (235) |
| Crowne
Plaza | 15 | (2) | 3,256 | (30) |
| Hotel
Indigo | 31 | (1) | 3,580 | (385) |
| EVEN
Hotels | 6 | - | 775 | (5) |
| Holiday
Inn 1 | 137 | 9 | 17,892 | 588 |
| Holiday
Inn Express | 496 | 8 | 46,930 | 134 |
| Staybridge
Suites | 141 | 10 | 14,798 | 902 |
| Candlewood
Suites | 107 | (1) | 9,608 | 4 |
| Other | 12 | 1 | 1,383 | 44 |
| | _ | | __ | |
| Total | 967 | 22 | 102,578 | 127 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 925 | 28 | 95,802 | 2,507 |
| Managed | 42 | (6) | 6,776 | (2,380) |
| | _ | | ___ | _ |
| Total | 967 | 22 | 102,578 | 127 |
| | | _ | | |

1 Includes three Holiday Inn Resort properties (455 rooms) (2016: three Holiday Inn Resort properties (455 rooms)).

EUROPE

Europe results	6 months ended 30 June — 2017	2016	%
	$m	$m	change
Revenue
Franchised	50	49	2.0
Managed	63	60	5.0
	____	____	____
Total	113	109	3.7
	____	____	____
Operating profit before exceptional items
Franchised	37	37	-
Managed	12	10	20.0
Regional
overheads	(11)	(13)	15.4
	____	____	____
Operating
profit	38	34	11.8
	____	____	____

Europe comparable RevPAR movement on previous year	6 months ended 30 June 2017
Franchised
All
brands	5.8%
Managed
All
brands	7.5%

Franchised revenue increased by $1m (2.0%) to $50m and operating profit remained flat at $37m. On a constant currency basis, revenue increased by $4m (8.2%) to $53m and operating profit increased by $2m (5.4%) to $39m.

Managed revenue increased by $3m (5.0%) to $63m and operating profit increased by $2m (20.0%) to $12m. Revenue included $38m (2016: $38m), and operating profit included $1m (2016: $1m) from managed leases 1 . Excluding properties operated under this arrangement, and on a constant currency basis, revenue increased by $4m (18.2%) and operating profit increased by $2m (22.2%).

1 Properties that are structured for legal reasons as an operating lease but have the same characteristics as a management contract.

| Europe hotel and room count | Hotels | Change
over | Rooms | Change
over |
| --- | --- | --- | --- | --- |
| | 2017 30 June | 2016 31
December | 2017 30 June | 2016 31
December |
| Analysed
by brand | | | | |
| InterContinental | 31 | - | 9,724 | - |
| Kimpton | 1 | 1 | 274 | 274 |
| Crowne
Plaza | 94 | 2 | 21,633 | 746 |
| Hotel
Indigo | 22 | 1 | 1,970 | 60 |
| Holiday
Inn 1 | 282 | (9) | 46,112 | (1,717) |
| Holiday
Inn Express | 239 | 5 | 29,508 | 930 |
| Staybridge
Suites | 7 | - | 1,000 | - |
| Other | 1 | - | 141 | - |
| | _ | | __ | |
| Total | 677 | - | 110,362 | 293 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 624 | (5) | 95,788 | (1,242) |
| Managed | 53 | 5 | 14,574 | 1,535 |
| | _ | | ___ | _ |
| Total | 677 | - | 110,362 | 293 |
| | | _ | | |

1 Includes one Holiday Inn Resort property (88 rooms) (2016: one Holiday Inn Resort properties (88 rooms)).

| Europe pipeline | Hotels | Change
over | Rooms | Change
over |
| --- | --- | --- | --- | --- |
| | 2017 30 June | 2016 31
December | 2017 30 June | 2016 31
December |
| Analysed
by brand | | | | |
| InterContinental | 6 | - | 813 | - |
| Kimpton | 1 | - | 149 | - |
| Crowne
Plaza | 13 | (1) | 3,003 | (182) |
| Hotel
Indigo | 18 | - | 2,211 | (53) |
| Holiday
Inn | 35 | 1 | 7,528 | 259 |
| Holiday
Inn Express | 60 | 2 | 9,444 | 49 |
| Staybridge
Suites | 6 | 1 | 826 | 189 |
| | _ | | __ | |
| Total | 139 | 3 | 23,974 | 262 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 118 | 7 | 18,784 | 876 |
| Managed | 21 | (4) | 5,190 | (614) |
| | _ | | ___ | _ |
| Total | 139 | 3 | 23,974 | 262 |
| | | _ | | |

ASIA, MIDDLE EAST AND AFRICA (AMEA)

AMEA results	6 months ended 30 June — 2017	2016	%
	$m	$m	change
Revenue
Franchised	8	8	-
Managed	90	90	-
Owned
and leased	17	17	-
	____	____	____
Total	115	115	-
	____	____	____
Operating profit before exceptional items
Franchised	7	6	16.7
Managed	43	42	2.4
Owned
and leased	1	1	-
Regional
overheads	(10)	(10)	-
	____	____	____
Operating
profit	41	39	5.1
	____	____	____

AMEA comparable RevPAR movement on previous year	6 months ended 30 June 2017
Franchised
All
brands	(1.9)%
Managed
All
brands	2.0%

On an actual and constant currency basis, franchised revenue remained flat at $8m whilst operating profit increased by $1m (16.7%) to $7m.

Managed revenue remained flat at $90m and operating profit increased by $1m (2.4%) to $43m. Comparable RevPAR increased by 2.0%. Revenue and operating profit included $24m (2016: $24m) and $2m (2016: $2m) respectively from one managed lease property 1 . Excluding results from this hotel and on a constant currency basis, revenue increased by $1m (1.5%) and operating profit increased by $3m (7.5%) benefiting from the favourable phasing of costs.

In the owned and leased estate, on an actual and constant currency basis, revenue and operating profit remained flat at $17m and $1m respectively.

1 A property that is structured for legal reasons as an operating lease but has the same characteristics as a management contract.

| AMEA hotel and room count | Hotels | Change
over | Rooms | Change
over |
| --- | --- | --- | --- | --- |
| | 2017 30 June | 2016 31
December | 2017 30 June | 2016 31
December |
| Analysed
by brand | | | | |
| InterContinental | 68 | (1) | 20,890 | (313) |
| Crowne
Plaza | 75 | 2 | 21,296 | 547 |
| Hotel
Indigo | 3 | 1 | 382 | 59 |
| Holiday
Inn 1 | 92 | (1) | 21,175 | (137) |
| Holiday
Inn Express | 34 | - | 7,693 | 110 |
| Staybridge
Suites | 4 | 1 | 502 | 77 |
| Other | 8 | 2 | 9,994 | 5,538 |
| | _ | | __ | |
| Total | 284 | 4 | 81,932 | 5,881 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 57 | 2 | 13,023 | 453 |
| Managed | 225 | 2 | 68,376 | 5,482 |
| Owned
and leased | 2 | - | 533 | (54) |
| | _ | | ___ | _ |
| Total | 284 | 4 | 81,932 | 5,881 |
| | | _ | | |

1 Includes 14 Holiday Inn Resort properties (2,958 rooms) (2016: 14 Holiday Inn Resort properties (2,953 rooms))

| AMEA pipeline | Hotels | Change
over | Rooms | Change
over |
| --- | --- | --- | --- | --- |
| | 2017 30 June | 2016 31
December | 2017 30 June | 2016 31
December |
| Analysed
by brand | | | | |
| InterContinental | 26 | (1) | 6,245 | (436) |
| Crowne
Plaza | 20 | (1) | 5,239 | (315) |
| Hotel
Indigo | 15 | 1 | 2,715 | 133 |
| Holiday
Inn 1 | 48 | (1) | 13,003 | (261) |
| Holiday
Inn Express | 31 | (4) | 6,687 | (799) |
| Staybridge
Suites | 4 | - | 830 | 42 |
| Other | 1 | 1 | 88 | (3,442) |
| | _ | | __ | |
| Total | 145 | (5) | 34,807 | (5,078) |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 12 | 1 | 2,605 | 199 |
| Managed | 133 | (6) | 32,202 | (5,277) |
| | _ | | ___ | _ |
| Total | 145 | (5) | 34,807 | (5,078) |
| | | _ | | |

1 Includes five Holiday Inn Resort properties (1,151 rooms) (2016: five Holiday Inn Resort properties (1,256 rooms))

GREATER CHINA

Greater China results	6 months ended 30 June — 2017	2016	%
	$m	$m	change
Revenue
Franchised	2	2	-
Managed	56	53	5.7
	____	____	____
Total	58	55	5.5
	____	____	____
Operating profit before exceptional items
Franchised	1	2	(50.0)
Managed	32	29	10.3
Regional
overheads	(10)	(11)	9.1
	____	____	____
Operating
profit	23	20	15.0
	____	____	____

| Greater China comparable RevPAR movement on previous
year | 6 months ended 30 June 2017 |
| --- | --- |
| Managed | |
| All
brands | 4.6% |

On an actual and constant currency basis, franchised revenue remained flat at $2m whilst operating profit decreased by $1m (50.0%) to $1m.

Managed revenue increased by $3m (5.7%) to $56m and operating profit increased by $3m (10.3%) to $32m. Comparable RevPAR increased by 4.6% and System size grew by 9.0% year-on-year. On a constant currency basis, revenue increased by $6m (11.3%) to $59m, whilst operating profit increased by $4m (13.8%) to $33m primarily due to strong trading in mainland China.

| Greater China hotel and room count | Hotels — 2017 | Change over
2016 | Rooms — 2017 | Change over
2016 |
| --- | --- | --- | --- | --- |
| | 30 June | 31
December | 30 June | 31
December |
| Analysed
by brand | | | | |
| InterContinental | 40 | 1 | 16,656 | 341 |
| HUALUXE | 5 | 1 | 1,436 | 340 |
| Crowne
Plaza | 80 | 1 | 28,350 | 299 |
| Hotel
Indigo | 6 | - | 745 | 5 |
| Holiday
Inn 1 | 81 | (2) | 25,371 | (500) |
| Holiday
Inn Express | 86 | 11 | 20,670 | 2,193 |
| Other | 5 | (1) | 2,204 | (268) |
| | _ | | __ | |
| Total | 303 | 11 | 95,432 | 2,410 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 6 | 2 | 2,590 | 406 |
| Managed | 297 | 9 | 92,842 | 2,004 |
| | _ | | ___ | _ |
| Total | 303 | 11 | 95,432 | 2,410 |
| | | _ | | |

1 Includes six Holiday Inn Resort properties (1,820 rooms) (2016: six Holiday Inn Resort properties (1,820 rooms))

| Greater China pipeline | Hotels — 2017 | Change over
2016 | Rooms — 2017 | Change over
2016 |
| --- | --- | --- | --- | --- |
| | 30 June | 31
December | 30 June | 31
December |
| Analysed
by brand | | | | |
| InterContinental | 25 | 3 | 8,344 | 890 |
| HUALUXE | 21 | (1) | 6,556 | (400) |
| Crowne
Plaza | 37 | (1) | 12,250 | (261) |
| Hotel
Indigo | 12 | 1 | 1,980 | 198 |
| EVEN
Hotels | 1 | 1 | 290 | 290 |
| Holiday
Inn 1 | 50 | - | 15,078 | 237 |
| Holiday
Inn Express | 115 | 20 | 23,390 | 3,185 |
| Other | 1 | - | 279 | - |
| | _ | | __ | |
| Total | 262 | 23 | 68,167 | 4,139 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 42 | 22 | 7,753 | 3,668 |
| Managed | 220 | 1 | 60,414 | 471 |
| | _ | | ___ | _ |
| Total | 262 | 23 | 68,167 | 4,139 |
| | | _ | | |

1 Includes six Holiday Inn Resort properties (1,995 rooms) (2016: six Holiday Inn Resort properties (1,820 rooms))

CENTRAL

	6 months ended 30 June — 2017	2016	%
Central results	$m	$m	change
Revenue	72	69	4.3
Gross
costs	(125)	(131)	4.6
	____	____	____
Operating
loss	(53)	(62)	14.5
	____	____	____

Central results

The net operating loss decreased by $9m (14.5%) compared to 2016 (a $4m or 6.5% decrease to $58m at constant currency). Central revenue, which mainly comprises technology fee income, increased by $3m (4.3%) to $72m, driven by increases in both comparable RevPAR and IHG System size in the first half of 2017. At constant currency, gross costs remained flat compared to 2016 (a $6m or 4.6% decrease at actual currency).

OTHER FINANCIAL INFORMATION

Exceptional operating items

The $4m exceptional operating charge, (2016 $5m charge), both relate to the costs of integrating Kimpton into the operations of the Group.

Net financial expenses

Net financial expenses decreased by $1m to $40m for the six months ended 30 June 2017. This decrease reflects a reduction in the cost of debt resulting from the refinancing of the £250m 6% bond which matured in December 2016, and the favourable impact of a weaker pound on translation of sterling interest expense, offset by higher average net debt levels following the payment of the $1.5bn special dividend in 2016.

Taxation

The tax charge on profit before tax, excluding the impact of exceptional items, has been calculated using an interim effective tax rate of 33%. Excluding the effect of prior-year items, the equivalent effective tax rate would be approximately 34%. This rate is higher than the average UK statutory rate for the year of 19.25% 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 $1m representing tax relief on the Kimpton integration costs.

Net tax paid in the six months ended 30 June 2017 totalled $50m.

Dividends

The Board has proposed an interim dividend per ordinary share of 33.0¢, representing growth of 10% on the 2016 interim dividend.

On 21 February 2017, the Group announced a $0.4bn return of funds to shareholders by way of a special dividend and share consolidation. The special dividend (202.5¢ per ordinary share) was paid on 22 May 2017.

Capital structure and liquidity management

During the six months ended 30 June 2017, $251m of cash was generated from operating activities. Net cash outflows from investing activities totalled $179m and net cash used in financing activities totalled $142m. Net debt at 30 June 2017 was $2,056m and included $228m in respect of the finance lease obligations for the InterContinental Boston.

The Group had net liabilities of $1,097m at 30 June 2017 reflecting that its internally generated brands are not recorded on the balance sheet, in accordance with accounting standards. The change in net liabilities (from $759m at 31 December 2016) was primarily due to the payment of the $404m special dividend on 22 May 2017.

USE OF NON-GAAP MEASURES

In addition to performance measures directly observable in the Interim Financial Statements (IFRS measures), additional measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures and include:

● Total gross revenue;

● Underlying revenue, underlying operating profit growth, underlying fee revenue, fee margin growth;

● Total operating profit before exceptional items and tax, adjusted earnings per ordinary share;

● Net debt;

● Net capital expenditure;

● Free cash flow; and

● Underlying earnings per share.

Further information can be found on page 26 of the IHG Annual Report and Form 20-F 2016 (which is available at www.ihgplc.com ).

Underlying revenue and underlying operating profit Non-GAAP reconciliations

The following tables:

● show underlying revenue and underlying operating profit on both an actual and constant currency basis a ;

● reconcile segmental underlying revenue and underlying operating profit to Group underlying revenue and operating profit;

● show underlying Group fee revenue and Group fee margin on both an actual and constant currency basis a ; and

● reconcile Group underlying revenue and underlying operating profit to the GAAP measures included in the Interim Financial Statements.

a IHG’s method for calculating the constant currency amounts of entities reporting in currencies other than US dollars is to translate the current period results into US dollars using the prior period’s exchange rate. For example, if a UK entity generated revenue of £100m in 2017 and 2016, the Interim Financial Statements would report revenue of $127m in 2017 and $143m in 2016, using the respective average exchange rates for the year of $1=£0.79 and $1=£0.70. For constant currency reporting, 2017 revenue would be translated at $1=£0.70 giving a US dollar value of $143m, thereby showing that underlying revenue was flat year-on-year.

Highlights for the six months ended 30 June 2017

	Revenue — 2017	2016	%	Operating profit — 2017	2016	%
	$m	$m	change	$m	$m	change
Per
Group income statement	857	838	2.3	366	339	8.0
Exceptional
items	-	-	-	4	5	(20.0)
Managed
leases	(80)	(82)	2.4	(4)	(4)	-
	_____	_____	_____	_____	_____	_____
Underlying
at actual exchange	777	756	2.8	366	340	7.6
rates	_____	_____	_____	_____	_____	_____
	At actual exchange rates			At constant currency
	2017	2016	%	2017	2016	%
	$m	$m	change	$m	$m	change
Underlying revenue
Americas	481	470	2.3	483	470	2.8
Europe	75	71	5.6	79	71	11.3
AMEA	91	91	-	92	91	1.1
Greater
China	58	55	5.5	61	55	10.9
Central	72	69	4.3	73	69	5.8
	_____	_____	_____	_____	_____	_____
Underlying
Group revenue	777	756	2.8	788	756	4.2
Owned
and leased revenue
included
above	(91)	(83)	(9.6)	(91)	(83)	(9.6)
	_____	_____	_____	_____	_____	_____
Underlying
Group fee revenue	686	673	1.9	697	673	3.6
	_____	_____	_____	_____	_____	_____

	At actual exchange rates — 2017	2016	%	At constant currency — 2017	2016	%
	$m	$m	change	$m	$m	change
Underlying operating profit
Americas	320	312	2.6	322	312	3.2
Europe	37	33	12.1	37	33	12.1
AMEA	39	37	5.4	41	37	10.8
Greater
China	23	20	15.0	23	20	15.0
Central	(53)	(62)	14.5	(58)	(62)	6.5
	_____	_____	_____	_____	_____	_____
Underlying
Group operating profit	366	340	7.6	365	340	7.4
Owned
and leased operating
profit
included above	(16)	(13)	(23.1)	(16)	(13)	(23.1)
	_____	_____	_____	_____	_____	_____
Underlying
Group fee profit	350	327	7.0	349	327	6.7
	_____	_____	_____	_____	_____	_____
Group
fee margin	51.0%	48.6%	2.4 ppts	50.1%	48.6%	1.5 ppts
	_____	_____	_____	_____	_____	_____

Net capital expenditure

Net capital expenditure is defined as cash flow from investing activities, less System Fund depreciation (recovery of previous System Fund capital expenditure). For internal management reporting, capital expenditure is reported as either maintenance, recyclable, or System Fund. The disaggregation of net capital expenditure provides useful information as it enables users to distinguish between System Fund capital investments and recyclable investments (such as investments in associates and joint ventures), which are intended to be recoverable in the medium term, compared with maintenance capital expenditure (including key money paid), which represents a permanent cash outflow.

The reconciliation of cash flow from investing activities to net capital expenditure is as follows:

	6 months ended 30 June — 2017	2016
	$m	$m
Net
cash from investing activities	(179)	(97)
Analysed
as:
Capital expenditure: maintenance and key money	(44)	(36)
Capital expenditure: recyclable investments	(80)	(25)
Capital expenditure: System Fund investments	(62)	(47)
	_____	_____
Gross
capital expenditure	(186)	(108)
Disposal proceeds	7	11
	_____	_____
	(179)	(97)
System Fund depreciation	17	14
	_____	_____
Net
capital expenditure	(162)	(83)
	_____	_____

Free cash flow

Free cash flow is defined as cash flow from operating activities (after interest and tax paid), less purchase of shares by employee share trusts and maintenance capital expenditure, including key money paid. In 2016, free cash flow also excludes the $95m cash receipt from renegotiation of long-term partnership agreements. Free cash flow is a useful measure for investors, as it represents the cash available to invest back into the business to drive growth, pay the ordinary dividend, with any surplus being available for additional returns to shareholders.

The reconciliation of cash flow from operating activities to free cash flow is as follows:

	6 months ended 30 June — 2017	2016
	$m	$m
Net
cash from operating activities	251	382
Less:
Purchase of shares by employee share trusts	(3)	(10)
Capital expenditure: maintenance and key money	(44)	(36)
Cash receipt from renegotiation of long-term partnership
agreements	-	(95)
	_____	_____
Free
cash flow	204	241
	_____	_____

Underlying earnings per share

Underlying earnings per share is calculated by dividing underlying 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.

Underlying earnings per share provides a per share measure based on comparable year-on-year trading and reflects underlying trends in the Group's financial performance.

Basic earnings per share can be reconciled to underlying earnings per share as follows:

	6 months ended 30 June — 2017	2016
	$m	$m
Basic earnings per ordinary share
Profit
available for equity holders	219	200
Basic
weighted average number of ordinary shares (millions)	196	228
Basic
earnings per ordinary share (cents)	111.7	87.7
	_____	_____
Underlying earnings per ordinary share
Profit
available for equity holders	219	200
Adjusted
for:
Exceptional items before tax	4	5
Tax on exceptional items	(1)	(2)
Managed leases	(4)	(4)
Tax on managed leases	1	1
Currency effects and other	-	-
	_____	_____
Underlying
profit available for equity holders	219	200
	_____	_____
Underlying
earnings per ordinary share (cents)	111.7	87.7
	_____	_____

RISKS AND UNCERTAINTIES

On pages 164 to 167 of the IHG Annual Report and Form 20-F 2016 we set out our assessment of the principal risk issues that would face the business through 2017 under the headings:

● political and economic developments;

● events that adversely impact domestic or international travel;

● hotel industry supply and demand cycle; competitive and changing industry;

● executing and realising the benefits from strategic acquisitions;

● dependency on external stakeholders and business partners;

● increasing competition from online travel agents and intermediaries;

● identifying, securing and retaining franchise and management agreements;

● changing technology and systems; brand reputation;

● resilience of our reservation systems and other key technology platforms;

● variety of risks relating to safety, security and crisis management; requirement for the right people, skills and capability to manage growth; financial stability and ability to borrow and

satisfy debt covenants;

● litigation;

● information security and data privacy;

● compliance with existing and changing regulations and societal expectations across numerous countries, territories and jurisdictions; and

● difficulties insuring our business.

In our view, the nature and potential impact of such risks remain essentially unchanged as regards our performance over the second half of 2017.

GOING CONCERN

An overview of the business activities of IHG, including a review of the key business risks that the Group faces, is given in this Interim Management Report. Information on the Group's treasury management policies can be found in note 22 to the Group Financial Statements in the IHG Annual Report and Form 20-F 2016.

In March 2017, the Group extended the maturity of its $1.275bn facility to March 2022. The Group now has no significant debt maturities before 2022.

At the end of June 2017, the Group was trading significantly within its banking covenants and debt facilities.

The Group's fee-based model and wide geographic spread means that it is well placed to manage through uncertain times, and our forecasts and sensitivity projections, based on a range of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facilities.

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, being a period of not less than 12 months from the date of this report. Accordingly, the financial statements continue to be prepared on going concern basis.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm that to the best of their knowledge:

● The condensed set of Financial Statements has been prepared in accordance with IAS 34;

● The Interim Management Report includes a fair review of the important events during the first six months, and their impact on the financial statements and a description of the principal

risks and uncertainties for the remaining six months of the year, as required by DTR 4.2.7R; and

● The Interim Management Report includes a fair review of related party transactions and changes therein, as required by DTR 4.2.8R.

On behalf of the Board

Keith Barr	Paul Edgecliffe-Johnson
Chief
Executive Officer	Chief
Financial Officer
7
August 2017	7
August 2017

INTERCONTINENTAL HOTELS GROUP PLC

GROUP INCOME STATEMENT

For the six months ended 30 June 2017

	6 months ended 30 June 2017 — Before exceptional items	Exceptional items (note 4)	Total	6 months ended 30 June 2016 — Before exceptional items	Exceptional items (note 4)	Total
	$m	$m	$m	$m	$m	$m
Continuing operations
Revenue (note 3)	857	-	857	838	-	838
Cost of
sales	(291)	-	(291)	(270)	-	(270)
Administrative
expenses	(156)	(4)	(160)	(177)	(5)	(182)
Share
of losses of associates and joint ventures	-	-	-	(2)	-	(2)
Other
operating income and expenses	7	-	7	3	-	3
	_____	____	____	_____	____	____
	417	(4)	413	392	(5)	387
Depreciation
and amortisation	(47)	-	(47)	(48)	-	(48)
	_____	_____	_____	_____	_____	_____
Operating profit (note 3)	370	(4)	366	344	(5)	339
Financial
income	2	-	2	4	-	4
Financial
expenses	(42)	-	(42)	(45)	-	(45)
	_____	_____	_____	_____	_____	_____
Profit before tax	330	(4)	326	303	(5)	298
Tax
(note 5)	(108)	1	(107)	(99)	2	(97)
	_____	_____	_____	_____	_____	_____
Profit for the period from continuing operations	222	(3)	219	204	(3)	201
	_____	_____	_____	_____	_____	_____
Attributable
to:
Equity
holders of the parent	222	(3)	219	203	(3)	200
Non-controlling
interest	-	-	-	1	-	1
	_____	_____	_____	_____	_____	_____
	222	(3)	219	204	(3)	201
	_____	_____	_____	_____	_____	_____
Earnings per ordinary share (note 6)
Continuing
and total operations:
Basic			111.7¢			87.7¢
Diluted			110.6¢			87.3¢
Adjusted	113.3¢			89.0¢
Adjusted
diluted	112.1¢			88.6¢
	_____		_____	_____		_____

INTERCONTINENTAL HOTELS GROUP PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2017

	2017 6 months ended 30 June $m	2016 6 months ended 30 June $m
Profit for the period	219	201
Other comprehensive income
Items
that may be subsequently reclassified to profit or
loss:
Losses
on valuation of available-for-sale financial assets, net of related
tax charge of $nil (2016 $nil)	(2)	(3)
Exchange
(losses)/gains on retranslation of foreign operations, net of
related tax credit of $1m (2016 charge of $2m)	(35)	98
	_____	_____
	(37)	95
Items
that will not be reclassified to profit or loss:
Re-measurement
gains/(losses) on defined benefit plans, net of related tax charge
of $1m (2016 credit of $3m)	-	(11)
	_____	_____
Total other comprehensive (loss)/income for the period	(37)	84
	_____	_____
Total comprehensive income for the period	182	285
	_____	_____
Attributable
to:
Equity
holders of the parent	181	282
Non-controlling
interest	1	3
	_____	_____
	182	285
	_____	_____

INTERCONTINENTAL HOTELS GROUP PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2017

	6 months ended 30 June 2017 — Equity share capital	Other reserves*	Retained earnings	Non-controlling interest	Total equity
	$m	$m	$m	$m	$m
At
beginning of the period	141	(2,300)	1,392	8	(759)
Total
comprehensive income for the period	-	(38)	219	1	182
Transfer
of treasury shares to employee share trusts	-	(20)	20	-	-
Purchase
of own shares by employee share trusts	-	(3)	-	-	(3)
Release
of own shares by employee share trusts	-	29	(29)	-	-
Equity-settled
share-based cost	-	-	12	-	12
Tax
related to share schemes	-	-	5	-	5
Equity
dividends paid	-	-	(531)	(3)	(534)
Exchange
adjustments	7	(7)	-	-	-
	_____	______	_____	_____	_____
At end of the period	148	(2,339)	1,088	6	(1,097)
	_____	_____	_____	_____	_____

	6 months ended 30 June 2016 — Equity share capital	Other reserves*	Retained earnings	Non-controlling interest	Total equity
	$m	$m	$m	$m	$m
At
beginning of the period	169	(2,513)	2,653	10	319
Total
comprehensive income for the period	-	93	189	3	285
Transfer
of treasury shares to employee share trusts	-	(24)	24	-	-
Purchase
of own shares by employee share trusts	-	(10)	-	-	(10)
Release
of own shares by employee share trusts	-	39	(39)	-	-
Equity-settled
share-based cost	-	-	15	-	15
Tax
related to share schemes	-	-	2	-	2
Equity
dividends paid	-	-	(1,637)	(5)	(1,642)
Transaction
costs relating to shareholder returns	-	-	(1)	-	(1)
Exchange
adjustments	(15)	15	-	-	-
	_____	______	_____	_____	_____
At end of the period	154	(2,400)	1,206	8	(1,032)
	_____	_____	_____	_____	_____

*
All
items above are shown net of tax.

INTERCONTINENTAL HOTELS GROUP PLC

GROUP STATEMENT OF FINANCIAL POSITION

30 June 2017

	2017 30 June	2016 31 December
	$m	$m
ASSETS
Property,
plant and equipment	422	419
Goodwill
and other intangible assets	1,373	1,292
Investment
in associates and joint ventures	157	111
Trade
and other receivables	-	8
Retirement
benefit assets	4	-
Other
financial assets	264	248
Non-current
tax receivable	23	23
Deferred
tax assets	52	48
	_____	_____
Total non-current assets	2,295	2,149
	_____	_____
Inventories	3	3
Trade
and other receivables	595	472
Current
tax receivable	49	77
Other
financial assets	15	20
Cash
and cash equivalents	166	206
	_____	_____
Total current assets	828	778
	_____	_____
Total assets (note 3)	3,123	2,927
	_____	_____
LIABILITIES
Loans
and other borrowings	(116)	(106)
Derivative
financial instruments	-	(3)
Loyalty
programme liability	(326)	(291)
Trade
and other payables	(641)	(681)
Provisions	(3)	(3)
Current
tax payable	(53)	(50)
	_____	_____
Total current liabilities	(1,139)	(1,134)
	_____	_____
Loans
and other borrowings	(2,106)	(1,606)
Retirement
benefit obligations	(100)	(96)
Loyalty
programme liability	(417)	(394)
Trade
and other payables	(177)	(200)
Provisions	(5)	(5)
Deferred
tax liabilities	(276)	(251)
	_____	_____
Total non-current liabilities	(3,081)	(2,552)
	_____	_____
Total liabilities	(4,220)	(3,686)
	_____	_____
Net liabilities	(1,097)	(759)
	_____	_____
EQUITY
Equity
share capital	148	141
Capital
redemption reserve	10	9
Shares
held by employee share trusts	(5)	(11)
Other
reserves	(2,868)	(2,860)
Unrealised
gains and losses reserve	109	111
Currency
translation reserve	415	451
Retained
earnings	1,088	1,392
	_____	_____
IHG shareholders' equity	(1,103)	(767)
Non-controlling
interest	6	8
	_____	_____
Total equity	(1,097)	(759)
	_____	_____

INTERCONTINENTAL HOTELS GROUP PLC

GROUP STATEMENT OF CASH FLOWS

For the six months ended 30 June 2017

	2017 6 months ended 30 June	2016 6 months ended 30 June
	$m	$m
Profit for the period	219	201
Adjustments
reconciling profit for the period to cash flow from operations
(note 8)	94	221
	_____	_____
Cash flow from operations	313	422
Interest
paid	(13)	(12)
Interest
received	1	4
Tax
paid on operating activities	(50)	(32)
	_____	_____
Net cash from operating activities	251	382
	_____	_____
Cash flow from investing activities
Purchase
of property, plant and equipment	(22)	(18)
Purchase
of intangible assets	(94)	(69)
Investment
in associates and joint ventures	(47)	(7)
Loan
advances to associates and joint ventures	-	(1)
Investment
in other financial assets	(27)	(10)
Capitalised
interest paid	(3)	(3)
Landlord
contributions to property, plant and equipment	7	-
Disposal
of hotel assets, net of costs and cash disposed	-	(4)
Proceeds
from associates and joint ventures	-	2
Repayments
of other financial assets	7	13
	_____	_____
Net cash from investing activities	(179)	(97)
	_____	_____
Cash flow from financing activities
Purchase
of own shares by employee share trusts	(3)	(10)
Dividends
paid to shareholders	(531)	(1,637)
Dividends
paid to non-controlling interests	(3)	(5)
Transaction
costs relating to shareholder returns	-	(1)
Increase
in other borrowings	395	395
	_____	_____
Net cash from financing activities	(142)	(1,258)
	_____	_____
Net movement in cash and cash equivalents, net of overdrafts, in
the period	(70)	(973)
Cash
and cash equivalents, net of overdrafts, at beginning of the
period	117	1,098
Exchange
rate effects	20	(30)
	_____	_____
Cash and cash equivalents, net of overdrafts, at end of the
period	67	95
	_____	_____

I NTERCONTINENTAL HOTELS GROUP PLC

NOTES TO THE INTERIM FINANCIAL STATEMENTS

| 1. |
| --- |
| These condensed interim financial statements have been prepared in
accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority and IAS 34 'Interim Financial
Reporting' and have been prepared on a consistent basis using the
same accounting policies and methods of computation set out in the
InterContinental Hotels Group PLC (the Group or IHG) Annual Report
and Form 20-F for the year ended 31 December 2016. The Directors are satisfied that the Group has sufficient resources
to continue in operation for the foreseeable future, being a period
of not less than 12 months from the date of this report.
Accordingly, the condensed interim financial statements continue to
be prepared on a going concern basis. These condensed interim financial statements are unaudited and do
not constitute statutory accounts of the Group within the meaning
of Section 435 of the Companies Act 2006. The auditors have carried
out a review of the financial information in accordance with the
guidance contained in ISRE 2410 (UK and Ireland) 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Auditing Practices Board. The financial information for the year ended 31 December 2016 has
been extracted from the Group's published financial statements for
that year which were prepared in accordance with IFRSs as adopted
by the European Union and which have been filed with the Registrar
of Companies. The auditor's report on those financial statements
was unqualified with no reference to matters to which the auditor
drew attention by way of emphasis and no statement under s498(2) or
s498(3) of the Companies Act 2006. The
Group continues to prepare for the implementation of IFRS 15
'Revenue from Contracts with Customers' in 2018. In terms of
the impacts and their financial quantification, the guidance
provided in the Annual Report and Form 20-F 2016 remains valid;
significantly reported higher revenues (of at least $1.6bn) and an
immaterial reduction in operating profit. Conclusions on
loyalty programme accounting remain outstanding and could result in
the reporting of additional revenues but are not expected to have
any further impact on operating profit. |

| 2. |
| --- |
| The
results of operations have been translated into US dollars at the
average rates of exchange for the period. In the case of sterling,
the translation rate is $1 = £0.79 (2016 $1 = £0.70). In
the case of the euro, the translation rate is $1 = €0.92
(2016 $1 = €0.90). Assets
and liabilities have been translated into US dollars at the rates
of exchange on the last day of the period. In the case of sterling,
the translation rate is $1 = £0.77 (2016 30 June $1 =
£0.74; 31 December $1 = £0.81). In the case of the euro,
the translation rate is $1 = €0.88 (2016 30 June $1 =
€0.90; 31 December $1 = €0.95). |

3 . — Revenue	2017 6 months ended 30 June	2016 6 months ended 30 June
	$m	$m
Americas	499	490
Europe	113	109
AMEA	115	115
Greater
China	58	55
Central	72	69
	_____	_____
Total revenue	857	838
	_____	_____
All
results relate to continuing operations.

Profit	2017 6 months ended 30 June $m	2016 6 months ended 30 June $m
Americas	321	313
Europe	38	34
AMEA	41	39
Greater
China	23	20
Central	(53)	(62)
	_____	_____
Reportable
segments' operating profit	370	344
Exceptional
items (note 4)	(4)	(5)
	_____	_____
Operating profit	366	339
Net
finance costs	(40)	(41)
	_____	_____
Profit before tax	326	298
	_____	_____
All
results relate to continuing operations.

Assets	2017 30 June $m	2016 31 December $m
Americas	1,585	1,417
Europe	358	321
AMEA	268	249
Greater
China	146	147
Central	476	439
	_____	_____
Segment assets	2,833	2,573
Unallocated
assets:
Non-current
tax receivable	23	23
Deferred
tax assets	52	48
Current
tax receivable	49	77
Cash
and cash equivalents	166	206
	_____	_____
Total assets	3,123	2,927
	_____	_____

4.	2017 6 months ended 30 June $m	2016 6 months ended 30 June $m
Exceptional items before tax
Administrative
expenses:
Kimpton
integration costs (a)	(4)	(5)
	_____	_____
Tax
Tax on
exceptional items (b)	1	2
	_____	_____

| All
items above relate to continuing operations. These items are
treated as exceptional by reason of their size or
nature. | |
| --- | --- |
| a) | Relates
to the costs of integrating Kimpton into the operations of the
Group. Kimpton was acquired on 16 January 2015. The
integration programme remains in progress and will be substantially
completed in 2017. |
| b) | Relates
to tax relief on the Kimpton integration costs. |

| 5. |
| --- |
| The tax
charge on profit for the period from continuing operations,
excluding the impact of exceptional items (note 4), has been
calculated using an interim effective tax rate of 33% (2016 33%)
analysed as follows: |

	2017	2017	2017	2016	2016	2016
6 months ended 30 June	Profit $m	Tax $m	Tax rate	Profit $m	Tax $m	Tax rate
Before
exceptional items	330	(108)	33%	303	(99)	33%
Exceptional
items	(4)	1		(5)	2
	_____	_____		_____	_____
	326	(107)		298	(97)
	_____	_____		_____	_____
Analysed
as:
UK
tax		(6)			1
Foreign
tax		(101)			(98)
		_____			_____
		(107)			(97)
		_____			_____

| 6. |
| --- |
| 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 impact of the
weighted average number of dilutive ordinary share awards
outstanding during the period. Adjusted
earnings per ordinary share* is disclosed in order to show
performance undistorted by exceptional items, to give a more
meaningful comparison of the Group's performance. |

Continuing and total operations	2017 6 months ended 30 June	2016 6 months ended 30 June
Basic earnings per ordinary share
Profit
available for equity holders ($m)	219	200
Basic
weighted average number of ordinary shares (millions)	196	228
Basic
earnings per ordinary share (cents)	111.7	87.7
	_____	_____
Diluted earnings per ordinary share
Profit
available for equity holders ($m)	219	200
Diluted
weighted average number of ordinary shares (millions)	198	229
Diluted
earnings per ordinary share (cents)	110.6	87.3
	_____	_____
Adjusted earnings per ordinary share
Profit
available for equity holders ($m)	219	200
Adjusting
items (note 4):
Exceptional
items before tax ($m)	4	5
Tax on
exceptional items ($m)	(1)	(2)
	_____	_____
Adjusted
earnings ($m)	222	203
Basic
weighted average number of ordinary shares (millions)	196	228
Adjusted
earnings per ordinary share (cents)	113.3	89.0
	_____	_____
Diluted
weighted average number of ordinary shares (millions)	198	229
Adjusted
diluted earnings per ordinary share (cents)	112.1	88.6
	_____	_____

| The
diluted weighted average number of ordinary shares is calculated
as: | 2017 millions | 2016 millions |
| --- | --- | --- |
| Basic
weighted average number of ordinary shares | 196 | 228 |
| Dilutive
potential ordinary shares | 2 | 1 |
| | _ | |
| | 198 | 229 |
| | __ | _____ |

• See the Use of Non-GAAP measures section in the Interim Management Report.

7.	2017 cents per share	2016 cents per share	2017 $m	2016 $m
Paid
during the period:
Final
(declared for previous year)	64.0	57.5	127	137
Special	202.5	632.9	404	1,500
	_____	_____	_____	_____
	266.5	690.4	531	1,637
	_____	_____	_____	_____
Proposed
for the period:
Interim	33.0	30.0	63	56*
	_____	_____	_____	_____
*Amount
paid
In
February 2017, the Group announced a $400m return of funds to
shareholders by way of a special dividend and share
consolidation. On 5 May 2017, shareholders approved the share
consolidation on the basis of 45 new ordinary shares of 19 17 / 21 p per share for
every 47 existing ordinary shares of 18 318 / 329 p, which became
effective on 8 May 2017 and resulted in the consolidation of 9m
shares. The dividend was paid on 22 May 2017. The
dividend and share consolidation had the same economic effect as a
share repurchase at fair value, therefore previously reported
earnings per share has not been restated. The
total number of shares held as treasury shares at 30 June 2017 was
7.6m.

1. Reconciliation of profit for the period to cash flow from operations

	2017 6 months ended 30 June	2016 6 months ended 30 June
	$m	$m
Profit
for the period	219	201
Adjustments
for:
Net
financial expenses	40	41
Income
tax charge	107	97
Depreciation and
amortisation	47	48
Exceptional
items	4	5
Equity-settled
share-based cost	9	11
Dividends from
associates and joint ventures	2	2
Net
change in loyalty programme liability and System Fund
surplus	66	110
System
Fund depreciation and amortisation	17	14
Other
changes in net working capital	(194)	(96)
Utilisation of
provisions, net of insurance recovery	-	(4)
Cash
flows relating to exceptional items	(4)	(10)
Other
items	-	3
	_____	--_____
Total
adjustments	94	221
	_____	_____
Cash
flow from operations	313	422
	_____	_____

9.	Net debt	2017 30 June	2016 31 December
		$m	$m
	Cash
and cash equivalents	166	206
	Loans
and other borrowings - current	(116)	(106)
	Loans
and other borrowings - non-current	(2,106)	(1,606)
		_____	_____
	Net debt*	(2,056)	(1,506)
		_____	_____
	Finance
lease obligation included above	(229)	(227)
		_____	_____
	* See
the Use of Non-GAAP measures section in the Interim Management
Report.
10.	Movement in net debt
		2017 6 months ended 30 June	2016 6 months ended 30 June
		$m	$m
	Net
decrease in cash and cash equivalents, net of
overdrafts	(70)	(973)
	Add
back cash flows in respect of other components of net
debt:
	Increase
in other borrowings	(395)	(395)
		_____	_____
	Increase
in net debt arising from cash flows	(465)	(1,368)
	Non-cash
movements:
	Finance
lease obligations	(2)	(2)
	Increase
in accrued interest	(21)	(30)
	Exchange
and other adjustments	(62)	100
		_____	_____
	Increase in net debt	(550)	(1,300)
	Net
debt at beginning of the period	(1,506)	(529)
		_____	_____
	Net debt at end of the period	(2,056)	(1,829)
		_____	_____

11.
The
table below compares carrying amounts and fair values of the
Group's financial assets and liabilities at 30 June
2017:
	2017 30 June Carrying value $m	2017 30 June Fair value $m	2016 31 December Carrying value $m	2016 31 December Fair value $m
Financial assets:
Equity
securities available-for-sale	156	156	156	156
Loans
and receivables	123	123	112	112
	_____	_____	_____	_____
	279	279	268	268
	_____	_____	_____	_____
Financial liabilities:
£400m
3.875% bonds 2022	(526)	(569)	(489)	(541)
£300m
3.75% bonds 2025	(398)	(431)	(370)	(408)
£350m
2.125% bonds 2026	(458)	(440)	(430)	(411)
Finance
lease obligations	(229)	(308)	(227)	(297)
Unsecured
bank loans	(512)	(512)	(107)	(107)
	_____	_____	_____	_____
	(2,123)	(2,260)	(1,623)	(1,764)
	_____	_____	_____	_____

| Cash
and cash equivalents, trade and other receivables, bank overdrafts,
trade and other payables and provisions are excluded from the above
tables as their fair value approximates book value. The fair value
of loans and receivables approximates book value based on
prevailing market rates. The fair value of the £400m,
£300m and £350m bonds is based on their quoted market
price. The fair value of finance lease obligations is calculated by
discounting future cash flows at prevailing interest rates. The
fair value of unsecured bank loans approximates book value as
interest rates reset to market rates on a frequent
basis. Equity
securities available-for-sale and derivatives are held in the Group
statement of financial position at fair value as set out in the
following table. — 30 June 2017 | Level 1 $m | Level 2 $m | Level 3 $m | Total $m |
| --- | --- | --- | --- | --- |
| Assets | | | | |
| Equity
securities available-for-sale: | | | | |
| Quoted
equity shares | 16 | - | - | 16 |
| Unquoted equity
shares | - | - | 140 | 140 |
| 31 December 2016 | Level 1 $m | Level 2 $m | Level 3 $m | Total $m |
| Assets | | | | |
| Equity
securities available-for-sale: | | | | |
| Quoted
equity shares | 14 | - | - | 14 |
| Unquoted equity
shares | - | - | 142 | 142 |
| Liabilities | | | | |
| Derivatives | - | (3) | - | (3) |
| Level
1: quoted (unadjusted) prices in active markets for identical
assets or liabilities. Level
2: other techniques for which all inputs which have a significant
effect on the recorded fair value are observable, either directly
or indirectly. Level
3: techniques which use inputs which have a significant effect on
the recorded fair value that are not based on observable market
data. | | | | |
| The
Level 2 derivatives consisted of foreign exchange swaps which were
valued using data from observable swap curves, adjusted to take
account of the Group's own credit risk. The
Level 3 equity securities relate to investments in unlisted shares
which are valued either by applying an average price-earnings (P/E)
ratio for a competitor group to the earnings generated by the
investment, or by reference to share of net assets if the
investment is currently loss-making or a recent property valuation
is available. The average P/E ratio for the period was 26.3
(2016 31 December 24.5) and a non-marketability factor of 30% (2016
31 December 30%) was applied. A 10%
increase in the average P/E ratio would result in a $2m increase
(2016 31 December $2m) in the fair value of the investments and a
10% decrease in the average P/E ratio would result in a $2m
decrease (2016 31 December $2m) in the fair value of the
investments. A 10% increase in net assets would result in a $7m
increase (2016 31 December $7m) in the fair value of investments
and a 10% decrease in net assets would result in a $7m decrease
(2016 31 December $7m) in the fair value of the
investments. There
were no transfers between Level 1 and Level 2 fair value
measurements during the period and no transfers into and out of
Level 3. The
following table reconciles movements in instruments classified as
Level 3 during the period: | | | | |
| | | | | $m |
| At 1
January 2017 | | | | 142 |
| Additions | | | | 2 |
| Valuation
losses recognised in other comprehensive income | | | | (4) |
| | | | | _ |
| At 30 June 2017 | | | | 140 |
| | | | | __ |

12.	Commitments and guarantees
	At 30
June 2017, the amount contracted for but not provided for in the
financial statements for expenditure on property, plant and
equipment and intangible assets was $123m (2016 31 December $97m).
The Group has also committed to invest in a number of its
associates, with an estimated outstanding commitment of $31m at 30
June 2017 based on current forecasts (2016 31 December
$36m). In
limited cases, the Group may provide performance guarantees to
third-party hotel owners to secure management contracts. At 30 June
2017, the amount provided in the financial statements was $3m (2016
31 December $5m) and the maximum unprovided exposure under such
guarantees was $23m (2016 31 December $14m). The
Group may guarantee loans made to facilitate third-party ownership
of hotels in which the Group has an equity interest. At 30
June 2017, there were guarantees of $43m in place (2016 31 December
$33m). On 29
March 2017, the Group invested $43m in the Barclay associate in
conjunction with its joint venture partner's refinancing of the
hotel, which was used to repay the $43m supplemental loan for which
the Group had provided an indemnity to its joint venture partner
for 100% of the related obligations. As a consequence, the
indemnity has been extinguished.
13.	Contingencies Security incidents
	In
respect of the security incidents notified in 2016 and 2017 (see
page 141 of the IHG Annual Report and Form 20-F 2016), $5m remains
the best estimate of the cost of reimbursing the impacted card
networks for counterfeit fraud losses and related expenses.
This estimate, which now includes the 12 IHG managed properties,
involves significant judgement based on currently available
information and remains subject to change as actual claims are made
and new information comes to light. The
Group may be exposed to investigations regarding compliance with
applicable State and Federal data security standards, and legal
action from individuals and organisations impacted by the security
incidents. Due to the general nature of the regulatory
enquires received and class action filings to date, it is not
practicable to make a reliable estimate of the possible financial
effects of any such claims on the Group at this time. To
date, three lawsuits have been filed against IHG entities relating
to the security incidents, all of which are in the early stages of
litigation. In
respect of the $5m provided in the Financial Statements in 2016, it
is expected that a proportion will be recoverable under the Group's
insurance programmes although this, together with any potential
recoveries in respect of the contingent liabilities detailed above,
will be subject to specific agreement with the relevant insurance
providers. Other From
time to time, the Group is subject to legal proceedings the
ultimate outcome of each being always subject to many uncertainties
inherent in litigation. The Group has also given warranties
in respect of the disposal of certain of its former subsidiaries.
It is the view of the Directors that, other than to the
extent that liabilities have been provided for in these financial
statements, it is not possible to quantify any loss to which these
proceedings or claims under these warranties may give rise,
however, as at the date of reporting, the Group does not believe
that the outcome of these matters will have a material effect on
the Group's financial position. At 30
June 2017, the Group had no other contingent liabilities (2016 31
December $nil).

| INDEPENDENT REVIEW REPORT TO INTERCONTINENTAL HOTELS GROUP
PLC |
| --- |
| Introduction We have been engaged by the Company to review the condensed set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2017 which comprises the Group income
statement, Group statement of comprehensive income, Group statement
of changes in equity, Group statement of financial position, Group
statement of cash flows and the related notes 1 to 13. We have read
the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements. This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
(UK and Ireland) 2410 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the
Auditing Practices Board. 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 half-yearly financial report is the responsibility of, and has
been approved by, the Directors. The Directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority. As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European
Union. Our Responsibility Our responsibility is to express to the Company a conclusion on the
condensed set of financial statements in the half-yearly financial
report based on our review. Scope of Review We conducted our review in accordance with International Standard
on Review Engagements (UK and Ireland) 2410 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Auditing Practices Board for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly we do not express
an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes
us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2017
is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority. Ernst & Young LLP London 7 August 2017 |

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/ F.
Cuttell
Name:	F.
CUTTELL
Title:	ASSISTANT
COMPANY SECRETARY
Date:	08 August 2017

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