7th May 2008 07:01
InterContinental Hotels Group PLC07 May 2008 7 May 2008 InterContinental Hotels Group PLC First Quarter Results to 31 March 2008 Headlines• 5,267 net rooms added in the quarter. System size up 6% year on year, taking the total to 590,361 rooms (3,983 hotels). • Global constant currency RevPAR growth of 3.5%; impacted by Easter timing. • Total gross revenue* from all hotels in IHG's system of £2.2bn, up 10% at constant currency. • Continuing revenue up 15% from £196m to £226m, up 14% at constant currency. Excluding £7m liquidated damages relating to one Americas development project leaving the pipeline, continuing revenues up 10% at constant currency. • Continuing operating profit up 38% from £45m to £62m, up 40% at constant currency. Excluding £7m liquidated damages, continuing operating profit up 24% at constant currency. • Adjusted continuing earnings per share ("EPS") up 47% to 11.6p. Adjusted total EPS of 12.0p. Basic total EPS of 10.6p. • 19,678 rooms signed, taking the pipeline to 231,553 rooms (1,720 hotels), equal to 39% of IHG's existing system size. *See appendix 5 for definition. All figures and movements unless otherwisenoted are at actual exchange rates and before exceptional items. See appendix 3for analysis of financial headlines. Constant exchange rate comparatives shownin appendix 4. Commenting on the results and trading, Andrew Cosslett, Chief Executive ofInterContinental Hotels Group PLC said: "IHG delivered a good performance in thefirst quarter of 2008. Growth in revenue per available room (RevPAR) of 3.5%was solid given the adverse impact of the timing of Easter. We increased thenumber of rooms in our system by over 5,200, more than twice the increase in thefirst quarter of 2007. We signed over 150 hotels into our development pipelinewhich now stands at over 1,700 hotels, giving good visibility on futureopenings. "We continue to focus on strengthening our brands. The response from our ownercommunity to the Holiday Inn relaunch has been very encouraging and we now have21 hotels operating with some or all of the elements of the new brand standardsand identity ahead of our full roll out which begins in the summer. "Even in a less certain economic environment our broad market coverage, recordpipeline, strong brands and resilient fee based business model position us wellfor continued growth." Rooms - strong signings and openings • In the quarter 19,678 rooms were signed. The growth of the InterContinental brand continued with five hotels signed, including three in the Americas, taking the total pipeline of hotels to 62. IHG signed its first Hotel Indigo outside the US in London which is due to open in Paddington in the third quarter, and its second Staybridge Suites hotel in the Middle East. This takes the pipeline of Staybridge Suites hotels outside the Americas region to 10. The first Staybridge Suites hotel in the UK will open in June in Liverpool. • 11,113 rooms were added to the system and 5,846 rooms were removed, in line with our strategy of driving quality growth, giving net room additions of 5,267. • The pipeline now stands at 1,720 hotels (231,553 rooms). The pipeline of Holiday Inn brand family hotels increased by 23 and now stands at 1,100 hotels (129,232 rooms). Americas: solid performanceRevenue performance RevPAR increased 2.3%, driven by rate, with RevPAR growth of 4.6% in the firsttwo months of the year and a 1.2% decline in March due to the timing of Easter. Continuing revenue grew 14% from $201m to $230m, driven by 11% growth inrevenues from owned and leased hotels and 16% growth in managed and franchisedrevenues. Excluding the impact of $13m liquidated damages, continuing revenuesgrew 8%. Operating profit performance Operating profit from continuing operations increased 20% to $112m. Excludingthe impact of $13m liquidated damages, continuing operating profit grew 6%.Continuing owned and leased hotel profit increased by $3m to $7m driven byongoing improvement in trading at the InterContinental Boston, which opened inNovember 2006 and 10% RevPAR growth at the InterContinental New York. Managedhotel profit increased $12m to $23m including the liquidated damages, andfranchised hotel profit increased $4m to $97m. EMEA: strong performance in the Middle EastRevenue performance RevPAR increased 5.9%, driven by rate, with RevPAR growth of 9.1% in the firsttwo months and 0.8% in March. The Middle East continued to perform strongly,growing RevPAR by 20.2%. Continental Europe grew RevPAR by 5.7%, including a12.3% increase in France. In the UK, Holiday Inn and Holiday Inn Expressoutperformed their market segment recording RevPAR growth of 1.5%. Continuingrevenues increased 18% driven by 29% growth in managed and franchised revenues. Operating profit performance Operating profit from continuing operations increased £8m to £15m. Thecontribution from continuing owned and leased hotels increased by £4m to £2m,driven by RevPAR growth of 11.9% at the InterContinental Paris Le Grand andcontinued improvement in trading at the InterContinental London Park Lanefollowing the completion of its refurbishment in June 2007. Managed hotel profitincreased by 38% from £8m to £11m reflecting the increase in number of hotelsunder management and strong growth in the Middle East. Franchised hotel profitincreased from £6m to £7m reflecting 3.8% RevPAR growth and 9.1% net roomsgrowth. Asia Pacific: further growth across all brandsRevenue performance RevPAR increased 5.1%, driven by rate, with RevPAR growth of 6.1% in the firsttwo months and 3.4% in March. InterContinental and Holiday Inn brand performancewere strongest with 7.3% and 9.4% RevPAR growth respectively. Greater ChinaRevPAR increased 3.2%, driven by both occupancy and rate growth. Continuingrevenues increased 16% to $72m. Operating profit performance Operating profit from continuing operations increased 31% to $17m. Owned andleased hotel operating profit increased $2m to $10m driven by RevPAR growth of9.2% at the InterContinental Hong Kong after completion of its rollingrefurbishment at the end of 2007. Managed hotel profit increased $5m to $14mdriven by the contribution from the increasing number of hotels under IHGmanagement in the region. Overheads, Tax and Exceptional items In the first quarter aggregated regional overheads increased £1m to £17m and central costs increased £1m to £18m. Based on the position at the end of the quarter the tax charge on profit fromcontinuing and discontinued operations, excluding the impact of exceptionalitems, has been calculated using an estimated effective annual tax rate of 29%(Q1 2007: 28%). As previously disclosed, the effective tax rate in 2008 isexpected to be in the mid to high 20s and then will trend upwards over time. As previously announced IHG will make a non-recurring revenue investment of £30mto accelerate implementation of the global relaunch of the Holiday Inn brands,which will be treated as an exceptional item. £3m has been charged in theperiod. Disposals and returns of funds IHG's net debt at the period end was £845m, including the $200m (£101m) finance lease on the InterContinental Boston. 1.6m shares were repurchased under IHG's buyback programme during the firstquarter, at a cost of £13m, leaving £87m of the current buyback programme to becompleted. After the period end, IHG sold its 17% interest in the Crowne Plaza AmsterdamCity Centre for €18m (£14m) including a • 6m (£5m) agreed settlement for theprevious management contract and €2m (£1m) repayment of existing loans. IHGwill continue to manage the hotel under a new 40 year management contractincluding renewals. Appendix 1: Asset disposal programme Number of hotels Proceeds Net book valueDisposed since April 2003 181 £3.0bn £2.9bnRemaining hotels 18 £0.9bn For a full list please visit www.ihg.com/Investors Appendix 2: Rooms Americas EMEA Asia Pacific TotalOpenings 7,456 2,434 1,223 11,113Removals (4,536) (636) (674) (5,846)Net room additions 2,920 1,798 549 5,267Signings 15,060 1,659 2,959 19,678 Appendix 3: Financial headlinesThree months to 31 Mar £m Total Americas EMEA Asia Pacific Central 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007Franchised operating profit 57 55 49 48 7 6 1 1Managed operating profit 29 19 11 6 11 8 7 5Continuing owned and leased 11 4 4 2 2 (2) 5 4operating profitRegional overheads (17) (16) (8) (8) (5) (5) (4) (3)Continuing operating profit pre 80 62 56 48 15 7 9 7central overheadsCentral overheads (18) (17) - - - - - - (18) (17)Continuing operating profit 62 45 56 48 15 7 9 7 (18) (17)Discontinued owned and leased 2 1 2 1 - - - -operating profitTotal operating profit 64 46 58 49 15 7 9 7 (18) (17) Appendix 4: Constant currency continuing operating profits before exceptionalitems Americas EMEA Asia Pacific Total*** Actual Constant Actual Constant Actual Constant Actual Constant currency* currency** currency* currency** currency* currency* currency** currency**Growth 17% 19% 114% 114% 29% 29% 38% 40% Exchange rates USD:GBP EUR:GBPQ1 2008 1.98 1.32Q1 2007 1.95 1.49 * Sterling actual currency. ** Translated at constant 2007 exchange rates. *** After Central Overheads. Appendix 5: Definition of total gross revenue Total gross revenue is defined as total room revenue from franchised hotels andtotal hotel revenue from managed, owned and leased hotels. It is not revenueattributable to IHG, as it is derived mainly from hotels owned by third parties.The metric is highlighted as an indicator of the scale and reach of IHG'sbrands. For further information, please contact:Investor Relations (Heather Wood; Catherine Dolton): +44 (0) 1753 410 176Media Affairs (Leslie McGibbon; Claire Williams): +44 (0) 1753 410 425 +44 (0) 7808 094 471 High resolution images to accompany this announcement are available for themedia to download free of charge from www.vismedia.co.uk . This includes profileshots of the key executives. UK Q&A Conference Call: A conference call with Andrew Cosslett (Chief Executive) and Richard Solomons(Finance Director) will commence at 9.30 am (London time) on 7 May. There willbe an opportunity to ask questions. International dial-in: +44 (0)1452 556 518UK Free Call: 0800 694 8084Conference ID: 43988921 A recording of the conference call will also be available for 7 days. To accessthis please dial the relevant number below and use the access number 43988921# International dial-in: +44 (0)1452 55 00 00UK Free Call: 0845 245 5205 US Q&A conference call: There will also be a conference call, primarily for US investors and analysts,at 10.00am (Eastern Standard Time) on 7 May with Andrew Cosslett (ChiefExecutive) and Richard Solomons (Finance Director). There will be anopportunity to ask questions. International dial-in: +44 (0)1452 556 518US Toll Free: 1866 966 4782Conference ID: 43989314 A recording of the conference call will also be available for 7 days. To accessthis please dial the relevant number below and use the access number 43989314# International dial-in: +44 (0)1452 55 00 00US Toll Free: 1866 247 4222 Website: The full release and supplementary data will be available on our website from7.00 am (London time) on Wednesday 7 May The web address is www.ihg.com/Q1 Notes to Editors: InterContinental Hotels Group PLC (IHG) of the United Kingdom (LON:IHG, NYSE:IHG(ADRs)) is one of the world's largest hotel groups by number of rooms. IHGowns, manages, leases or franchises, through various subsidiaries, over 3,980hotels and more than 590,000 guest rooms in nearly 100 countries and territoriesaround the world. IHG owns a portfolio of well recognised and respected hotelbrands including InterContinental(R) Hotels & Resorts, Crowne Plaza(R) Hotels &Resorts, Holiday Inn(R) Hotels and Resorts, Holiday Inn Express(R), StaybridgeSuites(R), Candlewood Suites(R) and Hotel Indigo(R), and also manages theworld's largest hotel loyalty programme, Priority Club(R) Rewards with over 37million members worldwide. The company pioneered the travel industry's first collaborative response toenvironmental issues as founder of the International Hotels and EnvironmentInitiative (IHEI). The IHEI formed the foundations of the Tourism Partnershiplaunched by the International Business Leaders Forum in 2004, of which IHG isstill a member today. The environment and local communities remain at the heartof IHG's global corporate responsibility focus. IHG offers information and online reservations for all its hotel brands atwww.ihg.com and information for the Priority Club Rewards programme atwww.priorityclub.com. For the latest news from IHG, visit our online PressOffice at www.ihg.com/media Cautionary note regarding forward-looking statements This announcement contains certain forward-looking statements as defined underUS law (Section 21E of the Securities Exchange Act of 1934). Theseforward-looking statements can be identified by the fact that they do not relateto historical or current facts. Forward-looking statements often use words suchas 'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe' or other words of similar meaning. By their nature, forward-lookingstatements are inherently predictive, speculative and involve risk anduncertainty. There are a number of factors that could cause actual results anddevelopments to differ materially from those expressed in or implied by, suchforward-looking statements. Factors that could affect the business and thefinancial results are described in 'Risk Factors' in the InterContinental HotelsGroup PLC Annual report on Form 20-F filed with the United States Securities andExchange Commission. INTERCONTINENTAL HOTELS GROUP PLCGROUP INCOME STATEMENTFor the three months ended 31 March 2008 3 months ended 31 March 2008 3 months ended 31 March 2007 Before Exceptional Before Exceptional exceptional items exceptional items items (note 8) Total items (note 8) Total £m £m £m £m £m £mContinuing operations Revenue (note 3) 226 - 226 196 - 196Cost of sales (104) - (104) (98) - (98)Administrative expenses (47) (4) (51) (40) - (40)Other operating income and expenses 1 - 1 1 16 17 ____ ____ ____ ____ ____ ____ 76 (4) 72 59 16 75Depreciation and amortisation (14) (1) (15) (14) - (14) _____ _____ ____ _____ _____ ____ Operating profit (note 4) 62 (5) 57 45 16 61Financial income 2 - 2 3 - 3Financial expenses (17) - (17) (8) - (8) ____ ____ ____ ____ ____ ____ Profit before tax 47 (5) 42 40 16 56 Tax (note 9) (13) 1 (12) (12) 2 (10) ____ ____ ____ ____ ____ ____ Profit for the period from continuingoperations 34 (4) 30 28 18 46 Profit for the period fromdiscontinued operations (note 10) 1 - 1 1 - 1 ____ ____ ____ ____ ____ ____Profit for the period attributable tothe equity holders of the parent 35 (4) 31 29 18 47 ==== ==== ==== ==== ==== ====Earnings per ordinary share (note 11):Continuing operations: Basic 10.3p 13.0p Diluted 10.2p 12.6p Adjusted 11.6p 7.9p Adjusted diluted 11.5p 7.7pTotal operations: Basic 10.6p 13.3p Diluted 10.5p 12.9p Adjusted 12.0p 8.2p Adjusted diluted 11.9p 7.9p ==== ==== ==== ==== INTERCONTINENTAL HOTELS GROUP PLCGROUP STATEMENT OF RECOGNISED INCOME AND EXPENSEFor the three months ended 31 March 2008 2008 2007 3 months 3 months ended 31 March ended 31 March £m £m Income and expense recognised directly in equityGains/(losses) on valuation of available-for-sale assets 3 (4)Actuarial (losses)/gains on defined benefit pension plans (4) 11Exchange differences on retranslation of foreign operations 10 1 ____ ____ 9 8 ____ ____Transfers to the income statementOn disposal of available-for-sale assets - (4) ____ ____ - (4) ____ ____TaxTax on items above taken directly to or transferred from equity 2 -Tax related to share schemes recognised directly in equity (2) 3 ____ ____ - 3 ____ ____ Net income recognised directly in equity 9 7 Profit for the period 31 47 ____ ____Total recognised income and expense for the period attributableto the equity holders of the parent 40 54 ==== ==== INTERCONTINENTAL HOTELS GROUP PLCGROUP CASH FLOW STATEMENTFor the three months ended 31 March 2008 2008 2007 3 months 3 months ended 31 March ended 31 March £m £m Profit for the period 31 47Adjustments for: Net financial expenses 15 5 Income tax charge 13 10 Exceptional operating items before depreciation 4 (16) Depreciation and amortisation 15 15 Equity settled share-based cost, net of payments 1 (1) _____ _____Operating cash flow before movements in working capital 79 60Increase in net working capital (27) (25)Retirement benefit contributions, net of cost (11) (10)Cash flows relating to exceptional operating items (3) - _____ _____Cash flow from operations 38 25Interest paid (16) (6)Interest received 2 4Tax paid (3) (2) _____ _____Net cash from operating activities 21 21 _____ _____Cash flow from investing activitiesPurchases of property, plant and equipment (9) (18)Purchase of intangible assets (5) (3)Purchases of associates and other financial assets - (9)Disposal of assets, net of costs - (5)Proceeds from associates and other financial assets 4 22 _____ _____Net cash from investing activities (10) (13) _____ _____Cash flow from financing activitiesProceeds from the issue of share capital 1 3Purchase of own shares (13) (25)Purchase of own shares by employee share trusts - (43)Proceeds on release of own shares by employee share trusts - 1Increase in borrowings 38 55 _____ _____Net cash from financing activities 26 (9) _____ _____ Net movement in cash and cash equivalents in the period 37 (1)Cash and cash equivalents at beginning of the period 52 179Exchange rate effects - - _____ _____Cash and cash equivalents at end of the period 89 178 ===== ===== INTERCONTINENTAL HOTELS GROUP PLCGROUP BALANCE SHEET31 March 2008 2008 2007 2007 31 March 31 March 31 December £m £m £mASSETSProperty, plant and equipment 983 950 962Goodwill 113 110 110Intangible assets 173 161 167Investment in associates 34 32 33Retirement benefit assets 43 - 32Other financial assets 86 100 93 _____ _____ _____Total non-current assets 1,432 1,353 1,397 _____ _____ _____Inventories 3 3 3Trade and other receivables 253 248 235Current tax receivable 48 12 54Cash and cash equivalents 89 178 52Other financial assets 18 7 9 _____ _____ _____Total current assets 411 448 353 Non-current assets classified as held for sale 58 92 57 ______ ______ ______Total assets 1,901 1,893 1,807 ===== ===== =====LIABILITIESLoans and other borrowings (8) (5) (8)Trade and other payables (381) (381) (390)Current tax payable (219) (224) (212) _____ _____ _____Total current liabilities (608) (610) (610) _____ _____ _____Loans and other borrowings (926) (365) (869)Retirement benefit obligations (60) (50) (55)Trade and other payables (141) (111) (139)Deferred tax payable (85) (77) (82) _____ _____ _____Total non-current liabilities (1,212) (603) (1,145) Liabilities classified as held for sale (3) (5) (3) _____ _____ _____Total liabilities (1,823) (1,218) (1,758) ===== ===== =====Net assets (note 14) 78 675 49 ===== ===== =====EQUITYEquity share capital 82 69 81Capital redemption reserve 5 4 5Shares held by employee share trusts (15) (40) (41)Other reserves (1,528) (1,528) (1,528)Unrealised gains and losses reserve 22 19 19Currency translation reserve 17 (3) 6Retained earnings 1,492 2,146 1,504 ______ ______ ______IHG shareholders' equity (note 15) 75 667 46Minority equity interest 3 8 3 ______ ______ ______Total equity 78 675 49 ===== ===== ===== INTERCONTINENTAL HOTELS GROUP PLC NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. Basis of preparation These interim financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' using, on a consistent basis, the accounting policies set out in the 2007 InterContinental Hotels Group PLC (the Group or IHG) Annual Report and Financial Statements. These interim financial statements are unaudited and do not constitute statutory accounts of the Group within the meaning of Section 240 of the Companies Act 1985. The auditors have carried out a review of the financial information in accordance with the guidance contained in 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 2007 has been extracted from the Group's published financial statements for that year which contain an unqualified audit report and which have been filed with the Registrar of Companies. 2. Exchange rates The results of overseas operations have been translated into sterling at the weighted average rates of exchange for the period. In the case of the US dollar, the translation rate for the three months ended 31 March is £1= $1.98 (2007 3 months, £1 = $1.95). In the case of the euro, the translation rate for the three months ended 31 March is £1 = €1.32 (2007 3 months, £1 = €1.49). Foreign currency denominated assets and liabilities have been translated into sterling at the rates of exchange on the last day of the period. In the case of the US dollar, the translation rate is £1=$1.99 (2007 31 March £1 = $1.96; 31 December £1 = $2.01). In the case of the euro, the translation rate is £1 = €1.26 (2007 31 March £1 = €1.47; 31 December £1= €1.36). Revenue 3. 2008 2007 3 months 3 months ended 31 March ended 31 March £m £m Continuing operations Americas (note 5) 116 102 EMEA (note 6) 58 49 Asia Pacific (note 7) 36 32 Central 16 13 ____ ____ 226 196 Discontinued operations (note 10) 5 10 ____ ____ 231 206 ==== ==== 4. Operating profit 2008 2007 3 months 3 months ended 31 March ended 31 March £m £m Continuing operations Americas (note 5) 56 48 EMEA (note 6) 15 7 Asia Pacific (note 7) 9 7 Central (18) (17) ____ ____ 62 45 Exceptional operating items (note 8) (5) 16 ____ ___ 57 61 Discontinued operations (note 10) 2 1 ____ ___ 59 62 ==== === 5. Americas 2008 2007 3 months 3 months ended 31 March ended 31 March $m $m Revenue Owned & leased 63 57 Managed 53 38 Franchised 114 106 ____ ____ Continuing operations 230 201 Discontinued operations - Owned & leased 11 17 ____ ____ Total $m 241 218 ==== ==== Sterling equivalent £m Continuing operations 116 102 Discontinued operations 5 9 ____ ____ 121 111 ==== ==== Operating profit Owned & leased 7 4 Managed 23 11 Franchised 97 93 Regional overheads (15) (15) ____ ____ Continuing operations 112 93 Discontinued operations - Owned & leased 3 2 ____ ____ Total $m 115 95 ==== ==== Sterling equivalent £m Continuing operations 56 48 Discontinued operations 2 1 ____ ____ 58 49 ==== ==== 6. EMEA 2008 2007 3 months 3 months ended 31 March ended 31 March £m £m Revenue Owned & leased 27 25 Managed 20 16 Franchised 11 8 ____ ____ Continuing operations 58 49 Discontinued operations - Owned & leased - 1 ____ ____ Total 58 50 ==== ==== Operating profit Owned & leased 2 (2) Managed 11 8 Franchised 7 6 Regional overheads (5) (5) ____ ____ Total - continuing operations 15 7 ==== ==== 7. Asia Pacific 2008 2007 3 months 3 months ended 31 March ended 31 March $m $m Revenue Owned & leased 40 36 Managed 28 22 Franchised 4 4 ____ ____ Total $m 72 62 ==== ==== Sterling equivalent £m 36 32 ==== ==== Operating profit Owned & leased 10 8 Managed 14 9 Franchised 2 2 Regional overheads (9) (6) ____ ____ Total $m 17 13 ==== ==== Sterling equivalent £m 9 7 ==== ==== All results relate to continuing operations. 8. Exceptional items 2008 2007 3 months 3 months ended 31 March ended 31 March £m £m Exceptional operating items Gain on sale of associate investment - 11 Gain on sale of other financial assets - 5 Office reorganisations (a) (2) - Holiday Inn brand relaunch (b) (3) - ____ ____ (5) 16 ==== ==== Tax Tax on exceptional operating items 1 2 ==== ==== All exceptional items relate to continuing operations. a) Relates to further costs incurred on the relocation of the Group's head office and the closure of its Aylesbury facility. b) Relates to costs incurred in support of the worldwide relaunch of the Holiday Inn brand family that was announced on 24 October 2007. 9. Tax The tax charge on the combined profit from continuing and discontinued operations, excluding the impact of exceptional items (note 8), has been calculated using an estimated effective annual tax rate of 29% (2007 28%), analysed as follows. 3 months ended 31 March 2008 3 months ended 31 March 2007 Profit Tax Tax Profit Tax Tax £m £m rate £m £m rate Before exceptional items: Continuing operations 47 (13) 40 (12) Discontinued operations 2 (1) 1 - ____ ____ ____ ____ 49 (14) 29% 41 (12) 28% Exceptional items: Continuing operations (5) 1 16 2 ____ ____ ____ ____ 44 (13) 57 (10) ==== ==== ==== ==== Analysed as: UK tax (2) (4) Foreign tax (11) (6) ____ ____ (13) (10) ==== ==== By also excluding the effect of prior year items, the equivalent effective tax rate would be approximately 35% (2007 34%). Prior year items have been treated as relating wholly to continuing operations. 10. Discontinued operations Discontinued operations are those relating to hotels sold or those classified as held for sale as part of the asset disposal programme that commenced in 2003. These disposals underpin IHG's strategy of growing its managed and franchised business whilst reducing asset ownership. The results of discontinued operations which have been included in the consolidated income statement, are as follows: 2008 2007 3 months 3 months ended 31 March ended 31 March £m £m Revenue 5 10 Cost of sales (3) (8) ____ ____ 2 2 Depreciation and amortisation - (1) ____ ____ Operating profit 2 1 Tax (1) - ____ ____ Profit for the period from discontinued operations 1 1 ==== ==== 2008 2007 3 months 3 months ended 31 March ended 31 March pence per share pence per share Earnings per share from discontinued operations Basic 0.3 0.3 Diluted 0.3 0.3 ==== ==== The effect of discontinued operations on segment results is disclosed in notes 5 and 6. 11. Earnings per ordinary share Basic earnings per ordinary share is calculated by dividing the profit for the period available for IHG equity holders by the weighted average number of ordinary shares, excluding investment in own shares, in issue during the period. Diluted earnings per ordinary share is calculated by adjusting basic earnings per ordinary share to reflect the notional exercise of the weighted average number of dilutive ordinary share options outstanding during the period. Adjusted earnings per ordinary share is disclosed in order to show performance undistorted by exceptional items, to give a more meaningful comparison of the Group's performance. 2008 2007 3 months ended 3 months ended 31 March 31 March Continuing Continuing operations Total operations Total Basic earnings per share Profit available for equity holders (£m) 30 31 46 47 Basic weighted average number of ordinary shares (millions) 292 292 354 354 Basic earnings per share (pence) 10.3 10.6 13.0 13.3 ==== ===== ==== ===== Diluted earnings per share Profit available for equity holders (£m) 30 31 46 47 Diluted weighted average number of ordinary shares (millions) (see below) 295 295 365 365 Diluted earnings per share (pence) 10.2 10.5 12.6 12.9 ==== ===== === === Adjusted earnings per share Profit available for equity holders (£m) 30 31 46 47 Less adjusting items (note 8): Exceptional operating items (£m) 5 5 (16) (16) Tax (£m) (1) (1) (2) (2) ____ ____ ____ ____ Adjusted earnings (£m) 34 35 28 29 Basic weighted average number of ordinary shares (millions) 292 292 354 354 Adjusted earnings per share (pence) 11.6 12.0 7.9 8.2 ==== ==== ==== ==== Diluted weighted average number of ordinary shares (millions) 295 295 365 365 Adjusted diluted earnings per share (pence) 11.5 11.9 7.7 7.9 ==== ==== ==== ==== 2008 2007 3 months 3 months ended 31 March ended 31 March millions millions Diluted weighted average number of ordinary shares is calculated as: Basic weighted average number of ordinary shares 292 354 Dilutive potential ordinary shares - employee share options 3 11 ____ ____ 295 365 ==== ==== 12. Net debt 2008 2007 2007 31 March 31 March 31 December £m £m £m Cash and cash equivalents 89 178 52 Loans and other borrowings - current (8) (5) (8) Loans and other borrowings - non-current (926) (365) (869) ____ ____ ____ Net debt (845) (192) (825) ==== ==== ==== Finance lease liability included above (101) (99) (100) ==== ==== ==== 13. Movement in net debt 2008 2007 2007 3 months ended 3 months ended 12 months ended 31 March 31 March 31 December £m £m £m Net increase/(decrease) in cash and cash 37 (1) (131) equivalents Add back cash flows in respect of other components of net debt: Increase in borrowings (38) (55) (553) ____ ____ ____ Increase in net debt arising from cash flows (1) (56) (684) Non-cash movements: Finance lease liability (2) (2) (9) Exchange and other adjustments (17) - 2 ____ ____ ____ Increase in net debt (20) (58) (691) Net debt at beginning of the period (825) (134) (134) ____ ____ ____ Net debt at end of the period (845) (192) (825) ==== ==== ==== 14. Net assets 2008 2007 2007 31 March 31 March 31 December £m £m £m Americas 402 427 388 EMEA 420 375 376 Asia Pacific 274 283 267 Central 83 71 83 ____ ____ ____ 1,179 1,156 1,114 Net debt (845) (192) (825) Unallocated assets and liabilities (256) (289) (240) ____ ____ ____ 78 675 49 ==== ==== ==== 15. Statement of changes in IHG shareholders' equity 2008 2007 2007 3 months ended 3 months ended 12 months ended 31 March 31 March 31 December £m £m £m At beginning of period 46 678 678 Total recognised income and expense for the 40 54 240 period Equity dividends paid - - (773) Issue of ordinary shares 1 3 16 Purchase of own shares (13) (25) (81) Movement in shares in employee share trusts (6) (47) (64) Equity settled share-based cost 7 4 30 ____ ____ ____ At end of the period 75 667 46 ==== ==== ==== The proposed final dividend of 14.9 pence per share for the year ended 31 December 2007 is not recognised in these accounts as it remains subject to approval at the Annual General Meeting to be held on 30 May 2008. If approved, the dividend will be paid on 6 June 2008 to shareholders who were registered on 28 March 2008 at an expected total cost of £44m. 16. Capital commitments and contingencies At 31 March 2008 amounts contracted for but not provided for in the financial statements for expenditure on property, plant and equipment was £9m (2007 31 December £10m; 31 March £23m). At 31 March 2008 the Group had contingent liabilities of £10m (2007 31 December £5m; 31 March £5m), mainly comprising guarantees given in the ordinary course of business. In limited cases, the Group may provide performance guarantees to third-party owners to secure management contracts. The maximum exposure under such guarantees is £110m (2007 31 December £121m; 31 March £113m). It is the view of the Directors that, other than to the extent that liabilities have been provided for in these financials statements, such guarantees are not expected to result in financial loss to the Group. The Group has given warranties in respect of the disposal of certain of its former subsidiaries. It is the view of the Directors that, other than to the extent that liabilities have been provided for in these financial statements, such warranties are not expected to result in financial loss to the Group. 17. Other commitments In March and June 2007, the Company made the first two payments of £10m under the agreement to make special pension contributions of £40m to the UK pension plan. A further payment of £10m was made on 31 January 2008 and the final £10m is scheduled for payment in 2009. On 24 October 2007, the Group announced a worldwide relaunch of its Holiday Inn brand family. In support of this relaunch, IHG will make a non recurring revenue investment of £30m which will be charged to the income statement as an exceptional item during 2008, of which £3m has been charged in the first quarter. 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 interim financial report for the three months ended 31 March 2008 which comprises the Group income statement, Group statement of recognised income and expense, Group cash flow statement, Group balance sheet and the related notes 1 to 17. We have read the other information contained in the interim 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 ISRE 2410 (UK and Ireland) '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 interim financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services 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 interim financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union. 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 interim financial report for the three months ended 31 March 2008 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 Services Authority. Ernst & Young LLP London 6 May 2008 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
InterContinental Hotels