Intercontinental Hotels Group PLC — Interim / Quarterly Report 2017

Feb 21, 2017

6-K 1 a3763x-fr.htm FINAL RESULTS 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 21 February 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 Final Results

Exhibit No: 99.1

InterContinental Hotels Group PLC

Preliminary Results for the year to 31 December 2016

Financial summary 1	Reported — 2016	2015	% Change	Underlying 2 — 2016	2015	% Change
Revenue	$1,715m	$1,803m	-4.9%	$1,582m	$1,513m	4.6%
Fee Revenue 3	$1,380m	$1,349m	2.3%	$1,409m	$1,349m	4.4%
Operating profit	$707m	$680m	4.0%	$702m	$641m	9.5%
Adjusted EPS	203.3¢	174.9¢	16.2%	203.1¢	165.0¢	23.1%
Basic EPS 4	195.3¢	520.0¢	(62.4%)
Total dividend per share	94.0¢	85.0¢	11%
Net debt	$1,506m	$529m

1 All figures before exceptional items unless otherwise noted. 2 Excluding owned asset disposals, managed leases and significant liquidated damages at constant FY15 exchange rates (CER). Underlying adjusted EPS based on underlying EBIT, effective tax rate, and reported interest at actual exchange rates. 3 Group revenue excluding owned & leased hotels, managed leases and significant liquidated damages. 4 After exceptional items.

| Richard Solomons, Chief Executive of InterContinental Hotels Group
PLC, said: |
| --- |
| "Our
results clearly demonstrate our strong operational performance and
the success of IHG's long-term strategy, which have delivered a
9.5% increase in underlying profit and a 23% increase in underlying
EPS. Our cash generative business model underpins our
decision to announce a $400 million special dividend and to propose
an 11% increase in the total dividend for the year. We
continued our focus on enhancing the long-term sustainability of
our competitive advantage by evolving our brand portfolio and by
driving innovation in our digital and loyalty offer. We
rolled out new formats across our Holiday Inn Brand Family which
deliver significant uplifts in guest satisfaction and improved
returns for owners, built momentum for our HUALUXE and EVEN Hotels
brands, and took Kimpton Hotels & Restaurants and Hotel Indigo
into new markets. We also strengthened our loyalty proposition
through initiatives including 'Your Rate' helping to drive a 16%
increase in member enrolments. The
fundamentals for the hospitality industry remain compelling.
Despite the uncertain environment in some markets, we remain
confident in the outlook for the year ahead, as well as our ability
to deliver sustainable growth into the future." |
| Financial Highlights |
| ● Strong underlying revenue growth driven by both
RevPAR and rooms - Global comparable RevPAR up 1.8% (Q4: 1.7%), led by rate up 1.2%,
and record occupancy levels. - Net
room growth of 3.1%, including 8.8% in Greater China. 40k room
openings, ~90% in our priority markets. - $24.5bn total gross revenue from hotels in IHG's system (up 2%
year-on-year; 4% CER). ● High quality business model, continuing margin
growth and low capital intensity drives operating cash
flows - > 95% profit from the fee business; ~85% of fee revenue linked
directly to hotel revenues. - Group fee margin of 48.8%, up 3.3%pts (2.5%pts CER); strong
progression through efficiency improvements. - Net
capital expenditure of $185m (gross $241m). Focused investments in
brands and new Guest Reservation System, in which we will invest a
further ~$90m in 2017 within existing capex guidance of up to $350m
gross. ● Commitment to efficient balance sheet and
driving shareholder returns - $400m will be returned to shareholders via a special dividend with
share consolidation, to be paid in Q2 2017. - Total returns since 2003 of $12.8bn, nearly $5bn of which is from
underlying operations. - Year-end net debt:EBITDA of 1.9x, or 2.4x on a proforma basis
assuming payment of the special dividend. - Proposed 11% increase in total dividend to 94.0¢ reflects
confidence in our long-term sustainable future growth. |
| Strategic progress to enhance our long term competitive
advantage |
| ● Strengthening our preferred
brands - Expanded our luxury footprint and InterContinental Hotels &
Resorts' position as the largest luxury hotel brand with eight
openings globally, including five in Greater China, and our highest
room signings since 2008. - Strengthened our boutique portfolio, with six Kimpton openings
including our first outside the US in Grand Cayman, three EVEN
Hotels openings including two in New York and our first franchise,
and opened our 75 th Hotel
Indigo. - Progressed the next phase of the Crowne Plaza refresh, announced in
June, to accelerate growth in the Americas supported by $200m
investment over 3 years (~$100m system funded, ~$100m within
existing capex guidance). - Continued to roll out leading edge guest experiences for Holiday
Inn Brand Family hotels; new public space designs now in 225
Holiday Inn Express hotels across US and Europe. New room designs
driving guest satisfaction uplifts. - Signed 20 Holiday Inn Express hotels in Greater China in 8 months,
under our new tailored franchising model, taking the total signed
for the brand in the region to 47 hotels. |
| ● Growing through targeted hotel
distribution - Signed 76k rooms into the pipeline, representing over 500 new
hotels, the highest number of deals signed since 2008,
demonstrating owner confidence in our brands. - 230k pipeline rooms, up 8%; ~ 45% under construction and ~90% in
our ten priority markets. |
| ● Driving
revenue delivery through technology and loyalty -
Industry-leading cloud-based Guest Reservation System remains on
track to begin roll-out in 2017. -
Digital revenue of $4.3bn, up ~$0.3bn year-on-year, with mobile
delivering over 50% of digital traffic and $1.6bn of gross revenues
globally, and ~60% of direct bookings in Greater
China. -
Enhanced IHG Rewards Club with the launch of Your Rate, our
preferential member pricing initiative, which has helped to
increase loyalty contribution by 2%pts and driven enrolments up 16%
year-on-year. |

| Americas - Rate led US RevPAR increase driving strong profit
growth |
| --- |
| Comparable
RevPAR increased 2.1% (Q4: up 1.5%), driven by 2.0% rate growth. US
RevPAR was up 1.8%, led by Holiday Inn up 2.5% and Kimpton up 2.9%.
Fourth quarter US RevPAR growth of 1.3% continued to be impacted by
our concentration in oil producing markets, where RevPAR was down
6.1%; the remainder of the estate grew 2.2%. Reported
revenue increased 4% (up 5% at CER) and profit increased 6% (up 7%
at CER). On an
underlying 1 basis, revenue was
up almost 6% and operating profit up almost 8%. Franchise
profit increased 5%, driven by RevPAR up 1.9% and rooms growth of
2.0%, which more than funded additional investment in development
resources. Managed profit includes an unusually high number of
small liquidated damages receipts ($4m total in H2). This was
offset by $8m related to our 20% interest in InterContinental New
York Barclay and the ongoing impact of new supply on RevPAR growth
in New York. We expect a high level of new supply to continue to
impact trading in New York in 2017, and that we will continue to
incur costs relating to the joint venture as the hotel ramps up
post repositioning, although these will largely be offset by
related management fees. Regional overheads declined by $11m
on an underlying basis due to a $10m year-on-year decrease in US
healthcare costs. Opened
24k rooms (188 hotels), our highest level of openings in 5 years,
with more than half driven by our Holiday Inn Brand
Family. Our continued
focus on maintaining a high-quality estate meant that we removed
15k rooms (103 hotels). We signed 37k rooms (332 hotels),
including 9k rooms (93 hotels) for our extended stay brands, and 2k
rooms (19 hotels) across our boutique brands, including a Kimpton
in Grenada, our first entry into the country. |
| Europe - Market outperformance in priority markets and highest
rooms signings for 9 years |
| Comparable
RevPAR increased 1.7% (Q4: up 3.1%), driven by rate up 1.4%. UK
RevPAR increased 2.6%, led by a robust fourth quarter (up 4.6%)
which was boosted by a strong end to the year for tourist arrivals
and leisure travel generally. In Germany, RevPAR growth of 6.8%
benefitted from a favourable trade fair calendar. Across the
rest of Europe, RevPAR declined by 0.5%, impacted by challenging
trading conditions in France, Turkey and Belgium. Reported
revenue declined 14% (10% at CER) and reported operating profit was
down 4% (flat at CER), both impacted by the sale of
InterContinental Paris - Le Grand in 2015. On an
underlying 1 basis, revenue was
up 1% and operating profit was flat. Franchise profit grew
8%, driven by RevPAR up 2.0% and rooms growth of 2.8%.
Managed profit declined by 22% due to difficult trading conditions
for our hotels in Paris and the impact of three hotels in key
cities as reported in our interim results. Opened
4k rooms (24 hotels) including the 706 room Holiday Inn Kensington
London. We signed almost 10k rooms (60 hotels) into our
system, our highest rooms signings since 2007. This included
a record 17 properties in Germany, a third consecutive record year
for the country, where we now have more than 100 properties open or
in the pipeline. |
| AMEA - Solid trading offset by oil markets |
| Comparable
RevPAR decreased 0.2% (Q4: flat), with rate declines offset by
occupancy gains. Performance outside the Middle East
continued to be strong with 3.7% RevPAR growth overall. We
continued to outperform the market in India, delivering RevPAR
growth of 14.1%, driven by strong corporate business and inbound
tourism. South East Asia (+2.0%), Australia (+2.9%), and
Japan (+3.6%) saw good trading, the last against tough
comparables. The Middle East continued to be impacted by
declining oil prices, ending the year down 7.0%. Total
RevPAR was down 2.0% for the year (Q4: down 2.1%) impacted by the
proportion of hotel openings in developing markets (2016: ~60%)
where RevPARs are significantly lower than developed markets.
We expect the proportion of hotels in developing markets to
continue to grow (~65% pipeline vs ~45% system) as we execute our
strategy to grow rapidly in markets where the long term demand
drivers are favourable and where we see the largest opportunities
for growth. This, combined with a number of other
individually small items, means we expect managed profit in 2017 to
be broadly in line with 2016. Reported
revenues declined 2% (down 3% at CER) with profit down 5% on both
an actual and constant currency basis. On an
underlying 1 basis, revenue was
down 4% and operating profit decreased 4%. Managed profit
increased 8%, excluding the $7m reduction flagged at the half year
results relating to three long-standing contracts being renewed
onto standard market terms and one equity stake
disposal. We
opened 4k rooms (17 hotels) including two hotels in Singapore, our
first Hotel Indigo and a 451-room Holiday Inn Express, our largest
for the brand in the region. Openings also included our first
Holiday Inn Express in Australia, the first of a larger portfolio
development across Australasia. We signed 11k rooms (42
hotels), and entered into an agreement to develop a portfolio of
EVEN Hotels in Australia and New Zealand. |

---

1 Excluding owned asset disposals, managed leases and significant liquidated damages at constant FY15 exchange rates (CER).

| Greater China - Market outperformance and rooms growth drive strong
fee revenue increase |
| --- |
| Comparable
RevPAR increased by 2.2%, with growth of 3.9% in mainland China
offset by declines in Hong Kong and Macau. Fourth quarter RevPAR
grew by 3.2% benefitting from 2.8% growth in Hong Kong, the first
positive quarter there since late 2014. Full year growth was
particularly strong in mainland tier 1 cities, up 6.3%, driven by
strong corporate demand, with the rest of the mainland up 2.2%. As
we continued to increase our penetration in less developed cities,
full year total RevPAR declined 3.1%. Reported
revenue and operating profit declined by 43% (41% at CER) and 36%
(33% at CER) respectively, both affected by the disposal of
InterContinental Hong Kong in 2015. Underlying 1 revenue was up 13% driven by trading outperformance in key cities
and nearly 9% net system growth. Underlying 1 operating profit
increased 15%, with ongoing investment in growth initiatives more
than offset by scale efficiencies and strategic cost management. Opened
8k rooms (29 hotels). We opened five InterContinental Hotels &
Resorts properties including our third in Beijing and our fifth in
Shanghai, now the most in any city globally. We also opened our
fourth HUALUXE hotel. Signed 19k rooms (82 hotels), including 20
franchised Holiday Inn Express hotels since launching the new China
franchise model in May. |
| Highly cash generative business with disciplined approach to cost
control and capital allocation |
| ● Fee margin growth through strategic cost
management - Continued focus on strategic cost management. Reported central
overheads declined $23m, or $12m on a constant currency basis,
benefitting from a $9m increase in central revenues and efficiency
improvements. - Group fee margin of 48.8%, increased 3.3%pts (2.5%pts CER).
In 2017, we will leverage scale and control costs to drive fee
margin progression, but at a slower rate than 2016 after 560pts of
margin expansion in the last 3 years. ● Strong free cash flow generation fuelling
investment - Free cash flow of $646m, up 39% year on year (2015: $466m),
including a $95m cash receipt on behalf of the system fund from the
renegotiation of long term partnership agreements. - $241m gross capital expenditure in 2016 (2015: $264m) comprised of:
$96m maintenance capex and key money; $40m recyclable investments;
and $105m system funded capital investments, offset by $25m
proceeds from asset recycling and $31m system fund depreciation
received via working capital, resulting in $185m of net
capex. - Gross capex guidance unchanged at up
to $350m per annum into the medium term. ● Efficient balance sheet provides
flexibility - Financial position remains robust, with an on-going commitment to
an investment grade credit rating by maintaining our net
debt:EBITDA ratio at 2.0x to 2.5x. - Issued a £350m, 10-year bond in August 2016, at a 2.125%
coupon rate, the lowest funding rate IHG has achieved in the
Sterling bond market. - Year-end net debt of $1,506m (including $227m finance lease on
InterContinental Boston), up $977m on 2015 due to the $1.5bn
special dividend paid in May 2016. Closing net debt is $205m
lower due to the impact of exchange rates. ● Shareholder returns demonstrating confidence in
future growth prospects - Proposed 11% increase in the final dividend to 64.0¢, taking
the total dividend for the year up 11% to 94.0¢, reflecting
our confident outlook on our ability to continue delivering
sustainable growth into the future. - Proposed $400m special dividend with share consolidation, equating
to 202.5¢ per share. |
| Foreign exchange - volatile currency markets impact reported
revenues and profit |
| Cost
benefits from the devaluation of sterling against the dollar were
broadly offset by revenue impacts of the strong dollar against a
number of currencies, reducing reported profit by $1m. If the
closing December 2016 exchange rates had existed through the first
half of 2016, reported operating profit for that period would have
reduced by $1m. 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 remained flat at $87m
principally due to the devaluation of sterling against the dollar
offsetting interest related to the £350m bond raised in August
2016. Annualised bond interest costs will reduce in 2017 following
the expiry of the £250m, 6.0% coupon rate bond in December
2016. |
| Tax: Effective rate for 2016 was 30% (2015: 30%). 2017
tax rate expected to be low 30s. Exceptional operating items: Exceptional operating
items of $29m include $13m related to the Kimpton integration and
$16m of impairment charges related to the Barclay associate which
owns InterContinental New York Barclay. |

---

1 Excluding owned asset disposals, managed leases and significant liquidated damages at constant FY15 exchange rates (CER).

Appendix 1: RevPAR Movement Summary
	Full Year 2016			Q4 2016
	RevPAR	Rate	Occ.	RevPAR	Rate	Occ.
Group	1.8%	1.2%	0.4pts	1.7%	1.0%	0.5pts
Americas	2.1%	2.0%	0.1pts	1.5%	1.6%	(0.1)pts
Europe	1.7%	1.4%	0.2pts	3.1%	1.1%	1.4pts
AMEA	(0.2)%	(0.8)%	0.5pts	0.0%	(0.4)%	0.3pts
G.
China	2.2%	(2.2)%	2.7pts	3.2%	(0.7)%	2.5pts

| Appendix 2: Comparable RevPAR movement at constant exchange rates
(CER) vs. actual exchange rates (AER) | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | Full Year 2016 | | | Q4 2016 | | |
| | CER | AER | Difference | CER | AER | Difference |
| Group | 1.8% | 0.0% | 1.8pts | 1.7% | (0.6)% | 2.3pts |
| Americas | 2.1% | 1.4% | 0.7pts | 1.5% | 0.9% | 0.6pts |
| Europe | 1.7% | (4.4)% | 6.1pts | 3.1% | (6.6)% | 9.7pts |
| AMEA | (0.2)% | 0.0% | (0.2)pts | 0.0% | 0.6% | (0.6)pts |
| G.
China | 2.2% | (2.4)% | 4.6pts | 3.2% | (2.1)% | 5.3pts |

| Appendix 3: Full Year System & Pipeline Summary
(rooms) | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | System | | | | | Pipeline | |
| | Openings | Removals | Net | Total | YoY% | Signings | Total |
| Group | 40,134 | (17,367) | 22,767 | 767,135 | 3.1% | 75,812 | 230,076 |
| Americas | 23,535 | (15,117) | 8,418 | 487,993 | 1.8% | 37,038 | 102,451 |
| Europe | 4,188 | (830) | 3,358 | 110,069 | 3.1% | 9,554 | 23,954 |
| AMEA | 4,473 | (995) | 3,478 | 76,051 | 4.8% | 10,551 | 39,643 |
| G.
China | 7,938 | (425) | 7,513 | 93,022 | 8.8% | 18,669 | 64,028 |

Appendix 4: Full Year financial headlines — Operating Profit $m	Total		Americas		Europe		AMEA		G. China		Central
	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Franchised	693	669	600	575	78	77	12	12	3	5	-	-
Managed	239	241	64	64	22	28	89	90	64	59	-	-
Owned
& leased	26	57	24	24	-	1	2	3	-	29	-	-
Regional
overheads	(123)	(136)	(55)	(66)	(25)	(28)	(21)	(19)	(22)	(23)	-	-
Profit
pre central overheads	835	831	633	597	75	78	82	86	45	70	-	-
Central
overheads	(128)	(151)	-	-	-	-	-	-	-	-	(128)	(151)
Operating profit before exceptional items	707	680	633	597	75	78	82	86	45	70	(128)	(151)
Exceptional
items	(29)	819	(29)	(41)	-	175	-	(2)	-	698	-	(11)
Total operating profit	678	1,499	604	556	75	253	82	84	45	768	(128)	(162)

Appendix 5: Reported operating profit movement before exceptional items at actual and constant exchange rates

Reported	Total** — Actual	CER**	Americas — Actual*	CER**	Europe — Actual*	CER**	AMEA — Actual*	CER**	G. China — Actual*	CER**
Growth/
(decline)	4%	4%	6%	7%	(4)%	0%	(5)%	(5)%	(36)%	(33)%

Appendix 6: Underlying operating profit movement before exceptional items

Underlying****	Total***	Americas	Europe	AMEA	G. China
Growth/
(decline)	10%	8%	0%	(4)%	15%

| Exchange rates: | GBP:USD | EUR:USD | * US
dollar actual currency |
| --- | --- | --- | --- |
| 2016 | 0.74 | 0.90 | **
Translated at constant 2015 exchange rates |
| 2015 | 0.65 | 0.90 | ***
After central overheads |
| | | | **** At
CER and excluding: owned asset disposals, results from managed
lease hotels and significant liquidated damages (see below for
definitions) |

| Appendix 7: Definitions |
| --- |
| CER: constant exchange rates with 2015 exchange rates
applied to 2016. Comparable RevPAR: Revenue per available room for hotels
that have traded for all of 2015 and 2016, reported at
CER. Fee revenue: Group revenue excluding owned & 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 2016 $34m; 2015 $38m; EBIT 2016 $nil, 2015 $nil.
Europe: Revenue 2016 $77m; 2015 $75m; EBIT 2016 $2m, 2015
$1m. AMEA: Revenue 2016 $51m; 2015 $46m; EBIT 2016 $5m, 2015
$5m. Owned asset disposals: InterContinental Hong Kong was sold
on 30 September 2015 (2016: $nil revenue and $nil EBIT, 2015: $98m
revenue and $29m EBIT), InterContinental Paris - Le Grand was sold
on 20 May 2015 (2016: $nil revenue and $nil EBIT, 2015: $30m
revenue and $1m EBIT). Significant liquidated damages: $nil in 2016, $3m in 2015
($3m Americas managed in Q2). 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 2015 or 2016, reported at CER. |

| Appendix 8: Investor information for proposed 2016 final
dividend — Ex-dividend date: | 4 May
2017 |
| --- | --- |
| Dividend payment: | ADRs:
64.0 cents per ADR; The corresponding amount in Pence Sterling per
ordinary share will be announced on 11 May 2017, calculated based
on the average of the
market exchange rates for the three days commencing 8 May
2017 . |

| Appendix 9: Investor information for proposed special
dividend — Ex-dividend date: | 8 May
2017 |
| --- | --- |
| Dividend payment: | ADRs:202.5
cents per ADR. The corresponding amount in Pence Sterling per
ordinary share will be announced on 11 May 2017, calculated based
on the average of the
market exchange rates for the three days commencing 8 May
2017 . |

| For further information, please contact: — Investor
Relations (Heather Wood; Adam Smith; Neeral Morzaria): | +44
(0)1895 512 176 | +44
(0)7808 098 724 |
| --- | --- | --- |
| Media
Relations (Yasmin Diamond; Zoë Bird): | +44
(0)1895 512 008 | +44
(0)7736 746 167 |
| Presentation for Analysts and Shareholders: A
presentation with Richard Solomons, Chief Executive Officer and
Paul Edgecliffe-Johnson, Chief Financial Officer will commence at
9:30am London time on 21 February at Goldman Sachs, Rivercourt, 120
Fleet Street, London, EC4A 2BE. There will be an opportunity
to ask questions. The presentation will conclude at
approximately 10:30am. There will be a live audio webcast of the results presentation on
the web address www.ihgplc.com/prelimswebcast . 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: | | |
| UK
toll: UK toll
free: US
toll: Passcode: | +44
(0)20 7108 6248 0800
279 3953 +1 210
795 1098 IHG
Investor | |
| A
replay of the conference call will also be available following the
event - details are below. | | |
| Replay: Pin: | +1 866
358 4517 2021 | |
| US conference call and Q&A: There
will also be a conference call, primarily for US investors and
analysts, at 9:00am New York Time on 21 February with Richard
Solomons, Chief Executive Officer and Paul Edgecliffe-Johnson,
Chief Financial Officer. There will be an opportunity to ask
questions. | | |
| UK
toll: US
toll: US toll
free: Passcode: | +44
(0)20 7108 6248 +1 210
795 1098 +1 866
803 2143 IHG
Investor | |
| A
replay of the conference call will also be available following the
event - details are below. | | |
| Replay: Pin: | +1 800
839 1335 0228 | |
| Website: The
full release and supplementary data will be available on our
website from 7:00am (London time) on 21 February. The web address
is www.ihgplc.com/prelims17. | | |
| 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® Hotels &
Resorts , Holiday Inn
Express® , Staybridge
Suites® and Candlewood
Suites® . IHG franchises, leases, manages or owns nearly 5,200 hotels and
770,000 guest rooms in almost 100 countries, with nearly 1,500
hotels in its development pipeline. IHG also manages IHG® Rewards
Club , the world's first and
largest hotel loyalty programme, with more than 100 million
enrolled members worldwide. 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. | | |

This Business Review provides a commentary on the performance of InterContinental Hotels Group PLC

(the Group or IHG) for the financial year ended 31 December 2016.

GROUP PERFORMANCE

Group results	12 months ended 31 December — 2016	2015	%
	$m	$m	change
Revenue
Americas	993	955	4.0
Europe	227	265	(14.3)
AMEA	237	241	(1.7)
Greater
China	117	207	(43.5)
Central	141	135	4.4
	____	____	___
	1,715	1,803	(4.9)
	____	____	___
Operating profit before exceptional items
Americas	633	597	6.0
Europe	75	78	(3.8)
AMEA	82	86	(4.7)
Greater
China	45	70	(35.7)
Central	(128)	(151)	15.2
	____	____	___
	707	680	4.0
Exceptional
operating items	(29)	819	(103.5)
	___	___	___
Operating
profit	678	1,499	(54.8)
Net
financial expenses	(87)	(87)	-
	___	___	___
Profit
before tax	591	1,412	(58.1)
	___	___	___
Earnings per ordinary share
Basic	195.3¢	520.0¢	(62.4)
Adjusted	203.3¢	174.9¢	16.2
Average US dollar to sterling exchange rate	$1 : £0.74	$1 :
£0.65	13.8

During the year ended 31 December 2016, revenue decreased by $88m (4.9%) to $1,715m primarily as a result of the sale of InterContinental Paris - Le Grand and InterContinental Hong Kong. Operating profit and profit before tax both decreased by $821m to $678m and $591m, primarily due to the gain on sale of InterContinental Paris - Le Grand and InterContinental Hong Kong during the year ended 31 December 2015. Operating profit before exceptional items increased by $27m (4.0%) to $707m.

Underlying a Group revenue and underlying a Group operating profit increased by $69m (4.6%) and $61m (9.5%) respectively.

Comparable Group RevPAR increased by 1.8% (including an increase in average daily rate of 1.2%). IHG System size increased by 3.1% to 767,135 rooms, whilst underlying Group fee revenue b increased by 2.3% (4.4% at constant currency).

At constant currency, the net central operating loss before exceptional items decreased by $12m (7.9%) to $139m compared to 2015 (but at actual currency decreased by $23m (15.2%) to $128m).

Group fee margin was 48.8%, up 3.3 percentage points (up 2.5 percentage points at constant currency) on 2015, after adjusting for owned and leased hotels, managed leases, and significant liquidated damages. Group fee margin benefited from efficiency improvements and by leveraging our global scale.

Basic earnings per ordinary share decreased by 62.4% to 195.3¢, whilst adjusted earnings per ordinary share increased by 16.2% to 203.3¢, reflecting the increase in operating profit before exceptional items and the impact of the share consolidation in May 2016.

a Underlying excludes the impact of owned asset disposals, significant liquidated damages and the results from managed-lease hotels, translated at constant currency by applying prior-year exchange rates. Underlying operating profit growth also excludes the impact of exceptional items.

b Underlying fee revenue is defined as Group revenue excluding revenue from owned and leased hotels, managed leases and significant liquidated damages.

	12 months ended 31 December — 2016	2015	%
Global total gross revenue	$bn	$bn	change
InterContinental	4.6	4.5	2.2
Kimpton	1.1	1.1	-
Crowne
Plaza	4.1	4.2	(2.4)
Hotel
Indigo	0.4	0.3	33.3
Holiday
Inn	6.2	6.2	-
Holiday
Inn Express	6.3	6.1	3.3
Staybridge
Suites	0.8	0.8	-
Candlewood
Suites	0.7	0.7	-
Other
brands	0.3	0.1	200.0
	____	____	____
Total	24.5	24.0	2.1
	____	____	____

| Global hotel and room count at 31 December | Hotels — 2016 | Change over
2015 | Rooms — 2016 | Change over
2015 |
| --- | --- | --- | --- | --- |
| Analysed
by brand | | | | |
| InterContinental | 187 | 3 | 63,650 | 1,610 |
| Kimpton | 61 | - | 11,238 | 262 |
| HUALUXE | 4 | 1 | 1,096 | 298 |
| Crowne
Plaza | 408 | 2 | 113,803 | 519 |
| Hotel
Indigo | 75 | 10 | 8,905 | 1,241 |
| EVEN
Hotels | 6 | 3 | 1,010 | 564 |
| Holiday
Inn 1 | 1,241 | 15 | 231,756 | 3,656 |
| Holiday
Inn Express | 2,497 | 72 | 247,009 | 10,603 |
| Staybridge
Suites | 236 | 16 | 25,610 | 1,646 |
| Candlewood
Suites | 362 | 21 | 34,192 | 1,864 |
| Other | 97 | (1) | 28,866 | 504 |
| | _ | | __ | |
| Total | 5,174 | 142 | 767,135 | 22,767 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 4,321 | 102 | 542,650 | 11,902 |
| Managed | 845 | 39 | 222,073 | 10,670 |
| Owned
and leased | 8 | 1 | 2,412 | 195 |
| | _ | | ___ | _ |
| Total | 5,174 | 142 | 767,135 | 22,767 |
| | | _ | | |

1 Includes 46 Holiday Inn Resort properties (11,652 rooms) and 26 Holiday Inn Club Vacations properties

(7,601 rooms) (2015: 47 Holiday Inn Resort properties (11,518 rooms) and 16 Holiday Inn Club Vacations properties (5,231 rooms)).

| Global pipeline at 31 December | Hotels — 2016 | Change over
2015 | Rooms — 2016 | Change over
2015 |
| --- | --- | --- | --- | --- |
| Analysed
by brand | | | | |
| InterContinental | 62 | 10 | 17,480 | 1,804 |
| Kimpton | 18 | - | 3,098 | (268) |
| HUALUXE | 22 | 1 | 6,956 | 324 |
| Crowne
Plaza | 90 | 6 | 24,536 | 1,355 |
| Hotel
Indigo | 75 | 12 | 10,593 | 1,385 |
| EVEN
Hotels | 6 | (2) | 780 | (482) |
| Holiday
Inn 1 | 261 | 5 | 52,678 | 474 |
| Holiday
Inn Express | 676 | 74 | 83,882 | 8,277 |
| Staybridge
Suites | 140 | 26 | 15,321 | 2,680 |
| Candlewood
Suites | 108 | 10 | 9,604 | 884 |
| Other | 12 | (2) | 5,148 | (273) |
| | _ | | __ | |
| Total | 1,470 | 140 | 230,076 | 16,160 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 1,039 | 134 | 117,694 | 15,525 |
| Managed | 431 | 7 | 112,382 | 837 |
| Owned
and Leased | - | (1) | - | (202) |
| | _ | | ___ | _ |
| Total | 1,470 | 140 | 230,076 | 16,160 |
| | | _ | | |

1 Includes 14 Holiday Inn Resort properties (3,531 rooms) (2015: 14 Holiday Inn Resort properties (3,548 rooms)).

THE AMERICAS

	12 months ended 31 December — 2016	2015	%
Americas results	$m	$m	change
Revenue
Franchised	685	661	3.6
Managed	172	166	3.6
Owned
and leased	136	128	6.3
	____	____	____
Total	993	955	4.0
	____	____	____
Operating profit before exceptional items
Franchised	600	575	4.3
Managed	64	64	-
Owned
and leased	24	24	-
	____	____	____
	688	663	3.8
Regional
overheads	(55)	(66)	16.7
	____	____	____
	633	597	6.0
Exceptional
items	(29)	(41)	29.3
	____	____	____
Operating
profit	604	556	8.6
	____	____	____

Americas Comparable RevPAR movement on previous year	12 months ended 31 December 2016
Franchised
Crowne
Plaza	1.5%
Holiday
Inn	2.6%
Holiday
Inn Express	1.7%
All
brands	1.9%
Managed
InterContinental	2.7%
Kimpton	2.9%
Crowne
Plaza	5.7%
Holiday
Inn	4.9%
Staybridge
Suites	5.3%
Candlewood
Suites	1.2%
All
brands	3.2%
Owned
and leased
EVEN
Hotels	15.5%
All
brands	4.0%

Americas results

Franchised revenue and operating profit increased by $24m (3.6%) to $685m and by $25m (4.3%) to $600m respectively. Royalties a growth of 2.4% was driven by comparable RevPAR growth of 1.9%, including 2.6% for Holiday Inn and 1.7% for Holiday Inn Express, together with 2.0% rooms growth. On a constant currency basis, revenue and operating profit increased by $29m (4.4%) to $690m and by $30m (5.2%) to $605m respectively.

Managed revenue increased by $6m (3.6%) to $172m, whilst operating profit stayed flat at $64m due to costs relating to our 20% interest in InterContinental New York Barclay and the ongoing impact of new supply on RevPAR growth in New York. Revenue and operating profit included $34m (2015: $38m) and $nil (2015: $nil) respectively from one managed-lease property. Excluding results from this managed-lease hotel, the benefit of significant liquidated damages receipts (2016: $nil; 2015: $3m) and on a constant currency basis, revenue increased by $16m (12.8%) and operating profit increased by $5m (8.2%) respectively.

Owned and leased revenue increased by $8m (6.3%) to $136m, whilst operating profit stayed flat at $24m.

Regional overheads decreased by $11m (16.7%) to $55m due to a $10m year-on-year decrease in US healthcare costs.

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

| Americas hotel and room count at 31 December | Hotels — 2016 | Change over
2015 | Rooms — 2016 | Change over
2015 |
| --- | --- | --- | --- | --- |
| Analysed
by brand | | | | |
| InterContinental | 48 | (2) | 16,408 | (701) |
| Kimpton | 61 | - | 11,238 | 262 |
| Crowne
Plaza | 164 | (8) | 44,116 | (2,200) |
| Hotel
Indigo | 46 | 6 | 5,932 | 861 |
| EVEN
Hotels | 6 | 3 | 1,010 | 564 |
| Holiday
Inn 1 | 774 | 2 | 136,744 | 749 |
| Holiday
Inn Express | 2,154 | 48 | 192,371 | 5,399 |
| Staybridge
Suites | 226 | 15 | 24,185 | 1,523 |
| Candlewood
Suites | 362 | 21 | 34,192 | 1,864 |
| Other | 84 | - | 21,797 | 97 |
| | _ | | __ | |
| Total | 3,925 | 85 | 487,993 | 8,418 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 3,633 | 85 | 430,866 | 8,636 |
| Managed | 286 | (1) | 55,302 | (413) |
| Owned
and leased | 6 | 1 | 1,825 | 195 |
| | _ | | ___ | _ |
| Total | 3,925 | 85 | 487,993 | 8,418 |
| | | _ | | |

1 Includes 25 Holiday Inn Resort properties (6,791 rooms) and 26 Holiday Inn Club Vacations properties

(7,601 rooms) (2015: 23 Holiday Inn Resort properties (5,902 rooms) and 16 Holiday Inn Club Vacations properties (5,231 rooms)).

| Americas pipeline at 31 December | Hotels — 2016 | Change over
2015 | Rooms — 2016 | Change over
2015 |
| --- | --- | --- | --- | --- |
| Analysed
by brand | | | | |
| InterContinental | 7 | 3 | 2,532 | 987 |
| Kimpton | 17 | (1) | 2,949 | (417) |
| Crowne
Plaza | 17 | 2 | 3,286 | 796 |
| Hotel
Indigo | 32 | 2 | 3,965 | (59) |
| EVEN
Hotels | 6 | (2) | 780 | (482) |
| Holiday
Inn 1 | 128 | 3 | 17,304 | (899) |
| Holiday
Inn Express | 488 | 39 | 46,796 | 2,851 |
| Staybridge
Suites | 131 | 26 | 13,896 | 2,666 |
| Candlewood
Suites | 108 | 10 | 9,604 | 884 |
| Other | 11 | (2) | 1,339 | (260) |
| | _ | | __ | |
| Total | 945 | 80 | 102,451 | 6,067 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 897 | 88 | 93,295 | 7,432 |
| Managed | 48 | (7) | 9,156 | (1,163) |
| Owned
and leased | - | (1) | - | (202) |
| | _ | | ___ | _ |
| Total | 945 | 80 | 102,451 | 6,067 |
| | | _ | | |

1 Includes three Holiday Inn Resort properties (455 rooms) (2015: seven Holiday Inn Resort properties (1,657 rooms)).

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EUROPE

	12 months ended 31 December — 2016	2015	%
Europe results	$m	$m	change
Revenue
Franchised	102	104	(1.9)
Managed	125	131	(4.6)
Owned
and leased	-	30	(100.0)
	____	____	____
Total	227	265	(14.3)
	____	____	____
Operating profit before exceptional items
Franchised	78	77	1.3
Managed	22	28	(21.4)
Owned
and leased	-	1	(100.0)
	____	____	____
	100	106	(5.7)
Regional
overheads	(25)	(28)	10.7
	____	____	____
	75	78	(3.8)
Exceptional
items	-	175	(100.0)
	____	____	____
Operating
profit	75	253	(70.4)
	____	____	____
Europe comparable RevPAR movement on previous year		12 months ended 31 December 2016
Franchised
All
brands	2.0%
Managed
All
brands	(0.3)%

Europe results

Franchised revenue decreased by $2m (1.9%) to $102m, whilst operating profit increased by $1m (1.3%) to $78m. On a constant currency basis, revenue and operating profit increased by $6m (5.8%) and $6m (7.8%) respectively.

Managed revenue decreased by $6m (4.6%) and operating profit decreased by $6m (21.4%). Revenue and operating profit included $77m (2015: $75m) and $2m (2015: $1m) respectively from managed leases. Excluding properties operated under this arrangement, and on a constant currency basis, revenue decreased by $5m (8.9%) and operating profit decreased by $6m (22.2%). Performance was impacted by difficult trading conditions for our hotels in Paris, and a revenue reduction in relation to three managed hotels; two of which have exited the system and one of which is undergoing a major refurbishment.

The last remaining hotel in the owned and leased estate, InterContinental Paris - Le Grand, was sold in 2015. Following this, revenue and operating profit in the estate decreased to nil.

| Europe hotel and room count at 31 December | Hotels — 2016 | Change over
2015 | Rooms — 2016 | Change over
2015 |
| --- | --- | --- | --- | --- |
| Analysed
by brand | | | | |
| InterContinental | 31 | (1) | 9,724 | (162) |
| Crowne
Plaza | 92 | 4 | 20,887 | 618 |
| Hotel
Indigo | 21 | 2 | 1,910 | 120 |
| Holiday
Inn 1 | 291 | 6 | 47,829 | 1,679 |
| Holiday
Inn Express | 234 | 6 | 28,578 | 1,053 |
| Staybridge
Suites | 7 | 1 | 1,000 | 123 |
| Other | 1 | (1) | 141 | (73) |
| | _ | | __ | |
| Total | 677 | 17 | 110,069 | 3,358 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 629 | 14 | 97,030 | 2,620 |
| Managed | 48 | 3 | 13,039 | 738 |
| | _ | | ___ | _ |
| Total | 677 | 17 | 110,069 | 3,358 |
| | | _ | | |

1 Includes one Holiday Inn Resort property (88 rooms) (2015: two Holiday Inn Resort properties (212 rooms)).

| Europe pipeline at 31 December | Hotels — 2016 | Change over
2015 | Rooms — 2016 | Change over
2015 |
| --- | --- | --- | --- | --- |
| Analysed
by brand | | | | |
| InterContinental | 6 | 1 | 813 | (69) |
| Kimpton | 1 | 1 | 149 | 149 |
| Crowne
Plaza | 14 | 3 | 3,185 | 512 |
| Hotel
Indigo | 18 | 7 | 2,264 | 861 |
| Holiday
Inn | 35 | (2) | 7,511 | (323) |
| Holiday
Inn Express | 58 | 13 | 9,395 | 2,197 |
| Staybridge
Suites | 5 | 1 | 637 | 126 |
| Other | - | - | - | (31) |
| | _ | | __ | |
| Total | 137 | 24 | 23,954 | 3,422 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 111 | 23 | 17,908 | 3,781 |
| Managed | 26 | 1 | 6,046 | (359) |
| | _ | | ___ | _ |
| Total | 137 | 24 | 23,954 | 3,422 |
| | | _ | | |

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ASIA, MIDDLE EAST AND AFRICA (AMEA)

	12 months ended 31 December — 2016	2015	%
AMEA results	$m	$m	change
Revenue
Franchised	16	16	-
Managed	184	189	(2.6)
Owned
and leased	37	36	2.8
	____	____	____
Total	237	241	(1.7)
	____	____	____
Operating profit before exceptional items
Franchised	12	12	-
Managed	89	90	(1.1)
Owned
and leased	2	3	(33.3)
	____	____	____
	103	105	(1.9)
Regional
overheads	(21)	(19)	(10.5)
	____	____	____
	82	86	(4.7)
Exceptional
items	-	(2)	100.0
	____	____	____
Operating
profit	82	84	(2.4)
	____	____	____
AMEA comparable RevPAR movement on previous year		12 months ended 31 December 2016
Franchised
All
brands		(0.1)%
Managed
All
brands		(0.2)%

AMEA results

On an actual and constant currency basis, franchised revenue and operating profit remained flat at $16m and $12m respectively.

Managed revenue and operating profit decreased by $5m (2.6%) to $184m and $1m (1.1%) to $89m respectively. Revenue and operating profit included $51m (2015: $46m) and $5m (2015: $5m) respectively from one managed-lease property. Excluding results from this hotel and on a constant currency basis, revenue decreased by $9m (6.3%) to $134m, whilst operating profit remained flat at $85m. Good underlying growth in our managed business was offset by a $7m revenue reduction in relation to four hotels; three long standing contracts being renewed onto standard market terms and one equity stake disposal.

In the owned and leased estate, on an actual and constant currency basis, revenue increased by $1m (2.8%) to $37m and operating profit decreased by $1m (33.3%) to $2m.

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| AMEA hotel and room count at 31 December | Hotels — 2016 | Change over
2015 | Rooms — 2016 | Change over
2015 |
| --- | --- | --- | --- | --- |
| Analysed
by brand | | | | |
| InterContinental | 69 | 1 | 21,203 | (35) |
| Crowne
Plaza | 73 | 2 | 20,749 | 738 |
| Hotel
Indigo | 2 | 1 | 323 | 131 |
| Holiday
Inn 1 | 93 | 2 | 21,312 | 328 |
| Holiday
Inn Express | 34 | 7 | 7,583 | 1,697 |
| Staybridge
Suites | 3 | - | 425 | - |
| Other | 6 | - | 4,456 | 619 |
| | _ | | __ | |
| Total | 280 | 13 | 76,051 | 3,478 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 55 | 3 | 12,570 | 646 |
| Managed | 223 | 10 | 62,894 | 2,832 |
| Owned
and leased | 2 | - | 587 | - |
| | _ | | ___ | _ |
| Total | 280 | 13 | 76,051 | 3,478 |
| | | _ | | |

1 Includes 14 Holiday Inn Resort properties (2,953 rooms) (2015: 15 Holiday Inn Resort properties (3,169 rooms)).

| AMEA pipeline at 31 December | Hotels — 2016 | Change over
2015 | Rooms — 2016 | Change over
2015 |
| --- | --- | --- | --- | --- |
| Analysed
by brand | | | | |
| InterContinental | 27 | 5 | 6,681 | 1,332 |
| Crowne
Plaza | 21 | 2 | 5,554 | 253 |
| Hotel
Indigo | 14 | 1 | 2,582 | 301 |
| Holiday
Inn 1 | 48 | 3 | 13,022 | 1,493 |
| Holiday
Inn Express | 35 | (8) | 7,486 | (1,858) |
| Staybridge
Suites | 4 | (1) | 788 | (112) |
| Other | - | - | 3,530 | 18 |
| | _ | | __ | |
| Total | 149 | 2 | 39,643 | 1,427 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 11 | 3 | 2,406 | 227 |
| Managed | 138 | (1) | 37,237 | 1,200 |
| | _ | | ___ | _ |
| Total | 149 | 2 | 39,643 | 1,427 |
| | | _ | | |

1 Includes five Holiday Inn Resort properties (1,256 rooms) (2015: four Holiday Inn Resort properties (1,071 rooms)).

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GREATER CHINA

	12 months ended 31 December — 2016	2015	%
Greater China results	$m	$m	Change
Revenue
Franchised	3	4	(25.0)
Managed	114	105	8.6
Owned
and leased	-	98	(100.0)
	____	____	____
Total	117	207	(43.5)
	____	____	____
Operating profit before exceptional items
Franchised	3	5	(40.0)
Managed	64	59	8.5
Owned
and leased	-	29	(100.0)
	____	____	____
	67	93	(28.0)
Regional
overheads	(22)	(23)	4.3
	____	____	____
	45	70	(35.7)
Exceptional
items	-	698	(100.0)
	____	____	____
Operating
profit	45	768	(94.1)
	____	____	____

| Greater China comparable RevPAR movement on previous
year | 12 months ended 31 December 2016 |
| --- | --- |
| Managed | |
| All
brands | 3.0% |

Greater China results

On an actual and constant currency basis, franchised revenue and operating profit decreased by $1m (25.0%) and by $2m (40.0%) respectively.

Managed revenue and operating profit increased by $9m (8.6%) to $114m and by $5m (8.5%) to $64m respectively. Comparable RevPAR increased by 3.0%, whilst the Greater China System size grew by 9.0%, driving a 7.0% increase in total gross revenue derived from rooms business. Total gross revenue derived from non-rooms business increased by 6.8%, primarily due to increased food and beverage revenue. On a constant currency basis, revenue and operating profit increased by $15m (14.3%) to $120m and by $8m (13.6%) to $67m respectively, with ongoing investment in growth initiatives more than offset by scale efficiencies and strategic cost management.

The last remaining hotel in the owned and leased estate, InterContinental Hong Kong, was sold in 2015. Following this, revenue and operating profit in the estate decreased to nil.

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| Greater China hotel and room count at 31 December | Hotels — 2016 | Change over
2015 | Rooms — 2016 | Change over
2015 |
| --- | --- | --- | --- | --- |
| Analysed
by brand | | | | |
| InterContinental | 39 | 5 | 16,315 | 2,508 |
| HUALUXE | 4 | 1 | 1,096 | 298 |
| Crowne
Plaza | 79 | 4 | 28,051 | 1,363 |
| Hotel
Indigo | 6 | 1 | 740 | 129 |
| Holiday
Inn 1 | 83 | 5 | 25,871 | 900 |
| Holiday
Inn Express | 75 | 11 | 18,477 | 2,454 |
| Other | 6 | - | 2,472 | (139) |
| | _ | | __ | |
| Total | 292 | 27 | 93,022 | 7,513 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 4 | - | 2,184 | - |
| Managed | 288 | 27 | 90,838 | 7,513 |
| | _ | | ___ | _ |
| Total | 292 | 27 | 93,022 | 7,513 |
| | | _ | | |

1 Includes six Holiday Inn Resort properties (1,820 rooms) (2015: seven Holiday Inn Resort properties (2,235 rooms)).

| Greater China pipeline at 31 December | Hotels — 2016 | Change over
2015 | Rooms — 2016 | Change over
2015 |
| --- | --- | --- | --- | --- |
| Analysed
by brand | | | | |
| InterContinental | 22 | 1 | 7,454 | (446) |
| HUALUXE | 22 | 1 | 6,956 | 324 |
| Crowne
Plaza | 38 | (1) | 12,511 | (206) |
| Hotel
Indigo | 11 | 2 | 1,782 | 282 |
| Holiday
Inn 1 | 50 | 1 | 14,841 | 203 |
| Holiday
Inn Express | 95 | 30 | 20,205 | 5,087 |
| Other | 1 | - | 279 | - |
| | _ | | __ | |
| Total | 239 | 34 | 64,028 | 5,244 |
| | | _ | | |
| Analysed
by ownership type | | | | |
| Franchised | 20 | 20 | 4,085 | 4,085 |
| Managed | 219 | 14 | 59,943 | 1,159 |
| | _ | | ___ | _ |
| Total | 239 | 34 | 64,028 | 5,244 |
| | | _ | | |

1 Includes six Holiday Inn Resort properties (1,820 rooms) (2015: three Holiday Inn Resort properties (820 rooms)).

CENTRAL

	12 months ended 31 December — 2016	2015	%
Central results	$m	$m	change
Revenue	141	135	4.4
Gross
costs	(269)	(286)	5.9
	____	____	____
Operating
loss before exceptional items	(128)	(151)	15.2
Exceptional
items	-	(11)	100.0
	____	____	____
Operating
loss	(128)	(162)	21.0
	____	____	____

Central results

The net operating loss decreased by $34m (21.0%) compared to 2015. Central revenue, which mainly comprises technology fee income, increased by $6m (4.4%) to $141m (an increase of $9m (6.7%) at constant currency), driven by increases in both comparable RevPAR (1.8%) and IHG System size (3.1%). At constant currency, gross costs decreased by $3m (1.0%) compared to 2015 (a $17m or 5.9% decrease at actual currency) driven by a continued focus on strategic cost management. Net operating loss before exceptional items decreased by $23m (15.2%) to $128m (a $12m or 7.9% decrease to $139m at constant currency).

SYSTEM FUND

	2016	2015	%
System Fund assessments	$m	$m	change
Assessment
fees and contributions received from hotels	1,439	1,351	6.5
Proceeds
from sale of IHG Rewards Club points	283	222	27.5
	____	____	____
Total	1,722	1,573	9.5
	____	____	____

System Fund assessments

In addition to franchise or management fees, hotels within the IHG System pay assessments and contributions (other than for Kimpton and InterContinental) which are collected by IHG for specific use within the System Fund. The System Fund also receives proceeds from the sale of IHG Rewards Club points. The System Fund is managed for the benefit of hotels in the IHG System with the objective of driving revenues for the hotels.

The System Fund is used to pay for marketing, the IHG Rewards Club loyalty programme and the guest reservation system. The operation of the System Fund does not result in a profit or loss for the Group and consequently the revenues and expenses of the System Fund are not included in the Group Income Statement.

In the year to 31 December 2016, System Fund income increased by 9.5% to $1,722m primarily as a result of a 6.5% increase in assessment fees and contributions from hotels resulting from increased hotel room revenues, reflecting increases in RevPAR and IHG System size. Continued strong performance in co-branded credit card schemes drove the 27.5% increase in proceeds from the sale of IHG Rewards Club points.

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OTHER FINANCIAL INFORMATION

Exceptional items

Exceptional items totalled a loss of $29m which included $13m relating to the cost of integrating Kimpton into the operations of the Group and a $16m impairment charge relating to the Barclay associate which owns InterContinental New York Barclay, a hotel managed by the Group. The impairment charge reflects the currently depressed trading outlook for the New York market and the high cost of renovation of the hotel.

Exceptional items are treated as exceptional by reason of their size or nature and are excluded from the calculation of adjusted earnings per ordinary share in order to provide a more meaningful comparison of performance.

Net financial expenses

Net financial expenses were flat at $87m, reflecting the issue of £350m 2.125% public bonds in August 2016, and a full year of interest on the £300m 3.75% bonds issued in August 2015, offset by the impact of a weaker pound on translation of sterling interest expense.

Financing costs included $3m (2015: $2m) of interest costs associated with IHG Rewards Club where interest is charged on the accumulated balance of cash received in advance of the redemption of points awarded. Financing costs in 2016 also included $20m (2015: $20m) in respect of the InterContinental Boston finance lease.

Taxation

The effective rate of tax on operating profit excluding the impact of exceptional items was 30% (2015: 30%). Excluding the impact of prior-year items, the equivalent tax rate would be 31% (2015: 36%). This rate is higher than the average UK statutory rate of 20% (2015: 20.25%), due mainly to certain overseas profits (particularly in the US) being subject to statutory tax rates higher than the UK statutory rate, unrelieved foreign taxes and disallowable expenses.

Taxation within exceptional items totalled a credit of $12m (2015: charge of $8m). In 2016, the credit included a $6m deferred tax credit in respect of the impairment charge relating to the Barclay associate and a $5m deferred tax credit representing future tax relief on $13m of Kimpton integration costs. In 2015, the charge comprised $56m relating to the disposal of InterContinental Hong Kong and InterContinental Paris - Le Grand, a credit of $21m in respect of the 2014 disposal of an 80% interest in InterContinental New York Barclay reflecting the judgement that state tax law changes would now apply to the deferred gain and credits of $27m for current and deferred tax relief on other operating exceptional items of current and prior years.

Net tax paid in 2016 totalled $130m (2015: $110m, including $1m in respect of disposals). Tax paid represents an effective rate of 22% (2015: 8%) on total profits and is lower than the effective income statement tax rate of 30% (2015: 30%), primarily due to the timing of US tax payments and the impact of deferred taxes.

Dividends

The Board has proposed a final dividend per ordinary share of 64.0¢. With the interim dividend per ordinary share of 30.0¢, the full-year dividend per ordinary share for 2016 will total 94.0¢, an increase of 11% over 2015.

In February 2017, the Board proposed a $400m return of funds to shareholders by way of a special dividend and share consolidation.

IHG pays its dividends in pounds sterling and US dollars. The sterling amount of the final and special dividend will be announced on 11 May 2017 using the average of the daily exchange rates from 8 May 2017 to 10 May 2017 inclusive.

Earnings per ordinary share

Basic earnings per ordinary share decreased by 62.4% to 195.3¢ from 520.0¢ in 2015. Adjusted earnings per ordinary share increased by 16.2% to 203.3¢ from 174.9¢ in 2015.

Share price and market capitalisation

The IHG share price closed at £36.38 on 31 December 2016, up from £26.58 on 31 December 2015. The market capitalisation of the Group at the year end was £7.2bn.

Capital structure and liquidity management

In August 2016, the Group issued a £350m, 10-year bond at a 2.125% coupon rate, the lowest funding rate the Group has achieved in the sterling bond market. The bonds are repayable in 2026, extending the maturity

profile of the Group's debt.

This is in addition to £400m of public bonds which are repayable on 28 November 2022 and £300m of public bonds which are repayable on 14 August 2025. On 9 December 2016, the Group repaid £250m of maturing public bonds which were issued in 2009.

The Group is further financed by a $1.275bn revolving syndicated bank facility (the Syndicated Facility) and a $75m revolving bilateral facility (the Bilateral facility) which mature in March 2021, with a one-year extension option exercisable in 2017. $110m was drawn under the Syndicated Facility at the year end.

The Syndicated and Bilateral facilities contain the same terms and two financial covenants; interest cover; and net debt divided by earnings before interest, tax, depreciation and amortisation (EBITDA). The Group is in compliance with all of the financial covenants in its loan documents, none of which is expected to present a material restriction on funding in the near future.

Additional funding is provided by the 99-year finance lease (of which 89 years remain) on InterContinental Boston and other uncommitted bank facilities. In the Group's opinion, the available facilities are sufficient for the Group's present liquidity requirements.

Net debt of $1,506m (2015: $529m) is analysed by currency as follows:

	2016	2015
	$m	$m
Borrowings
Sterling	1,289	1,405
US
dollar	418	253
Euros	2	4
Other	3	4
Cash
and cash equivalents
Sterling	(27)	(619)
US
dollar	(127)	(460)
Euros	(12)	(15)
Canadian
dollar	(8)	(8)
Chinese
renminbi	(7)	(4)
Other	(25)	(31)
	____	____
Net
debt	1,506	529
	____	____
Average
debt levels	1,235	1,420
	____	____

INTERCONTINENTAL HOTELS GROUP PLC

GROUP INCOME STATEMENT

For the year ended 31 December 2016

	Year ended 31 December 2016 — Before exceptional items	Exceptional items (note 4)	Total	Year ended 31 December 2015 — Before exceptional items	Exceptional items (note 4)	Total
	$m	$m	$m	$m	$m	$m
Revenue (note 3)	1,715	-	1,715	1,803	-	1,803
Cost of
sales	(580)	-	(580)	(640)	-	(640)
Administrative
expenses	(339)	(13)	(352)	(395)	(25)	(420)
Share
of losses of associates and joint ventures	(2)	-	(2)	(3)	-	(3)
Other
operating income and expenses	9	-	9	11	880	891
	_____	_____	_____	_____	_____	_____
	803	(13)	790	776	855	1,631
Depreciation
and amortisation	(96)	-	(96)	(96)	-	(96)
Impairment
charges	-	(16)	(16)	-	(36)	(36)
	_____	_____	_____	_____	_____	_____
Operating profit (note 3)	707	(29)	678	680	819	1,499
Financial
income	6	-	6	5	-	5
Financial
expenses	(93)	-	(93)	(92)	-	(92)
	_____	_____	_____	_____	_____	_____
Profit before tax	620	(29)	591	593	819	1,412
Tax
(note 5)	(186)	12	(174)	(180)	(8)	(188)
	_____	_____	_____	_____	_____	_____
Profit for the year from continuing operations	434	(17)	417	413	811	1,224
	____	_____	_____	____	_____	_____
Attributable
to:
Equity
holders of the parent	431	(17)	414	411	811	1,222
Non-controlling
interest	3	-	3	2	-	2
	____	_____	____	____	_____	____
	434	(17)	417	413	811	1,224
	____	_____	_____	____	_____	_____
Earnings per ordinary share (note 6)
Continuing
and total operations:
Basic			195.3¢			520.0¢
Diluted			193.5¢			513.4¢
Adjusted	203.3¢			174.9¢
Adjusted
diluted	201.4¢			172.7¢
	_____		_____	_____		_____

INTERCONTINENTAL HOTELS GROUP PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2016

	2016 Year ended 31 December $m	2015 Year ended 31 December $m
Profit for the year	417	1,224
Other comprehensive income
Items
that may be subsequently reclassified to profit or
loss:
Gains
on valuation of available-for-sale financial assets, net of related
tax charge of $nil (2015 $nil)	5	2
Exchange
gains/(losses) on retranslation of foreign operations, net of
related tax charge of $3m (2015 $1m)	182	(2)
Fair
value gain reclassified to profit on disposal of available-for-sale
financial asset	(7)	-
Exchange losses
reclassified to profit on hotel disposal	-	2
	_____	_____
	180	2
Items
that will not be reclassified to profit or loss:
Re-measurement
(losses)/gains on defined benefit plans, net of related tax credit
of $4m (2015 charge of $4m)	-	9
Tax
related to pension contributions	-	7
	_____	_____
	-	16
	_____	_____
Total other comprehensive income for the year	180	18
	_____	_____
Total comprehensive income for the year	597	1,242
	_____	_____
Attributable
to:
Equity
holders of the parent	594	1,240
Non-controlling
interest	3	2
	_____	_____
	597	1,242
	_____	_____

INTERCONTINENTAL HOTELS GROUP PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2016

	Year ended 31 December 2016 — Equity share capital	Other reserves*	Retained earnings	Non-controlling interest	Total equity
	$m	$m	$m	$m	$m
At
beginning of the year	169	(2,513)	2,653	10	319
Total
comprehensive income for the year	-	180	414	3	597
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	-	-	23	-	23
Tax
related to share schemes	-	-	11	-	11
Equity
dividends paid	-	-	(1,693)	(5)	(1,698)
Transaction
costs relating to shareholder returns	-	-	(1)	-	(1)
Exchange
adjustments	(28)	28	-	-	-
	_____	_____	_____	_____	_____
At end of the year	141	(2,300)	1,392	8	(759)
	_____	_____	_____	_____	_____

	Year ended 31 December 2015 — Equity share capital	Other reserves*	Retained earnings	Non-controlling interest	Total equity
	$m	$m	$m	$m	$m
At
beginning of the year	178	(2,539)	1,636	8	(717)
Total
comprehensive income for the year	-	2	1,238	2	1,242
Purchase
of own shares by employee share trusts	-	(47)	-	-	(47)
Release
of own shares by employee share trusts	-	62	(62)	-	-
Equity-settled
share-based cost	-	-	24	-	24
Tax
related to share schemes	-	-	5	-	5
Equity
dividends paid	-	-	(188)	-	(188)
Exchange
adjustments	(9)	9	-	-	-
	_____	_____	____	____	____
At end of the year	169	(2,513)	2,653	10	319
	_____	_____	_____	_____	_____

• Other reserves comprise the capital redemption reserve, shares held by employee share trusts, other reserves, unrealised gains and losses reserve and currency translation reserve.

All items above are shown net of tax.

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INTERCONTINENTAL HOTELS GROUP PLC

GROUP STATEMENT OF FINANCIAL POSITION

31 December 2016

	2016 31 December	2015 31 December
	$m	$m
ASSETS
Property,
plant and equipment	419	428
Goodwill
and other intangible assets	1,292	1,226
Investment
in associates and joint ventures	111	136
Trade
and other receivables	8	3
Other
financial assets	248	284
Non-current
tax receivable	23	37
Deferred
tax assets	48	49
	_____	_____
Total non-current assets	2,149	2,163
	_____	_____
Inventories	3	3
Trade
and other receivables	472	462
Current
tax receivable	77	4
Other
financial assets	20	-
Cash
and cash equivalents	206	1,137
	_____	_____
Total current assets	778	1,606
	_____	_____
Total assets (note 3)	2,927	3,769
	_____	_____
LIABILITIES
Loans
and other borrowings	(106)	(427)
Derivative
financial instruments	(3)	(3)
Loyalty
programme liability	(291)	(223)
Trade
and other payables	(681)	(616)
Provisions	(3)	(15)
Current
tax payable	(50)	(85)
	_____	_____
Total current liabilities	(1,134)	(1,369)
	_____	_____
Loans
and other borrowings	(1,606)	(1,239)
Retirement
benefit obligations	(96)	(129)
Loyalty
programme liability	(394)	(426)
Trade
and other payables	(200)	(152)
Provisions	(5)	-
Deferred
tax liabilities	(251)	(135)
	_____	_____
Total non-current liabilities	(2,552)	(2,081)
	_____	_____
Total liabilities	(3,686)	(3,450)
	_____	_____
Net (liabilities)/assets	(759)	319
	_____	_____
EQUITY
Equity
share capital	141	169
Capital
redemption reserve	9	11
Shares
held by employee share trusts	(11)	(18)
Other
reserves	(2,860)	(2,888)
Unrealised
gains and losses reserve	111	113
Currency
translation reserve	451	269
Retained
earnings	1,392	2,653
	_____	_____
IHG shareholders' equity	(767)	309
Non-controlling
interest	8	10
	_____	_____
Total equity	(759)	319
	_____	_____

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INTERCONTINENTAL HOTELS GROUP PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 31 December 2016

	2016 Year ended 31 December	2015 Year ended 31 December
	$m	$m
Profit for the year	417	1,224
Adjustments
reconciling profit for the year to cash flow from operations (note
8)	536	(414)
	_____	_____
Cash flow from operations	953	810
Interest
paid	(75)	(75)
Interest
received	4	2
Tax
paid on operating activities	(130)	(109)
	_____	_____
Net cash from operating activities	752	628
	_____	_____
Cash flow from investing activities
Purchase
of property, plant and equipment	(32)	(42)
Purchase
of intangible assets	(175)	(157)
Investment
in associates and joint ventures	(14)	(30)
Loan
advances to associates and joint ventures	(2)	(25)
Investment
in other financial assets	(13)	(28)
Acquisition
of business, net of cash acquired	-	(438)
Capitalised
interest paid	(5)	(4)
Disposal
of hotel assets, net of costs and cash disposed	(5)	1,277
Repayments
related to intangible assets	3	-
Loan
repayments by associates and joint ventures	-	22
Proceeds
from associates and joint ventures	2	9
Repayments
of other financial assets	25	6
Tax
paid on disposals	-	(1)
	_____	_____
Net cash from investing activities	(216)	589
	_____	_____
Cash flow from financing activities
Purchase
of own shares by employee share trusts	(10)	(47)
Dividends
paid to shareholders	(1,693)	(188)
Dividend
paid to non-controlling interest	(5)	-
Transaction
costs relating to shareholder returns	(1)	-
Issue
of long-term bonds	459	458
Other
new borrowings	-	400
Long-term
bonds repaid	(315)	-
New
borrowings repaid	-	(400)
Increase/(decrease)
in other borrowings	109	(355)
Proceeds
from foreign exchange swaps	-	22
	_____	_____
Net cash from financing activities	(1,456)	(110)
	_____	_____
Net movement in cash and cash equivalents, net of overdrafts, in
the year	(920)	1,107
Cash
and cash equivalents, net of overdrafts, at beginning of the
year	1,098	55
Exchange
rate effects	(61)	(64)
	_____	_____
Cash and cash equivalents, net of overdrafts, at end of the
year	117	1,098
	_____	_____

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I NTERCONTINENTAL HOTELS GROUP PLC

NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS

| 1. |
| --- |
| The audited consolidated financial statements of InterContinental
Hotels Group PLC (the Group or IHG) for the year ended 31 December
2016 have been prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union and as
applied in accordance with the provisions of the Companies Act
2006. Other than the change set out below, they have
been prepared on a consistent basis using the accounting policies
set out in the InterContinental Hotels Group PLC Annual Report and
Financial Statements for the year ended 31 December
2015. |
| With effect from 1 January 2016, the Group has adopted Amendments
to IAS 1 'Disclosure Initiative' which has resulted in the
presentation of the loyalty programme liability separately on the
Group statement of financial position. |

| 2. |
| --- |
| The
results of operations have been translated into US dollars at the
average rates of exchange for the year. In the case of sterling,
the translation rate is $1= £0.74 (2015 $1=£0.65). In the
case of the euro, the translation rate is $1 = €0.90 (2015 $1
= €0.90). Assets
and liabilities have been translated into US dollars at the rates
of exchange on the last day of the year. In the case of sterling,
the translation rate is $1=£0.81 (2015 $1 = £0.68). In
the case of the euro, the translation rate is $1 = €0.95
(2015 $1 = €0.92). |

3 .
Revenue
	2016	2015
	$m	$m
Americas	993	955
Europe	227	265
AMEA	237	241
Greater
China	117	207
Central	141	135
	_____	_____
Total revenue	1,715	1,803
	_____	_____
All
results relate to continuing operations.

Profit	2016 $m	2015 $m
Americas	633	597
Europe	75	78
AMEA	82	86
Greater
China	45	70
Central	(128)	(151)
	_____	_____
Reportable segments' operating profit	707	680
Exceptional
items (note 4)	(29)	819
	_____	_____
Operating profit	678	1,499
Net
finance costs	(87)	(87)
	_____	_____
Profit before tax	591	1,412
	_____	_____
All
results relate to continuing operations.

Assets	2016 $m	2015 $m
Americas	1,417	1,355
Europe	321	383
AMEA	249	260
Greater
China	147	148
Central	439	396
	_____	_____
Segment assets	2,573	2,542
Unallocated
assets:
Non-current
tax receivable	23	37
Deferred
tax assets	48	49
Current
tax receivable	77	4
Cash
and cash equivalents	206	1,137
	_____	_____
Total assets	2,927	3,769
	_____	_____

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4.	2016 $m	2015 $m
Exceptional items before tax
Administrative
expenses:
Kimpton
integration costs (a)	(13)	(10)
Venezuelan
currency losses (b)	-	(4)
Reorganisation
costs (c)	-	(6)
Corporate
development costs (d)	-	(5)
	_	_
	(13)	(25)
Other
operating income and expenses:
Gain on
disposal of hotels (e)	-	871
Gain on
disposal of investment in associate (f)	-	9
	_____	_____
	-	880
Impairment charges:
Associates
(g)	(16)	(9)
Property,
plant and equipment (h)	-	(27)
	_____	____
	(16)	(36)
	_____	____
	(29)	819
	_____	_____
Tax
Tax on
exceptional items (i)	12	(8)
	_____	_____

| All
items above relate to continuing operations. These items are
treated as exceptional by reason of their size or
nature. | |
| --- | --- |
| a) | Relates
to the cost of integrating Kimpton Hotel and Restaurant Group, LLC
('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) | Arose from changes to the Venezuelan exchange rate
mechanisms. |
| c) | Related
to the implementation of more efficient processes and procedures in
the Group's Global Technology infrastructure to help mitigate
future cost increases. |
| d) | Primarily
legal costs related to development opportunities. |
| e) | Arose
from the sale of InterContinental Paris - Le Grand on 20 May 2015
and InterContinental Hong Kong on 30 September 2015. |
| f) | Related to the disposal of an associate investment in the AMEA
region. |
| g) | In
2016, relates to an associate investment in The Americas region
and, in 2015, related to an associate investment in the AMEA
region, following re-assessments of their recoverable
amounts. |
| h) | Related
to two hotels in North America following a re-assessment of their
recoverable amounts. |
| i) | In
2016, comprises a $6m deferred tax credit in respect of the
associate investment impairment, a $5m deferred tax credit
representing future tax relief on Kimpton integration costs and $1m
credit in respect of other items. In 2015, comprised a charge
of $56m relating to disposal of hotels, a credit of $21m in respect
of the 2014 disposal of an 80.1% interest in InterContinental New
York Barclay reflecting the judgment that state tax law changes
would now apply to the deferred gain, and credits of $27m for
current and deferred tax relief on other operating exceptional
items of current and prior periods. |

| 5. |
| --- |
| The tax
charge on profit from continuing operations, excluding the impact
of exceptional items (note 4), has been calculated using a tax rate
of 30% (2015 30%) analysed as follows: |

Year ended 31 December	2016	2016	2016	2015	2015	2015
	Profit $m	Tax $m	Tax rate	Profit $m	Tax $m	Tax rate
Before
exceptional items	620	(186)	30%	593	(180)	30%
Exceptional
items	(29)	12		819	(8)
	____	____		____	____
	591	(174)		1,412	(188)
	_____	_____		_____	_____
Analysed
as:
UK
tax		20			(2)
Foreign
tax		(194)			(186)
		____			____
		(174)			(188)
		_____			_____

| 6. |
| --- |
| 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 awards
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. |

Continuing and total operations	2016	2015
Basic earnings per ordinary share
Profit
available for equity holders ($m)	414	1,222
Basic
weighted average number of ordinary shares (millions)	212	235
Basic
earnings per ordinary share (cents)	195.3	520.0
	_____	_____
Diluted earnings per ordinary share
Profit
available for equity holders ($m)	414	1,222
Diluted
weighted average number of ordinary shares (millions)	214	238
Diluted
earnings per ordinary share (cents)	193.5	513.4
	_____	_____
Adjusted earnings per ordinary share
Profit
available for equity holders ($m)	414	1,222
Adjusting
items (note 4):
Exceptional
items before tax ($m)	29	(819)
Tax on
exceptional items ($m)	(12)	8
	____	____
Adjusted
earnings ($m)	431	411
Basic
weighted average number of ordinary shares (millions)	212	235
Adjusted
earnings per ordinary share (cents)	203.3	174.9
	_____	_____
Adjusted diluted earnings per ordinary share
Diluted
weighted average number of ordinary shares (millions)	214	238
Adjusted
diluted earnings per ordinary share (cents)	201.4	172.7
	_____	_____

| The
diluted weighted average number of ordinary shares is calculated
as: | 2016 millions | 2015 millions |
| --- | --- | --- |
| Basic
weighted average number of ordinary shares | 212 | 235 |
| Dilutive
potential ordinary shares | 2 | 3 |
| | _ | _ |
| | 214 | 238 |
| | _ | ___ |

7.	2016 cents per share	2015 cents per share	2016 $m	2015 $m
Paid
during the year:
Final
(declared for previous year)	57.5	52.0	137	125
Interim	30.0	27.5	56	63
Special	632.9	-	1,500	-
	_____	_____	_____	_____
	720.4	79.5	1,693	188
	_____	_____	_____	_____
Proposed
for approval at the Annual GeneralMeeting (not recognised as a
liability at31 December):
Final	64.0	57.5	126	135
	_____	_____	_____	_____
On 23
February 2016, the Group announced a $1.5bn return of funds to
shareholders by way of a special dividend and share
consolidation. On 6 May 2016, shareholders approved the share
consolidation on the basis of 5 new ordinary shares of 18 318 / 329 p per share for
every 6 existing ordinary shares of 15 265 / 329 p, which became
effective on 9 May 2016 and resulted in the reduction of 42m shares
in issue. The special dividend was paid to shareholders on 23
May 2016. 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. In
February 2017, the Board proposed a $400m return of funds to
shareholders by way of a special dividend with a share
consolidation. The
total number of shares held as treasury shares at 31 December 2016
was 8.9m.

8.	2016	2015
	$m	$m
Profit
for the year	417	1,224
Adjustments
for:
Net
financial expenses	87	87
Income
tax charge	174	188
Depreciation and
amortisation	96	96
Impairment	16	36
Other
exceptional items	13	(855)
Equity-settled
share-based cost	17	19
Dividends from
associates and joint ventures	5	5
Net
change in loyalty programme liability and System Fund
surplus	65	42
System
Fund depreciation and amortisation	31	21
Other
changes in net working capital	78	(10)
Utilisation of
provisions, net of insurance recovery	(4)	-
Retirement benefit
contributions, net of costs	(32)	(4)
Cash
flows relating to exceptional items	(19)	(45)
Other
items	9	6
	_____	______
Total
adjustments	536	(414)
	_____	_____
Cash flow from operations	953	810
	_____	_____

9.	2016	2015
	$m	$m
Cash
and cash equivalents	206	1,137
Loans
and other borrowings - current	(106)	(427)
Loans
and other borrowings - non-current	(1,606)	(1,239)
	_____	_____
Net debt	(1,506)	(529)
	_____	_____
Finance
lease obligation included above	(227)	(224)
	_____	_____

10.	2016	2015
	$m	$m
Net
(decrease)/increase in cash and cash equivalents, net of
overdrafts	(920)	1,107
Add
back cash flows in respect of other components of net
debt:
Issue
of long-term bonds	(459)	(458)
Other
new borrowings	-	(400)
Long-term bonds
repaid	315	-
New
borrowings repaid	-	400
(Increase)/decrease
in other borrowings	(109)	355
	_____	_____
(Increase)/decrease
in net debt arising from cash flows	(1,173)	1,004
Non-cash
movements:
Finance
lease obligations	(4)	(6)
Increase
in accrued interest	(6)	(7)
Exchange
and other adjustments	206	13
	_____	_____
(Increase)/decrease in net debt	(977)	1,004
Net
debt at beginning of the year	(529)	(1,533)
	_____	_____
Net debt at end of the year	(1,506)	(529)
	_____	_____

| 11. |
| --- |
| At 31
December 2016, the amount contracted for but not provided for in
the financial statements for expenditure on property, plant and
equipment and intangible assets was $97m (2015 $76m). The
Group has also committed to invest in a number of its associates,
with an estimated outstanding commitment of $36m at 31 December
2016 (2015 $45m) based on current forecasts. In
limited cases, the Group may provide performance guarantees to
third-party hotel owners to secure management contracts. At
31 December 2016, the amount provided in the financial statements
was $5m (2015 $1m) and the maximum unprovided exposure under
such guarantees was $14m (2015 $13m). The
Group may guarantee loans made to facilitate third-party ownership
of hotels in which the Group has an equity interest. At 31
December 2016, there were guarantees of $33m in place (2015
$30m). In connection with an associate investment, the
Group has provided an indemnity to its joint venture partner for
100% of the obligations related to a $43m supplemental bank loan
made to the associate on 31 December 2015. During
the first half of 2016, the Group was notified of a security
incident at a number of Kimpton hotels that resulted in
unauthorised access to guest payment card data (the "Kimpton
Security Incident"). Based on the estimated number of cards
affected and opinion of external advisers, an amount of $5m has
been provided in the financial statements to cover the estimated
cost of reimbursing the impacted payment card networks for
counterfeit fraud losses and related expenses. This estimate
involves significant judgement based on currently available
information and is subject to change as actual claims are made and
new information becomes available. In
December 2016, the Group was notified of a security incident at a
number of hotels in The Americas region (the "Americas Security
Incident"). The Group issued a Substitute Notice on 3
February 2017 notifying guests that malware was installed on
servers that processed payment cards used at restaurants and bars
of 12 IHG managed properties. An investigation of other properties
in The Americas region is ongoing. It is not practicable to make a
reliable estimate of the possible financial effect of any claims
concerning the Americas Security Incident at this
time. The
Group may be exposed to investigations regarding compliance with
applicable State and Federal data security standards, although no
claims have been received to date. In addition, the Group is
exposed to legal action from individuals and organisations impacted
by the security incidents. A class action has been filed in
the courts in relation to the Kimpton Security Incident, although
alleged damages have not been specified. It is not practicable to
make a reliable estimate of the possible financial effect of any
claims on the Group at this time. In
respect of the $5m provided in the financial statements, 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. 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. |

| 12. |
| --- |
| The
preliminary statement of results was approved by the Board on 20
February 2017. The preliminary statement of results 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 2015 has been extracted from the IHG
Annual Report and Financial Statements for that year as filed with
the Registrar of Companies. |
| Auditor's review |
| The
auditors, Ernst & Young LLP, have given an unqualified report
under Chapter 3 of Part 16 of the Companies Act 2006 in respect of
the full Group financial statements. |

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:	21 February
2017

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