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 06 August 2019
 
 
InterContinental Hotels Group PLC
(Registrant's name)
 
 
Broadwater Park, Denham, Buckinghamshire, UB9 5HJ, United Kingdom
(Address of principal executive offices)
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
 
 
Form 20-F           Form 40-F
 
 
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
 
Yes           No
 
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable
 
 
 
 
 
EXHIBIT INDEX
 
99.1
Half-year Report dated 06 August 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit No: 99.1
 
 
IHG PLC – Half Year Results to 30 June 2019
 
 
 
 
Reported
 
Underlying5
 
2019
2018 Restated1
% Change
 
% Change
 
REPORTABLE SEGMENTS2
 
 
 
 
 
 
Revenue3
$1,012m
$900m
12%
 
13%
 
Revenue from fee business
$730m
$719m
2%
 
3%
 
Operating profit3
$410m
$413m
(1)%
 
2%
 
Fee margin4
53.7%
53.9%
(0.2)%pts
 
0.3%pts
 
Adjusted EPS
143.2¢
145.3¢
(1)%
 
2%
 
 
 
 
 
 
 
 
GROUP RESULTS6
 
 
 
 
 
 
Total revenue
$2,280m
$2,113m
8%
 
KEY METRICS
 
Operating profit
$457m
$401m
14%
 
 $13.6bn total gross revenue (up 2%; 5% at CER)
Basic EPS
167.2¢
122.6¢
36%
 
Interim dividend per share
39.9¢
36.3¢
10%
 
 0.1% global H1 RevPAR (Q2 = (0.2)%)
Net debt
$2,847m
$2,198m
30%
 
 
1 Restated following the adoption of IFRS 16 ‘Leases’ from 1 January 2019. 2 Excludes System Fund results, hotel cost reimbursements and exceptional items. 3 Comprises the Group’s fee business and owned, leased, and managed lease hotels, and excludes exceptional items. 4 Also excludes owned, leased and managed lease hotels, and significant liquidated damages. 5 Reportable segment results excluding owned asset disposals, significant liquidated damages, current year acquisitions and stated at constant H1 2018 exchange rates (CER). 6 Includes System Fund results, hotel cost reimbursements and excludes exceptional items (except for Basic EPS).
 
 
H1 Comparable RevPAR: Americas = 0.1% (US = 0.0%); EMEAA = 0.2%; Greater China = (0.3)%.
 
Underlying operating profit up 2% (up 5% excluding the result from the UK portfolio transaction and adjusting for $6m of cost phasing benefit in H1 2018); underlying EPS up 2%; Interim dividend up 10%.
 
Net system size growth of 5.7%, the highest in over a decade, with 30k room additions, up 38% YoY. Removed 10k rooms, in line with a continued focus on the long-term health of established brands, leaving 856k rooms across the global estate.
 
First half signings of 48k rooms (up 3% YoY), highest in over a decade and includes record performance in Greater China. Total pipeline now stands at 282k rooms.
 
Continued progress optimising our brand portfolio for future growth, with 5 signings for Six Senses Hotels Resorts Spas since acquisition in February, and the launch of our new upper midscale brand Atwell Suites in H1.
 
Rollout of voco continuing at pace with 21 hotels signed to date (8k rooms); expected to reach ~30 signings (10k rooms) by the end of the year. Almost 200 avid hotels signed in less than 2 years with 3 open and more than a quarter under construction or with planning approved.
 
 
 
 
Keith Barr, Chief Executive Officer, IHG, said:
 
 
 
 
Eighteen months ago, we set out a series of strategic initiatives to drive an acceleration in growth to ambitious new levels. Our approach is built around strengthening our established brands, adding new brands in high opportunity segments and optimising our owner proposition. In a slower RevPAR growth environment, we’ve made significant progress, opening a record number of rooms in the first half which have delivered a 5.7% increase in net system size growth, our best performance in over a decade, with future growth underpinned by our highest level of signings over the same period.
 
In the first half alone, we launched transformational design prototypes for Staybridge Suites and Candlewood Suites and evolved our brand prototypes for Holiday Inn and Holiday Inn Express. We also developed six flagship properties for Crowne Plaza in the US, Europe and China and have continued to take Hotel Indigo and Kimpton Hotels & Restaurants to new markets. Our new avid and voco brands are performing well, we’ve already had over 50 expressions of interest for our newest brand, Atwell Suites, and we’re well placed to capitalise on strong growth in the luxury segment with our recently acquired Six Senses and Regent brands. As we focus on ensuring that we operate and grow our business in a responsible way, we’re proud to have committed to switching every IHG hotel to bulk-size bathroom amenities, in an effort to reduce waste and protect the environment.
 
Funded by our efficiency programme, the investments we are making behind our strategic initiatives are driving accelerated rooms growth and position us well to achieve industry leading, sustainable net system size growth over the medium-term. Whilst there are always macro-economic and geo-political uncertainties in some markets, our broad geographic spread and the resilient, cash-generative nature of our business gives us confidence in the outlook for the balance of the year.”
 
 
 
Update on strategic initiatives
 
 
 
We continue to make good progress in executing against our strategic model to deliver industry leading net rooms growth over the medium term
 Build and leverage scale
- Our focus on building scale positions in attractive markets and high opportunity segments has seen us grow our share of global branded industry signings over the last two years.
- Record H1 performance for openings and signings in China, with 13k rooms (36 hotels) opened and a further 22k rooms (90 hotels) signed into the pipeline. Combined system and pipeline now stands at >800 hotels.
 
 Strengthen loyalty programme
- Announced InterContinental Alliance Resorts partnership with Sands China in Macau, along with an extension of our alliance with The Venetian Resort Las Vegas, our most popular point redemption location, giving guests the opportunity to earn and redeem points in these highly desirable destinations.
- Strengthened our ability to offer unique experiences to IHG Rewards Club members through partnerships with the US Open Tennis Championships and the Cadillac Centre – a multi-purpose indoor arena in Beijing.
- Enhancing value of points to members through trials of variable point pricing and the ability to pay with points during hotel stays.
 
 Enhance revenue delivery
- Developing updated arrivals platform within IHG Concerto, which will allow for an improved check-in experience for guests through features such as mobile pre-check in and room ready notifications.
- Now piloting our proprietary price optimisation software for Groups business in IHG Concerto.
 
 Evolve owner proposition
- Continued strong traction for our franchise offer in Greater China with 40 hotels signed for Holiday Inn Express in the half, taking the total to 187 signed and 43 opened since launch in 2016. We have also signed 10 franchise deals across our Holiday Inn and Crowne Plaza brands in Greater China in H1 2019, taking total franchise signings to over 200 since launch.
 
 Optimise our portfolio of brands for owners and guests
 
- Mainstream – ($115bn global segment with $65bn growth potential to 2025)
- Holiday Inn Express: Continued to evolve our ‘Formula Blue’ guestroom and public space designs; on track for adoption in two-thirds of the US estate by the end of 2020.
-Holiday Inn: Updated room and public space designs launched in the Americas, with >150 hotels open or committed. Currently running largest marketing campaign in over a decade for Holiday Inn Brand Family.
-Staybridge Suites & Candlewood Suites: Launched transformational new room and public space design prototypes for our extended stay brands to enhance guest experience and drive owner ROI.
-avid hotels: Almost 200 hotels (18k rooms) signed since launch (27 hotels (3k rooms) signed in H1 2019), and 3 hotels now open. With over 60 more under construction or with planning approved, we expect to have ~10 properties open by the end of the year.
-Atwell Suites: Launched new all-suites upper midscale brand, targeting an $18bn industry segment, to owners and investors earlier this year. Over 50 written expressions of owner interest ahead of the registration of franchise documents later this year.
 
- Upscale – ($40bn global segment with $20bn growth potential to 2025)
- Crowne Plaza: Achieved our best H1 signings performance in over a decade, with 4.5k rooms added to the pipeline. Developing flagship properties which will showcase new room and public space designs in key cities around the world.
-Hotel Indigo: Growing momentum for the brand with highest ever number of signings in the first half; now have deals signed into the pipeline that will take Hotel Indigo to 16 new countries.
- voco: Twenty-one hotels signed to date across 10 countries in EMEAA (8k rooms in total), including a 4k room property in Makkah. Anticipate growing voco portfolio to ~30 signed hotels by the end of the year.
 
- Luxury – ($60bn global segment with $35bn growth potential to 2025)
- InterContinental Hotels & Resorts: Reinforcing position as largest global luxury hotel brand with the openings of the InterContinental Hayman Island in Australia and the InterContinental Lyon – Hotel Dieu in France. A number of our more iconic properties are also currently under or soon to enter refurbishment, demonstrating our owners’ long-term commitment to the InterContinental brand.
- Kimpton Hotels & Restaurants: Global expansion continues with the opening of two further properties in the UK and 5 signings in H1, including landmark properties in Beijing and Hong Kong.
-Six Senses Hotels Resorts Spas: Five new signings since February 2019 acquisition, including properties in Iceland and the Loire Valley.
-Regent Hotels & Resorts: Signed two properties in the half in Chengdu and Bali, and are piloting new brand hallmarks which will help define Regent’s position in the top tier of luxury.
 
 
 
 
Americas – US RevPAR performance in line with the segments in which we compete
 
 
 
Comparable RevPAR increased 0.1% (Q2: down 0.5%), driven by 0.8% rate growth, with occupancy impacted by tough comparables from hurricane related demand in H1 2018. US RevPAR was flat for the half with performance in line with the segments in which we compete. The 0.7% decline in the second quarter was impacted by the shift in the timing of Easter and the lapping of hurricane related demand at the start of the quarter. Canada was flat (Q2: down 1%), with growth in British Columbia offset by softness in Ontario. Latin America and the Caribbean were up 7% (Q2: up 6%), with strong performances in Brazil and Colombia. Mexico RevPAR was down 2% (Q2: down 2%).
 
Reported revenue1 of $520m increased 1% (CER 2%) and reported operating profit1 of $344m increased 3% (CER 4%).
 
Underlying2 revenue and operating profit were in line with reported growth rates, with fee business operating profit up 4%. Growth in fee revenue from net rooms growth and higher levels of termination fees more than offset the net negative impact of previously flagged items, including equity investment income, a payroll tax credit and legal costs.
 
We opened 11k rooms (96 hotels) during the half, with continued strong pace for our Holiday Inn Brand Family, and we also opened our second and third avid hotels. We continue to focus on a high-quality estate and removed 6k rooms (46 hotels). Together, this drove a 2.7% increase in our net system size.
 
We signed 135 hotels (14k rooms), including a further 6 for the Hotel Indigo brand. We also signed 3 Kimpton properties, including hotels in North Carolina and Colorado, and have announced that we will be debuting the brand in Mexico with 2 properties scheduled to open in 2020.
 
 
EMEAA – Strong signings and openings pace; voco momentum continues
 
 
 
Comparable RevPAR increased 0.2% (Q2: up 0.7%) driven by occupancy up 0.5%pts. UK RevPAR was up 2% for the half with London up 5% and the Provinces up 1%. Second quarter RevPAR in the UK was up 2% with strong international demand driving RevPAR in London up 4%, whilst the Provinces were up 1%, benefitting from the Cricket World Cup.
 
Continental Europe RevPAR was up 3% in the half (Q2: up 4%). In France, RevPAR was down 1% with performance impacted by social unrest in Paris, with 1% growth in the second quarter driven by the FIFA Women’s World Cup and the Paris Air Show. Germany grew RevPAR 4% in the half and 5% in the second quarter helped by a favourable trade fair calendar.
 
Trading conditions in the Middle East remained challenging, with RevPAR down 5% in the half due to increased supply and political unrest weighing on demand. Australia RevPAR was down 2% (Q2: down 3%) impacted by supply growth and the lapping of the Commonwealth Games. Japan RevPAR grew 3% in the half (Q2: up 5%) with strong rate growth.
 
The first half includes the results of the UK portfolio transaction, which completed in July 2018. This resulted in a $91m increase in Owned, Leased and Managed Lease revenue, and, as previously flagged, a $7m decrease in operating profit for the half due to seasonality, which we expect to more than reverse in the second half.
 
Reported revenue1 of $338m increased 45% (52% CER) and reported operating profit1 of $88m decreased 7% (3% CER). On an underlying basis2, revenue increased 43% and operating profit decreased 2% (up 4% excluding the UK portfolio deal). Underlying fee business revenue and operating profit were both up 3%.
 
We opened 6k rooms (49 hotels), driving 6.5% net rooms growth, including an expansion of our Luxury brands with 2 InterContinental and 2 Kimpton openings in the half.
 
We signed 11k rooms (82 hotels) in the half including >1k rooms for Crowne Plaza, and 1k rooms for voco.
 
 
Greater China – Record room signings; continued industry outperformance
 
 
Comparable RevPAR decreased 0.3% (Q2: down 0.5%), impacted by the strong comparables from H1 2018. In Mainland China, RevPAR was down 1%, with market outperformance throughout the first half. Tier 1 and 2 cities were flat (Q2 also flat) and Tier 3 and 4 cities were down 3% (Q2: down 2%). Whilst corporate and meetings business was softer against strong prior year demand, domestic leisure business remains resilient.
 
RevPAR in Hong Kong SAR was marginally down in H1, with some impact from the ongoing political disputes, whilst Macau SAR RevPAR was up 5% for the half.
 
Reported revenue of $66m decreased by 4% (CER increased 1%), and reported operating profit of $36m increased by 13% (CER 16%).
 
On an underlying2 basis, revenue increased by 8% and operating profit increased by 32%, driven by double-digit net rooms growth and some benefit from cost phasing in the first half.
 
We opened a record 13k rooms (36 hotels), driving 18% net rooms growth. This takes the total number of open rooms to over 126k (422 hotels) and includes the opening of our 150th Holiday Inn Express in the region. Signings totalled 22k rooms (90 hotels), our highest ever for the region, and included 5k rooms from our InterContinental Alliance Resorts partnership with Sands.
 
 
Highly cash generative business with disciplined approach to cost control and capital allocation
 
 
 
Driving fee margin through strategic cost management
 Remain on track to deliver ~$125m in annual savings, including System Fund, by 2020 for reinvestment in growth.
 Savings being fully reinvested in growth initiatives, with ~80% to be realised by end of 2019.
 H1 2019 fee margin was down 20bps (down 30bps at CER), held back by the acquisition of Six Senses, which made a small operating loss in the half, and by $6m of cost phasing benefit in H1 2018. Excluding these impacts, fee margin increased 130bps (up 110bps at CER).
 Net central operating loss before exceptional items increased by $10m, ($11m CER); an increase in central revenues was offset by continued investments in growth initiatives. Central overheads include the reinvestment of a substantial proportion of growth investment funded by savings elsewhere in the business.
 Growth initiatives, and a continuation of our disciplined cost management and strong efficiency focus, expected to maintain future fee margin progression broadly in line with the historic average.
 
Strong free cash flow generation fuelling investment
 Free cash flow3 of $141m was down $120m year on year after $62m higher levels of cash tax, and an outflow of working capital which should largely reverse in the second half.
 Net capital expenditure3 of $71m (H1 2018: $112m) with $101m gross (H1 2018: $132m). This comprised: $45m maintenance capex and key money; $14m gross recyclable investments; and $42m System Fund capital investments; offset by $5m net proceeds from asset recycling and $25m System Fund depreciation and amortisation. Capex guidance unchanged at up to $350m gross, and $150m net, per annum into the medium term.
 Exceptional cash costs of $30m during the half, including $24m relating to the group wide efficiency programme ($13m in relation to the System Fund).
 
Efficient balance sheet provides flexibility
 Financial position remains robust, with an on-going commitment to an investment grade credit rating; the best proxy for which is 2.5-3.0x net debt/EBITDA following the adoption of IFRS 16 (equivalent to 2.0-2.5x net debt/EBITDA under the previous accounting standard).
 Net debt of $2,847m, up $882m on the 2018 close, after payment of the $500m special dividend and $300m acquisition of Six Senses.
 
Cash generative business driving shareholder returns
 Proposed 10% increase in the interim dividend to 39.9¢.
 
 
Foreign exchange
 
 
 
The impact of the movement in average USD exchange rates for H1 2019 against a number of currencies (particularly Sterling, Euro and Renminbi) netted to a $6m negative impact on reported profit4. If the 28 June 2019 spot rate had existed throughout H2 2018, H2 2018 reported profit would have been unchanged.
 
A full breakdown of constant currency vs. actual currency RevPAR by region is set out in Appendix 2.
 
 
Other
 
 
 
System Fund:
System Fund revenues and costs are recognised on a gross basis with the in-year surplus or deficit recorded in the Group income statement, but excluded from results from reportable segments, underlying results and adjusted EPS, as the Fund is operated for the benefit of the hotels in the IHG System such that the Group does not make a gain or loss from operating the Fund.
 
 
In H1 2019 we recorded a System Fund income statement surplus of $47m, largely due to favourable adjustments due to changes in breakage estimates and the seasonality in timing of marketing spend, which we expect to reverse for the full year.
 
Interest:
Net financial expenses were $67m. Underlying5 interest expense of $76m, which adds back interest relating to the System Fund, was $20m higher than in 2018, reflecting higher levels of net debt and finance charges related to deferred and contingent consideration on acquisitions.
 
 
Following the €500m bond issued in November 2018, the finance charges relating to deferred and contingent consideration on acquisitions and the adoption of IFRS 16, we continue to expect the underlying5 interest charge to be ~$150m for the full year.
 
 
Tax:
Effective rate6 for H1 2019 was 21% (H1 2018: 22%). We expect our full year 2019 effective tax rate will be in the mid to low 20s percentage point range.
 
Exceptional operating items:
Before tax exceptional items total $15m charge and comprise: $10m costs incurred in relation to the group wide efficiency programme and $5m of acquisition and integration costs. A further $13m of costs related to the group wide efficiency programme were incurred by the System Fund and are included within System Fund expenses in the Group income statement.
 
 
 
2019 items
 
 
 
Americas:
 $4m benefit from payroll tax credit received in H1 2018 will not repeat in 2019.
 $5m of equity investment income received in H1 2018 will not repeat in 2019.
 
 
EMEAA: A previously disclosed $15m cash payment was received in Q1 2018 in relation to the termination of a portfolio of hotels. This has been / will be recognised as individually significant liquidated damages as follows: $6.7m in 2018, $7.7m in 2019 and $1.0m in 2020.
 
 
Greater China: $6m of individually significant liquidated damages received in 2018 will not repeat in 2019.
 
 
 
 
 
1 Comprises the Group’s fee business and owned, leased, and managed lease hotels from reportable segments and excludes exceptional items.
2 Excluding owned asset disposals, significant liquidated damages, current year acquisitions, System Fund results, hotel cost reimbursements and exceptional items at constant H1 2018 exchange rates (CER).
See the Interim Management Report for definition of non-GAAP measures and reconciliation to GAAP measures.
3 For definition of non-GAAP measures and reconciliation to GAAP measures see the Interim Management Report.
4 Based on monthly average exchange rates each year.
5 For definition of non-GAAP measures and reconciliation to GAAP measures see the Interim Management Report.
6 Excludes exceptional items and System Fund results.
 
Appendix 1: RevPAR Movement Summary
 
Half Year 2019
 
Q2 2019
 
RevPAR
 
Rate
 
Occ.
 
RevPAR
 
Rate
 
Occ.
 
Group
 
0.1%
0.4%
(0.2)%pts
(0.2)%
0.3%
(0.4)%pts
Americas
 
0.1%
0.8%
(0.5)%pts
(0.5)%
0.6%
(0.8)%pts
EMEAA
 
0.2%
(0.4)%
0.5%pts
0.7%
0.1%
0.4%pts
G. China
 
(0.3)%
(0.5)%
0.2%pts
(0.5)%
(1.2)%
0.5%pts
 
Appendix 2: Comparable RevPAR movement at constant exchange rates (CER) vs. actual exchange rates (AER)
 
Half Year 2019
 
Q2 2019
 
CER
 
AER
 
Difference
 
CER
 
AER
 
Difference
 
Group
 
0.1%
(2.0)%
(2.1)%pts
(0.2)%
(2.0)%
(1.8)%pts
Americas
 
0.1%
(0.4)%
(0.5)%pts
(0.5)%
(0.8)%
(0.3)%pts
EMEAA
 
0.2%
(4.7)%
(5.0)%pts
0.7%
(3.7)%
(4.4)%pts
G. China
 
(0.3)%
(5.5)%
(5.2)%pts
(0.5)%
(6.1)%
(5.6)%pts
 
Appendix 3: Half Year System & Pipeline Summary (rooms)
 
 
System
 
Pipeline
 
Openings
 
Removals
 
Net
 
Total
 
YoY%
 
Signings
 
Total
 
Group
 
29,660
 
(10,286)
 
19,374
 
855,915
 
5.7%
 
47,796
 
281,845
 
Americas
 
10,994
 
(6,414)
 
4,580
 
514,709
 
2.7%
 
14,030
 
118,530
 
EMEAA
 
5,880
 
(1,961)
 
3,919
 
215,018
 
6.5%
 
11,347
 
78,017
 
G. China
 
12,786
 
(1,911)
 
10,875
 
126,188
 
18.2%
 
22,419
 
85,298
 
 
Appendix 4: Half Year financial headlines
 
GROUP
 
REPORTABLE SEGMENTS
 
 
Total
 
Americas
 
EMEAA
 
G. China
 
Central
 
2019
 
2018*
 
2019
 
2018*
 
2019
 
2018*
 
2019
 
2018*
 
2019
 
2018*
 
Revenue ($m)
 
 
 
 
 
 
 
 
 
 
 
Revenue from reportable segments
 
1,012
900
520
514
338
233
66
69
88
 
84
 
System Fund result
 
675
618
-
-
-
-
-
-
-
 
-
 
Hotel Cost Reimbursements
 
593
595
-
-
-
-
-
-
-
 
-
 
Group Revenue
 
2,280
2,113
520
514
338
233
66
69
88
 
84
 
 
 
 
 
 
 
 
 
 
 
 
Operating Profit ($m)
 
 
 
 
 
 
 
 
 
 
 
Fee Business
 
452
439
323
312
93
95
36
32
-
 
-
 
Owned, leased & managed lease
 
16
22
21
22
(5)
-
-
-
-
 
-
 
Central overheads
 
(58)
(48)
-
-
-
-
-
-
(58)
 
(48)
 
Operating profit from reportable segments before exceptionals
 
410
413
344
334
88
95
36
32
(58)
 
(48)
 
System Fund result
 
47
(12)
-
-
-
-
-
-
-
 
-
 
Operating profit before exceptionals
 
457
401
344
334
88
95
36
32
(58)
 
(48)
 
Exceptional items
 
(15)
(53)
(2)
(15)
(2)
(5)
-
-
(11)
 
(33)
 
Operating Profit after exceptionals
 
442
348
342
319
86
90
36
32
(69)
 
(81)
 
*Restated following the adoption of IFRS 16 ‘Leases
 
Appendix 5: Reported operating profit before exceptional items from reportable segments at actual & constant exchange rates
 
 
Total***
 
Americas
 
EMEAA
 
G. China
 
Reported
 
Actual*
 
CER**
 
Actual*
 
CER**
 
Actual*
 
CER**
 
Actual*
 
CER**
 
Growth / (decline)
 
(1)%
 
1%
 
3%
 
4%
 
(7)%
 
(3)%
 
13%
 
16%
 
 
Appendix 6: Underlying**** operating profit movement before exceptional items
 
 
Total***
 
Americas
 
EMEAA
 
G. China
 
Growth / (decline)
 
2%
 
4%
 
(2)%
 
32%
 
 
 
Exchange rates:
USD:GBP
USD:EUR
* US dollar actual currency
H1 2019
0.77
0.89
** Translated at constant H1 2018 exchange rates
H1 2018
0.73
0.83
*** After central overheads
 
 
 
**** At CER and excluding: owned asset disposals, significant liquidated damages, current year acquisitions, System Fund results and hotel cost reimbursements
 
 
 
Appendix 7: Definitions
 
CER: constant exchange rates with H1 2018 exchange rates applied to H1 2019.
Comparable RevPAR: revenue per available room for hotels that have traded for all of 2018 and 2019, reported at CER.
Fee revenue: group revenue from reportable segments excluding owned, leased and managed lease hotels, and significant liquidated damages.
Fee margin: adjusted to exclude owned, leased and managed lease hotels, and significant liquidated damages.
Reportable segments: group results excluding System Fund results, hotel cost reimbursements and exceptional items.
Significant liquidated damages: $4m in H1 2019 ($4m EMEAA fee business); $7m in H1 2018 ($3m in EMEAA fee business and $4m in Greater China fee business).
Total gross revenue: total rooms revenue from franchised hotels and total hotel revenue from managed, owned, leased and managed lease hotels. Other than owned, leased and managed lease 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 2018 or 2019, reported at CER.
Underlying Interest: adds back interest relating to the System Fund.
 
 
 
 
Appendix 8: Investor information for 2019 Interim dividend
 
Ex-dividend date:
 
29 August 2019
 
Record date:
 
30 August 2019
 
Payment date:
 
3 October 2019
 
Dividend payment:
 
ADRs: 39.9 cents per ADR; the corresponding amount in Pence Sterling per ordinary share will be announced on 18 September 2019, calculated based on the average of the market exchange rates for the three working days commencing 13 September. A DRIP is available, allowing shareholders of ordinary shares to elect to reinvest their cash dividend by purchasing additional ordinary shares.
 
For further information, please contact:
 
 
Investor Relations (Heather Wood, Matthew Kay, Rakesh Patel):
+44 (0)1895 512 176
+44 (0)7527 419 431
 
Media Relations (Yasmin Diamond; Mark Debenham):
+44 (0)1895 512 097
+44 (0)7527 424 046
 
 
 
 
 
Presentation for Analysts and Shareholders:
A conference call and webcast presented by Keith Barr, Chief Executive Officer and Paul Edgecliffe-Johnson, Chief Financial Officer will commence at 9.30am on 6 August 2019 on the web address www.ihgplc.com/interims2019. For those wishing to ask questions please use the dial in details below which will have a Q&A facility.
 
https://www.investis-live.com/ihg/5d24a3499add6d1100612f38/hyri
 
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 listen only dial-in facility, details are below:
 
 
 
UK
 
+44 (0) 203 936 2999
 
US
 
+1 646 664 1960
 
All other locations:
 
+44 (0) 203 936 2999
 
Participant Access Code:
 
72 80 10
 
 
 
A replay will be available following the event, details are below:
 
UK:
 
+44 (0) 203 936 3001
US:
 
+1 845 709 8569
 
All other locations:
 
+44 (0) 203 936 3001
 
Replay pin
 
41 17 72
 
 
 
Website:
The full release and supplementary data will be available on our website from 7:00am (London time) on 6th August. The web address is www.ihgplc.com/interims2019.
 
 
Notes to Editors:
IHG® (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is a global organisation with a broad portfolio of hotel brands, including Six Senses Hotels Resorts Spas, Regent Hotels & Resorts, InterContinental® Hotels & Resorts, Kimpton® Hotels & Restaurants, Hotel Indigo®, EVEN® Hotels, HUALUXE® Hotels and Resorts, Crowne Plaza® Hotels & Resorts, voco™, Holiday Inn®, Holiday Inn Express®, Holiday Inn Club Vacations®, Holiday Inn Resort®, avid™ hotels, Staybridge Suites®, Atwell Suites™,and Candlewood Suites®.
 
IHG franchises, leases, manages or owns more than 5,700 hotels and nearly 856,000 guest rooms in more than 100 countries, with over 1,900 hotels in its development pipeline. IHG also manages IHG® Rewards Club, our global loyalty programme, which has more than 100 million enrolled members.
 
InterContinental Hotels Group PLC is the Group’s holding company and is incorporated in Great Britain and registered in England and Wales. More than 400,000 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: https://twitter.com/ihgcorporate, www.facebook.com/ihgcorporateand www.linkedin.com/company/intercontinental-hotels-group.
 
 
 
 
 
Cautionary note regarding forward-looking statements:
This announcement contains certain forward-looking statements as defined under United States law (Section 21E of the Securities Exchange Act of 1934) and otherwise. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’ or other words of similar meaning. These statements are based on assumptions and assessments made by InterContinental Hotels Group PLC’s management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty. There are a number of factors that could cause actual results and developments to differ materially from those expressed in or implied by, such forward-looking statements. The main factors that could affect the business and the financial results are described in the ‘Risk Factors’ section in the current InterContinental Hotels Group PLC’s Annual report and Form 20-F filed with the United States Securities and Exchange Commission.
 
 
 
 
 
 
INTERIM MANAGEMENT REPORT
 
This Interim Management Report discusses the performance of InterContinental Hotels Group PLC (the Group or IHG) for the six months ended 30 June 2019. The 2018 comparatives have been restated to reflect the adoption of IFRS 16 ‘Leases'.
 
 
 
GROUP
 
 
6 months ended 30 June
 
Group results
 
2018
 
 
2019
Restated
%
 
$m
$m
change
Revenuea
 
 
 
 
 
 
 
Americas
520
514
1.2
EMEAA
338
233
45.1
Greater China
66
69
(4.3)
Central
88
84
4.8
 
____
____
____
Revenue from reportable segments
1,012
900
12.4
 
 
 
 
System Fund revenues
675
618
9.2
Reimbursement of costs
593
595
(0.3)
 
____
____
____
Total revenue
2,280
2,113
7.9
 
____
____
____
Operating profita
 
 
 
 
 
 
 
Americas
344
334
3.0
EMEAA
88
95
(7.4)
Greater China
36
32
12.5
Central
(58)
(48)
(20.8)
 
____
____
____
Operating profit from reportable segments
410
413
(0.7)
System Fund result
47
(12)
491.7
 
____
____
____
Operating profit before exceptional items
457
401
14.0
Exceptional items
(15)
(53)
71.7
 
____
____
____
Operating profit
442
348
27.0
Net financial expenses
(67)
(47)
(42.6)
 
____
____
____
Profit before tax
375
301
24.6
 
____
____
____
 
 
 
 
Earnings per ordinary share
 
 
 
 
Basic
167.2¢
122.6¢
36.4
 
Adjusted
143.2¢
145.3¢
(1.4)
 
 
 
 
 
Average US dollar to sterling exchange rate
$1 : £0.77
$1 : £0.73
5.5
 
 
During the six months ended 30 June 2019, total revenue increased by $167m (7.9%) to $2,280m and operating profit increased by $94m (27.0%) to $442m due to the System Fund moving from a $12m in-year deficit to a $47m in-year surplus and a $38m decrease in exceptional costs.
 
Revenue from reportable segmentsa increased by $112m (12.4%) to $1,012m and operating profit from reportable segmentsa decreased by $3m (0.7%) to $410m. Underlyingb Group revenue and underlyingb Group operating profit increased by $118m (13.2%) and $8m (2.0%) respectively.
 
Basic earnings per ordinary share increased by 36.4% to 167.2¢, whilst adjusted earnings per ordinary share decreased by 1.4% to 143.2¢.
 
 
a Americas, EMEAA and Greater China include revenue and operating profit before exceptional items from both fee business and owned, leased and managed lease hotels.
 
b Underlying revenue and underlying operating profit both exclude System Fund revenue and expenses, reimbursement of costs, the impact of owned asset disposals, significant liquidated damages, current year acquisitions, all translated at constant currency using prior year exchange rates. Underlying operating profit excludes the impact of exceptional items. The presentation of these performance measures allows a better understanding of comparable year-on-year trading and enables an assessment of the underlying trends in the Group’s financial performance.
 
 
 
 
Hotels
Rooms
Global hotel and room count
 
 Change over
 
Change over
 
2019
30 June
2018
31 December
2019
30 June
2018
31 December
Analysed by brand
 
 
 
 
 
Six Senses
18
18
1,448
1,448
 
Regent
6
-
2,003
(2)
 
InterContinental
205
1
 69,436
155
 
Kimpton
69
3
 13,470
555
 
HUALUXE
9
1
 2,632
297
 
Crowne Plaza
426
(3)
 119,494
(674)
 
voco
5
3
1,252
721
 
Hotel Indigo
109
7
 13,310
561
 
EVEN Hotels
10
-
 1,551
-
 
Holiday Inn1
1,269
18
236,507
2,655
 
Holiday Inn Express
2,776
50
286,486
6,970
 
avid hotels
3
2
261
174
 
Staybridge Suites
292
16
31,816
1,599
 
Candlewood Suites
401
5
37,578
368
 
Other
125
(1)
38,671
4,547
 
 
____
____
______
_____
Total
5,723
120
855,915
19,374
 
 
____
____
______
_____
Analysed by ownership type
 
 
 
 
 
Franchised
4,715
100
 594,165
17,186
 
Managed
982
17
255,413
1,847
 
Owned, leased and managed lease
26
3
 6,337
341
 
 
____
____
______
_____
Total
5,723
120
855,915
19,374
 
 
____
____
______
_____
 
 
                  1Includes 45 Holiday Inn Resort properties (11,388 rooms) and 27 Holiday Inn Club Vacations properties (7,927 rooms)
            
             (2018: 46 Holiday Inn Resort properties (11,644 rooms) and 26 Holiday Inn Club Vacations properties (7,676 rooms)).
 
 
 
 
Hotels
Rooms
Global pipeline
 
Change over
 
Change over
 
 
2019
30 June
2018
31 December
2019
30 June
2018
31 December
Analysed by brand
 
 
 
 
 
 
Six Senses
19
19
1,466
1,466
 
Regent
5
2
944
430
 
InterContinental
 61
1
 15,976
181
 
Kimpton
 30
3
 5,294
820
 
HUALUXE
 21
-
 6,051
(48)
 
Crowne Plaza
 89
10
 25,225
3,091
 
voco
10
2
1,898
388
 
Hotel Indigo
 103
11
 15,268
2,190
 
EVEN Hotels
 23
5
 4,112
928
 
Holiday Inn1
282
(6)
55,378
(273)
 
Holiday Inn Express
790
6
99,452
1,028
 
avid hotels
195
24
18,049
2,238
 
Staybridge Suites
185
3
21,239
390
 
Candlewood Suites
94
(8)
8,457
(664)
 
Other
18
(6)
3,036
(1,268)
 
 
____
____
______
_____
Total
1,925
66
281,845
10,897
 
 
____
____
______
_____
Analysed by ownership type
 
 
 
 
 
Franchised
1,417
19
 165,440
4,097
 
Managed
507
47
116,250
6,800
 
Owned, leased and managed lease
1
-
 155
-
 
 
____
____
______
_____
Total
1,925
66
281,845
10,897
 
 
____
____
______
_____
 
 
1Includes 21 Holiday Inn Resort properties (5,309 rooms) (2018: 17 Holiday Inn Resort properties (4,658 rooms)).
 
 
 
THE AMERICAS
 
 
6 months ended 30 June
Americas Results
 
2018
 
 
2019
Restated
%
 
$m
$m
change
Revenue from the reportable segmenta
 
 
 
 
Fee business
418
413
1.2
 
Owned, leased and managed lease
102
101
1.0
 
____
____
____
Total
 
520
514
1.2
 
____
____
____
Operating profit from the reportable segmenta
 
 
 
 
Fee business
323
312
3.5
 
Owned, leased and managed lease
21
22
(4.5)
 
____
____
____
 
 
344
334
3.0
Exceptional items
 
(2)
(15)
86.7
 
____
____
____
Operating profit
342
319
7.2
 
____
____
____
 
 
 
 
 
 
Americas Comparable RevPAR movement on previous year
6 months ended
30 June 2019
Fee business
 
 
InterContinental
1.8%
 
Kimpton
3.8%
 
Crowne Plaza
(1.3)%
 
Hotel Indigo
1.5%
 
EVEN Hotels
(2.2)%
 
Holiday Inn
(0.9)%
 
Holiday Inn Express
0.1%
 
Staybridge Suites
0.6%
 
Candlewood Suites
(1.1)%
 
All brands
0.0%
 
 
 
Owned, leased and managed lease
 
 
InterContinental
8.3%
 
EVEN Hotels
0.1%
 
Holiday Inn
5.6%
 
All brands
5.6%
Revenue from the reportable segmenta increased by $6m (1.2%) to $520m, whilst operating profit increased by $23m (7.2%) to $342m. Operating profit from the reportable segmenta increased by $10m (3.0%) to $344m. On an underlyingb basis, revenue increased by $8m (1.6%), whilst operating profit increased by $12m (3.6%).
 
Revenue and operating profit from the reportable segmenta are further analysed by fee business and owned, leased and managed lease hotels.
 
Fee business revenue increased by $5m (1.2%) to $418m and operating profit increased by $11m (3.5%) to $323m, partly impacted by adverse foreign exchangec (revenue $1m, and operating profit $2m), as net rooms growth and higher levels of termination fees more than offset the net negative impact of previously flagged profit items, including equity investment income, a payroll tax credit and legal costs.
 
Owned, leased and managed lease revenue increased by $1m (1.0%) to $102m, partly impacted by adverse foreign exchangec ($1m), whilst operating profit decreased by $1m (4.5%) to $21m, with no impact from foreign exchangec, due to renovations at one hotel.
 
a Americas reportable segment includes revenue and operating profit before exceptional items, excluding System Fund revenue and expenses and reimbursement of costs, for both fee business and owned, leased and managed lease hotels.
 
b Underlying revenue and underlying operating profit both exclude System Fund revenue and expenses, reimbursement of costs, the impact of owned asset disposals, significant liquidated damages, current year acquisitions, all translated at constant currency using prior year exchange rates. Underlying operating profit excludes the impact of exceptional items. The presentation of these performance measures allows a better understanding of comparable year-on-year trading and enables an assessment of the underlying trends in the Group’s financial performance.
 
c The impact of movements between the previous year’s average exchange rates and actual average rates in 2019.
 
 
 
Americas hotel and room count
 
Hotels
 
Rooms
 
 
2019
30 June
Change over 2018
31 December
2019
30 June
Change over 2018
31 December
Analysed by brand
 
 
 
 
 
InterContinental
 51
-
 17,893
140
 
Kimpton
 64
-
 12,421
114
 
Crowne Plaza
 151
(5)
 40,456
(1,043)
 
Hotel Indigo
 60
3
 7,786
291
 
EVEN Hotels
 10
-
 1,551
-
 
Holiday Inn1
 782
8
134,949
457
 
Holiday Inn Express
 2,312
23
 209,223
2,603
 
avid hotels
3
2
261
174
 
Staybridge Suites
 275
14
 29,427
1,395
 
Candlewood Suites
 401
5
 37,578
368
 
Other
102
-
23,164
81
 
____
____
______
_____
Total
4,211
50
514,709
4,580
 
____
____
______
_____
Analysed by ownership type
 
 
 
 
 
Franchised
3,909
56
 455,159
5,057
 
Managed
295
(6)
 57,327
(477)
 
Owned, leased and managed lease
7
-
2,223
-
 
____
____
______
_____
Total
4,211
50
514,709
4,580
 
____
____
______
_____
 
 
1Includes 22 Holiday Inn Resort properties (6,003 rooms) and 27 Holiday Inn Club Vacations (7,927 rooms)
 
  (2018: 23 Holiday Inn Resort properties (6,188 rooms) and 26 Holiday Inn Club Vacations (7,676 rooms)).
 
 
 
            Hotels
          Rooms
 
Americas pipeline
 
Change over
 
Change over
 
2019
30 June
2018
31 December
2019
30 June
2018
31 December
Analysed by brand
 
 
 
 
 
Six Senses
5
5
462
462
 
InterContinental
 5
(1)
 1,158
(319)
 
Kimpton
 18
2
 2,557
222
 
Crowne Plaza
 5
(1)
 1,113
(150)
 
Hotel Indigo
 38
3
 5,248
725
 
EVEN Hotels
 11
1
 1,441
145
 
Holiday Inn1
 106
(20)
 13,593
(2,459)
 
Holiday Inn Express
 485
(14)
 46,412
(1,208)
 
avid hotels
194
23
17,834
2,023
 
Staybridge Suites
 166
3
 17,221
319
 
Candlewood Suites
 94
(8)
 8,457
(664)
 
Other
18
(4)
3,034
(848)
 
____
____
______
_____
Total
1,145
(11)
118,530
(1,752)
 
____
____
______
_____
Analysed by ownership type
 
 
 
 
 
Franchised
1,099
(16)
 111,663
(1,994)
 
Managed
46
5
 6,867
242
 
____
____
______
_____
Total
1,145
(11)
118,530
(1,752)
 
____
____
______
_____
 
 
1Includes one Holiday Inn Resort property (165 rooms) (2018: one Holiday Inn Resort property (165 rooms)).
 
 
 
EMEAA
 
 
6 months ended 30 June
 
 
EMEAA results
 
2018
 
 
2019
Restated
%
 
$m
$m
change
Revenue from the reportable segmenta
 
 
 
 
Fee business
158
153
3.3
 
Owned, leased and managed lease
180
80
125.0
 
____
____
____
Total
 
338
233
45.1
 
____
____
____
Operating profit from the reportable segmenta
 
 
 
 
Fee business
93
95
(2.1)
 
Owned, leased and managed lease
(5)
-
-
 
____
____
____
 
 
88
95
(7.4)
Exceptional items
 
(2)
(5)
60.0
 
 
____
____
____
Operating profit
86
90
(4.4)
 
____
____
____
 
 
 
 
 
 
 
EMEAA comparable RevPAR movement on previous year
 
6 months ended
30 June 2019
 
 
Fee business
 
 
InterContinental
1.1%
 
Crowne Plaza
(1.1)%
 
Hotel Indigo
1.9%
 
Holiday Inn
(0.8)%
 
Holiday Inn Express
2.3%
 
Staybridge Suites
1.8%
 
All brands
0.2%
 
 
 
Owned, leased and managed lease
 
 
InterContinental
1.2%
 
Holiday Inn
2.4%
 
All brands
1.4%
 
Revenue from the reportable segmenta increased by $105m (45.1%) to $338m due to the addition of a portfolio of hotels in the UK in July 2018, whilst operating profit decreased by $4m (4.4%) to $86m, due to the seasonality of profit delivery from the UK portfolio. Operating profit from the reportable segmenta decreased by $7m (7.4%) to $88m.
 
Revenue and operating profit from the reportable segmenta are further analysed by fee business and owned, leased and managed lease hotels.
 
Fee business revenue increased by $5m (3.3%) to $158m, whilst operating profit decreased by $2m (2.1%) to $93m, partly impacted by adverse foreign exchangeb (revenue $8m, and operating profit $5m).
 
Owned, leased and managed lease revenue increased by $100m (125.0%) to $180m, partly impacted by adverse foreign exchangeb ($9m), whilst operating profit decreased by $5m, partly benefiting from the impact of foreign exchangeb ($1m). Both revenue and operating profit include the impact of the UK portfolio transaction.
 
 
a EMEAA reportable segment includes revenue and operating profit before exceptional items, excluding System Fund revenue and expenses and reimbursement of costs, for both fee business and owned, leased and managed lease hotels.
 
b The impact of movements between the previous year’s average exchange rates and actual average rates in 2019.
 
 
 
 
 
  Hotels
 
 
       Rooms
EMEAA hotel and room count
 
 
Change over
 
 
Change over
 
2019
30 June
2018
31 December
2019
30 June
2018
31 December
Analysed by brand
 
 
 
 
 
Six Senses
17
17
1,326
1,326
 
Regent
3
-
771
2
 
InterContinental
 108
2
 32,657
358
 
Kimpton
 4
2
 920
312
 
Crowne Plaza
 182
-
 46,001
(258)
 
voco
5
3
1,252
721
 
Hotel Indigo
 39
4
 4,019
271
 
Holiday Inn1
 388
3
 72,054
701
 
Holiday Inn Express
 313
9
 44,778
1,046
 
Staybridge Suites
 17
2
 2,389
204
 
Other
 14
(3)
 8,851
(764)
 
____
____
______
_____
Total
1,090
39
215,018
3,919
 
____
____
______
_____
Analysed by ownership type
 
 
 
 
 
Franchised
747
21
 120,993
2,871
 
Managed
324
15
 89,911
707
 
Owned, leased and managed lease
19
3
 4,114
341
 
____
____
______
_____
Total
1,090
39
215,018
3,919
 
____
____
______
_____
 
 
1Includes 16 Holiday Inn Resort properties (3,390 rooms) (2018: 16 Holiday Inn Resort properties (3,381 rooms)).
 
 
 
 
     Hotels
 
       Rooms
EMEAA pipeline
 
Change over
 
Change over
 
2019
30 June
2018
31 December
2019
30 June
2018
31 December
Analysed by brand
 
 
 
 
 
Six Senses
12
12
875
875
 
Regent
4
1
664
150
 
InterContinental
 30
1
 7,130
211
 
Kimpton
 7
-
 1,240
-
 
Crowne Plaza
 37
3
 9,824
808
 
voco
10
2
1,898
388
 
Hotel Indigo
 42
2
 6,247
486
 
EVEN Hotels
1
-
200
-
 
Holiday Inn1
 118
12
 26,548
2,209
 
Holiday Inn Express
 112
(2)
 19,156
2
 
avid hotels
1
1
215
215
 
Staybridge Suites
 19
-
 4,018
71
 
Other
 -
(1)
 2
(141)
 
____
____
______
_____
Total
393
31
78,017
5,274
 
____
____
______
_____
Analysed by ownership type
 
 
 
 
 
Franchised
164
5
 27,122
1,441
 
Managed
228
26
 50,740
3,833
      Owned, leased and managed lease
1
-
155
-
 
____
____
______
_____
Total
393
  31
78,017
5,274
 
____
____
______
_____
 
 
1Includes 13 Holiday Inn Resort properties (2,921 rooms) (2018: 10 Holiday Inn Resort properties (2,365 rooms)).
 
 
GREATER CHINA
 
 
                6 months ended 30 June
 
Greater China results
 
2018
 
 
2019
Restated
%
 
$m
$m
change
Revenue from the reportable segmenta
 
 
 
 
Fee business
66
69
(4.3)
 
 
____
____
____
Total
 
66
69
(4.3)
 
____
____
____
Operating profit from the reportable segmenta
 
 
 
 
Fee business
36
32
12.5
 
 
____
____
____
 
 
36
32
12.5
Exceptional items
 
-
-
-
 
____
____
____
 
36
32
12.5
Operating profit
____
____
____
 
 
 
 
Greater China comparable RevPAR movement on previous year
6 months ended
30 June 2019
 
 
Fee business
 
 
InterContinental
1.4%
 
HUALUXE
6.5%
 
Crowne Plaza
(2.2)%
 
Hotel Indigo
(2.6)%
 
Holiday Inn
(0.5)%
 
Holiday Inn Express
0.5%
 
All brands
(0.3)%
 
 
Revenue from the reportable segmenta decreased by $3m (4.3%) to $66m, whilst both operating profit and operating profit from the reportable segment increased by $4m (12.5%) to $36m, all partly impacted by adverse foreign exchangeb (revenue $4m, and operating profit $1m) and impacted by a reduction in significant liquidated damages recorded (2019: $nil, 2018: $4m). On an underlyingc basis, revenue increased by $5m (7.7%) and operating profit increased by $9m (32.1%), driven by 18% net system size growth and cost phasing benefiting the first half.
 
 
 
a Greater China reportable segment includes revenue and operating profit before exceptional items, excluding System Fund revenue and expenses and reimbursement of costs, for both fee business and owned, leased and managed lease hotels.
 
b The impact of movements between the previous year’s average exchange rates and actual average rates in 2019.
 
c Underlying revenue and underlying operating profit both exclude System Fund revenue and expenses, reimbursement of costs, the impact of owned asset disposals, significant liquidated damages, current year acquisitions, all translated at constant currency using prior year exchange rates. Underlying operating profit excludes the impact of exceptional items. The presentation of these performance measures allows a better understanding of comparable year-on-year trading and enables an assessment of the underlying trends in the Group’s financial performance.
 

 
 
 
   Hotels
 
     Rooms
 
Greater China hotel and room count
 
 
2019
Change
over 2018
 
2019
Change
over 2018
 
30 June
31 December
30 June
31 December
Analysed by brand
 
 
 
 
 
Six Senses
1
1
122
122
 
Regent
3
-
1,232
(4)
 
InterContinental
 46
(1)
 18,886
(343)
 
Kimpton
1
1
129
129
 
HUALUXE
 9
1
 2,632
297
 
Crowne Plaza
 93
2
 33,037
627
 
Hotel Indigo
 10
-
 1,505
(1)
 
Holiday Inn1
 99
7
 29,504
1,497
 
Holiday Inn Express
 151
18
 32,485
3,321
 
Other
 9
2
 6,656
5,230
 
 
____
____
______
_____
Total
422
31
126,188
10,875
 
 
____
____
______
_____
Analysed by ownership type
 
 
 
 
 
Franchised
59
23
 18,013
9,258
 
Managed
363
8
 108,175
1,617
 
 
____
____
______
_____
Total
422
31
126,188
10,875
 
 
____
____
______
_____
 
 
1Includes seven Holiday Inn Resort properties (1,995 rooms) (2018: seven Holiday Inn Resort properties (2,075 rooms))
 
 
 
 
Hotels
Rooms
 
Greater China pipeline
 
 
2019
Change
over 2018
 
2019
Change
over 2018
 
30 June
31 December
30 June
31 December
Analysed by brand
 
 
 
 
 
Six Senses
2
2
129
129
 
Regent
1
1
280
280
 
InterContinental
 26
1
 7,688
289
 
Kimpton
 5
1
 1,497
598
 
HUALUXE
 21
-
 6,051
(48)
 
Crowne Plaza
 47
8
 14,288
2,433
 
Hotel Indigo
 23
6
 3,773
979
 
EVEN Hotels
 11
4
 2,471
783
 
Holiday Inn1
 58
2
 15,237
(23)
 
Holiday Inn Express
 193
22
 33,884
2,234
 
Other
 -
(1)
 -
(279)
 
 
____
____
______
_____
Total
387
46
85,298
7,375
 
 
____
____
______
_____
Analysed by ownership type
 
 
 
 
 
Franchised
154
30
26,655
4,650
 
Managed
233
16
58,643
2,725
 
 
____
____
______
_____
Total
387
46
85,298
7,375
 
 
____
____
______
_____
 
 
1Includes seven Holiday Inn Resort properties (2,223 rooms) (2018: six Holiday Inn Resort properties (2,128 rooms))
 
 
 
CENTRAL
 
 
6 months ended 30 June
 
 
 
2018
 
 
2019
Restated
%
Central results
$m
$m
change
 
 
 
 
Revenue
88
84
4.8
Gross costs
(146)
(132)
(10.6)
 
____
____
____
 
 
(58)
(48)
(20.8)
Exceptional items
 
(11)
(33)
66.7
 
 
____
____
____
Operating loss
(69)
(81)
14.8
 
____
____
____
 
 
 
The net operating loss decreased by $12m (14.8%) compared to 2018. Central revenue, which mainly comprises technology fee income, increased by $4m (4.8%) to $88m (an increase of $6m (7.1%) at constant currencya), driven by increases in IHG System size in the first half of 2019. Gross costs increased by $14m (10.6%) compared to 2018 (an increase of $17m (12.9%) at constant currency), as central overheads include the reinvestment of a substantial portion of growth investment funded by savings elsewhere in the business. Net operating loss before exceptional items increased by $10m (20.8%) to $58m (an $11m or 22.9% increase to $59m at constant currency).
 
 
 
OTHER FINANCIAL INFORMATION
 
System Fund
 
During the six months ended 30 June 2019, System Fund revenue increased by 9.2% from $618m to $675m. The key drivers for this are an underlying growth in assessment fees reflecting System size growth, increased revenue relating to the sales of points to third parties and favourable adjustments due to changes in breakage estimates.
 
The Group operates a System Fund to collect and administer cash assessments from hotel owners for the specific purpose of use in marketing, the guest reservation systems and hotel loyalty programme. The Fund also receives proceeds from the sale of loyalty points under third-party co-branding arrangements. The Fund is not managed to generate a profit or loss for IHG, although an in-year surplus or deficit can arise, but is managed for the benefit of hotels in the IHG System with the objective of driving revenues for the hotels.
 
 
Reimbursement of costs
 
During the six months ended 30 June 2019, reimbursable revenue decreased 0.3% from $595m to $593m.
 
Cost reimbursements revenue represents reimbursements of costs incurred on behalf of managed and franchised properties and relates, predominantly, to payroll costs at managed properties where we are the employer. As we record cost reimbursements based upon costs incurred with no added mark up, this revenue and related expenses has no impact on either our operating profit or net income.
 
Exceptional items
 
Pre-tax exceptional items totalled a net charge of $15m (2018: $53m charge) and includes $10m relating to reorganisation costs (see below) and $5m of acquisition and integration costs primarily due to the Six Senses acquisition.
 
 
 
Reorganisation costs
 
In September 2017, the Group launched a comprehensive efficiency programme which will fund a series of new strategic initiatives to drive an acceleration in IHG’s future growth. The programme is centred around strengthening the Group’s organisational structure to redeploy resources to leverage scale in the highest opportunity markets and segments. The programme is expected to be completed in 2019. Included in the $10m cost are consultancy fees of $5m and severance costs of $3m. An additional $13m has been charged to the System Fund.
 
 
a The impact of movements between the previous year’s average exchange rates and actual average rates in 2019.
 
 
Net financial expenses
 
Net financial expenses increased by $20m to $67m for the six months ended 30 June 2019. The increase of $20m primarily reflects the interest on the €500m bond issued in November 2018 and the unwind of $10m interest on the deferred and contingent consideration relating to the acquisitions of Regent and the UK portfolio completed in 2018.
 
 
 
Taxation
 
The tax charge on profit before tax, excluding the impact of exceptional items and System Fund, has been calculated using an interim effective tax rate of 21%. Excluding the effect of prior-year items, the equivalent effective tax rate would be approximately 25%. This rate is higher than the average UK statutory rate for the year of 19% due mainly to certain overseas profits (particularly in the US) being subject to statutory rates higher than the UK statutory rate, unrelieved foreign taxes and disallowable expenses.
 
Taxation within exceptional items totalled a credit of $3m representing tax impacts on the accounting exceptional items.
 
Net tax paid in the six months ended 30 June 2019 totalled $67m.
 
 
 
Dividends
 
The Board has proposed an interim dividend per ordinary share of 39.9¢, representing growth of 10% on the 2018 interim dividend.
 
 
 
Capital structure and liquidity management
 
During the six months ended 30 June 2019, $194m of cash was generated from operating activities (2018: $306m). Net cash outflows from investing activities totalled $378m (2018: $105m) including $299m relating to acquisitions. Net cash used in financing activities totalled $299m (2018: $86m) including the $510m special dividend paid.
 
Net debt at 30 June 2019 was $2,847m ($1,965m at 31 December 2018) and included $697m in respect of lease liabilities ($670m at 31 December 2018).
 
The Group had net liabilities of $1,424m at 30 June 2019 ($1,131m at 31 December 2018) reflecting that its internally generated brands are not recorded on the balance sheet, in accordance with accounting standards.
 
 
USE OF NON-GAAP MEASURES
 
In addition to performance measures directly observable in the Interim Financial Statements (IFRS measures), additional measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures and should be viewed as complementary to, and not as a substitute for, the measures prescribed by GAAP.
 
Further information can be found on page 36 of the IHG Annual Report and Form 20-F 2018 (which is available at www.ihgplc.com).
 
 
Total gross revenue in IHG’s System
 
Total gross revenue provides a measure of the overall strength of the Group’s brands. It comprises total rooms revenue from franchised hotels and total hotel revenue from managed, owned, leased and managed lease hotels. Other than owned, leased and managed lease hotels, total gross revenue is not revenue attributable to IHG as it is derived from hotels owned by third parties.
 
 
Revenue and operating profit measures
 
In each of the following measures, System Fund results are excluded as the System Fund is not managed to a profit or loss for IHG, although an in-year surplus or deficit can arise. Revenues related to the reimbursement of costs, and the related costs, are excluded as operating profit is unaffected and an increase in these does not indicate growth for the business. Exceptional items are also excluded as they can be significantly skewed by one off events, for example reorganisation costs.
 
Operating profit measures are, by their nature, before interest and tax. A pre-interest and pre-tax measure excludes the impact of the Group’s financing and external factors such as legislative changes, respectively. A pre-interest and pre-tax measure is considered more reflective of the Group’s success in executing against its strategy.
 
Revenue from reportable segments and operating profit from reportable segments – comprises the Group’s fee business and owned, leased and managed lease hotels.
 
Underlying revenue and underlying operating profit – adjusts the above to exclude the impact of owned asset disposals, significant liquidated damages, current year acquisitions, all translated at constant currency using prior year exchange rates. The presentation of these performance measures allows a better understanding of comparable year-on-year trading and enables an assessment of the underlying trends in the Group’s financial performance.
 
Underlying fee revenue and fee margin – further analyses the above for the Group’s fee business only, reflecting the Group’s core fee-based business model. Underlying fee revenue is at constant currency using prior year exchange rates, fee margin is at actual exchange rates.
 
 
 
Underlying interest
 
This measure includes the interest payable to the System Fund on the outstanding cash balance relating to the IHG Rewards Club programme. In addition, the Group’s financial expenses are presented net of System Fund capitalised interest, this interest is related to the assets attributable to the System Fund. These are adjusted as the System Fund is not managed to a profit or loss for IHG therefore removing these provides a better view of the Group’s underlying interest expense.
 
Adjusted earnings per ordinary share, Underlying earnings per ordinary share
 
Adjusted earnings per ordinary share excludes System Fund revenue and expenses, any interest and tax relating to the System Fund, exceptional items, and their related tax impacts. Adjusted earnings per ordinary share provides a per share measure that is not skewed by the result of the System Fund or exceptional items.
 
Underlying earnings per ordinary share is calculated by dividing underlying profit for the period available for IHG equity holders by the weighted average number of ordinary shares in issue during the period, excluding investment in own shares. The presentation of underlying earnings per ordinary share allows a better understanding of comparable year-on-year trading and thereby allows an assessment of the underlying trends in the Group’s financial performance.
 
 
Net debt, Net capital expenditure, Free cash flow
 
Net debt is used in the monitoring of the Group’s liquidity and capital structure, and is used to calculate the key ratios attached to the Group’s bank covenants. Net debt comprises loans and other borrowings, derivatives hedging debt values, less cash and cash equivalents.
 
Net capital expenditure is defined as cash flow from investing activities less contract acquisition costs, excluding the acquisition of businesses net of cash acquired, tax paid on disposals and adjusted for System Fund depreciation and amortisation (recovery of previous System Fund capital expenditure). For internal management reporting, capital expenditure is reported as either maintenance, recyclable, or System Fund. The disaggregation of net capital expenditure provides useful information as it enables users to distinguish between System Fund capital investments and recyclable investments (such as investments in associates and joint ventures), which are intended to be recoverable in the medium term, compared with maintenance capital expenditure (including key money paid), which represents a permanent cash outflow.
 
Free cash flow is defined as cash flow from operating activities (after interest and tax paid) and excluding contract acquisition costs net of repayments, less purchase of shares by employee share trusts and maintenance capital expenditure (including key money paid). Free cash flow is a useful measure for investors, as it represents the cash available to invest back into the business to drive growth, pay the ordinary dividend, with any surplus being available for additional returns to shareholders.
 
These measures have limitations as they omit certain components of the overall cash flow statement. They are not intended to represent IHG’s residual cash flow available for discretionary expenditures, nor do they reflect our future capital commitments. These measures are used by many companies, but there can be differences in how each company defines the terms, limiting their usefulness as a comparative measure. Therefore, it is important to view these measures only as a complement to the Group statement of cash flows.
 
 
Underlying revenue and underlying operating profit Non-GAAP reconciliations
 
 
The following tables:
 
Reconcile the GAAP measures included in the Interim Financial Statements to Group underlying revenue and underlying operating profit;
Show underlying revenue and underlying operating profit on both an actual and constant currency basisa;
Reconcile segmental underlying revenue and underlying operating profit to Group underlying revenue and operating profit; and
Show underlying Group fee revenue and Group fee margin both on an actual and constant currency basisa.
 
Highlights for the six months ended 30 June 2019
 
 
                             Revenue
  Operating profit    
 
 
 
 
 
2018
 
 
2019
            2018
%
2019
Restated
%
 
$m
              $m
change
$m
$m
change
 
 
 
 
 
 
 
Per Group income statement
2,280
2,113
7.9
442
348
27.0  
Significant liquidated damages
(4)
(7)
42.9
(4)
(7)
42.9  
Exceptional items
Acquisitions of businesses
-
(22)
-
-
-
-
15
2
53
-
(71.7)
-  
System Fund
(675)
(618)
(9.2)
(47)
12
 (491.7)  
Reimbursement of costs
(593)
(595)
0.3
-
-
-  
 
_____
_____
_____
_____
_____
_____  
Underlying at actual exchange rates
986
893
10.4
408
406
0.5  
 
_____
_____
_____
_____
_____
_____  
 
 
 
a IHG’s method for calculating the constant currency amounts of entities reporting in currencies other than US dollars is to translate the current period results into US dollars using the prior period’s exchange rate. For example, if a UK entity generated revenue of £100m in 2019 and 2018, the Interim Financial Statements would report revenue of $130m in 2019 and $137m in 2018, using the respective average exchange rates for the year of $1=£0.77 and $1=£0.73. For constant currency reporting, 2019 revenue would be translated at $1=£0.73 giving a US dollar value of $137m, thereby showing that underlying revenue was flat year-on-year. An exception to this approach is made for currencies experiencing high volatility in order to remove the distorting effect on underlying results where the average daily rate broadly keeps pace with inflation. In 2019 and 2018 this exception has been applied to fees earned from hotels in Venezuela.
 
 
 
 
                  At actual exchange rates
 
                 At constant currency
 
2019
2018
%
2019
          2018
%
 
$m
$m
change
$m
$m
change
Underlying revenue
 
 
 
 
 
 
Americas
520
514
1.2
522
514
1.6
EMEAA
312
230
35.7
329
230
43.0
Greater China
66
65
1.5
70
65
7.7
Central
88
84
4.8
90
84
7.1
 
_____
_____
_____
_____
_____
_____
Underlying Group revenue
986
893
10.4
1,011
893
13.2
Owned, leased and managed lease revenue included above
 
(267)
 
(181)
 
(47.5)
 
(277)
 
(181)
 
(53.0)
 
_____
_____
_____
_____
_____
_____
Underlying Group fee revenue
719
712
1.0
734
712
3.1
 
_____
_____
_____
_____
_____
_____
 
 
 
 
 
 
 
 
 
 
              At actual exchange rates
           At constant currency
 
 
 
2018
 
 
2018
 
 
2019
Restated
%
2019
Restated
%
 
$m
$m
change
$m
$m
change
 
 
 
 
 
 
 
Underlying operating profit
 
 
 
 
 
 
Americas
344
334
3.0
346
334
3.6
EMEAA
86
92
(6.5)
90
92
(2.2)
Greater China
36
28
28.6
37
28
32.1
Central
(58)
(48)
(20.8)
(59)
(48)
(22.9)
 
_____
_____
_____
_____
_____
_____
Underlying Group operating profit
408
406
0.5
414
406
2.0
Owned, leased and managed lease operating profit included above
 
 
(17)
 
 
(22)
 
 
22.7
 
 
(16)
 
 
(22)
 
 
27.3
 
_____
_____
_____
_____
_____
_____
Underlying Group fee profit
391
384
1.8
398
384
3.6
 
_____
_____
_____
_____
_____
_____
Group fee margin
54.4%
53.9%
0.5ppts
54.2%
53.9%
0.3ppts
 
_____
_____
_____
_____
_____
_____
 
 
 
 
 
Underlying earnings per share
 
The following table reconciles basic earnings per ordinary share to underlying earnings per share:
 
 
6 months ended 30 June
 
 
 
2018
 
2019
Restated
 
$m
$m
 
 
 
Basic earnings per ordinary share
 
 
 
 
 
Profit available for equity holders
306
233
Basic weighted average number of ordinary shares (millions)
183
190
 
 
 
Basic earnings per ordinary share (cents)
167.2
122.6
 
_____
_____
Underlying earnings per ordinary share
 
 
Profit available for equity holders
306
233
Adjusted for:
 
 
Significant liquidated damages
(4)
(7)
Tax on significant liquidated damages
1
2
System Fund revenue and expenses
(47)
12
Interest attributable to the System Fund
(9)
(9)
Exceptional items before tax
15
53
Tax on exceptional items
Acquisition of businesses after tax
(3)
2
(13)
-
Currency effect
6
-
 
_____
_____
Underlying profit available for equity holders
267
271
 
_____
_____
 
 
 
Underlying earnings per ordinary share (cents)
145.8
142.6
 
_____
_____
 
 
Net capital expenditure
The following table reconciles net cash from investing activities to net capital expenditure:
 
 
           6 months ended 30 June
 
 
 
2018
 
2019
Restated
 
$m
$m
 
 
 
Net cash from investing activities
(378)
(105)
 
Adjusted for:
 
 
Contract acquisition costs
(17)
(25)
System Fund depreciation and amortisation
Acquisition of businesses, net of cash acquired
25
299
18
-
 
_____
_____
Net capital expenditure
(71)
(112)
 
 
 
Add back:
Disposal receipts
 
(5)
 
(2)
System Fund depreciation and amortisation
(25)
(18)
 
_____
_____
Gross capital expenditure
(101)
(132)
 
_____
_____
Analysed as:
 
 
    Capital expenditure: maintenance and key money
(45)
(50)
    Capital expenditure: recyclable investments
(14)
(32)
    Capital expenditure: System Fund investments
(42)
(50)
 
_____
_____
Gross capital expenditure
(101)
(132)
 
_____
_____
 
 
 
 
 
 
Free cash flow
 
The following table reconciles net cash from operating activities to free cash flow:
 
 
6 months ended 30 June
 
 
 
2018
 
2019
Restated
 
$m
$m
 
 
 
Net cash from operating activities
194
306
 
 
 
Adjusted for:
 
 
    Contract acquisition costs
17
25
 
 
 
Less:
 
 
    Purchase of shares by employee share trusts
(3)
(3)
    Capital expenditure: maintenance and key money
    Lease repayments
(45)
(22)
(50)
(17)
 
_____
_____
Free cash flow
141
261
 
_____
_____
 
 
Underlying interest
 
The following table reconciles net financial expenses to underlying interest:
 
 
 
6 months ended 30 June
 
 
 
2018
 
2019
Restated
 
$m
$m
Net financial expenses
 
 
 
 
 
Financial income
3
2
Financial expenses
(70)
(49)
 
_____
_____
Net financial expenses
(67)
(47)
 
Adjusted for:
 
 
Interest payable on balances with the System Fund
(7)
(6)
Capitalised interest relating to System Fund assets
(2)
(3)
 
_____
_____
Underlying interest
(76)
(56)
 
_____
_____
 
 
RELATED PARTY TRANSACTIONS
 
There were no material related party transactions during the six months to 30 June 2019.
 
 
PRINCIPAL RISKS AND UNCERTAINTIES
 
The principal risks and uncertainties that could substantially affect IHG’s business and results in 2019 are set out on pages 26 to 30 of the IHG Annual Report and Form 20-F 2018 (the “Annual Report”). The nature and potential impact of those risks and uncertainties has not materially changed since the publication of the Annual Report, nor are any expected for the remaining half of the financial year. However, there may be unknown risks or risks currently believed to be inconsequential that emerge and could become material. The following summarises the risks and uncertainties set out in the Annual Report:
 
 
 
Threats to cybersecurity and information governance could impact IHG’s operations, leading to the loss of sensitive data that could impact IHG financially and reputationally;
Failure to deliver IHG’s preferred brands and loyalty programme could impact IHG’s competitive positioning, its growth ambitions and reputation with guests and owners;
Failure to effectively attract, develop and retain talent in key areas could impact IHG’s ability to achieve its growth ambitions and execute effectively;
Failure to ensure legal, regulatory and ethical compliance would impact IHG operationally and reputationally;
Failure to capitalise on innovation in booking technology, and maintain and enhance IHG’s functionality and resilience of its channel management and technology platforms could impact IHG’s revenues and growth ambitions;
Risks in IHG’s ongoing agenda to accelerate growth and strategic initiatives could include short-term disruption, reputational damage and longer-term breakdown of a commercial relationship;
The inability to realise value from IHG’s programme and project delivery could result in failure to improve commercial performance, financial loss and undermine stakeholder confidence;
Macro external factors, such as political, economic, environmental and societal could have a mass impact on our ability to perform and grow;
Failure to maintain an effective safety and security system and ability to respond appropriately in the event of disruption or incidents affecting our operations more broadly could result in reputational and / or financial damage, and undermine stakeholder confidence; and
A material breakdown in financial management and control systems could lead to increased public scrutiny, regulatory investigation and litigation.
 
 
These principal risks and uncertainties are supported by a broader description of risk factors set out on pages 182 to 186 of the Annual Report.
 
 
GOING CONCERN
 
An overview of the business activities of IHG, including a review of the key business risks that the Group faces, is given in this Interim Management Report. Information on the Group’s treasury management policies can be found in note 22 to the Group Financial Statements in the IHG Annual Report and Form 20-F 2018.
 
The Group has no significant debt maturities before 2022. At the end of June 2019, the Group was trading significantly within its banking covenants and debt facilities.
 
The Group’s fee-based model and wide geographic spread means that it is well placed to manage through uncertain times, and our forecasts and sensitivity projections, based on a range of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facilities.
 
The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, being a period of not less than 12 months from the date of this report. Accordingly, the financial statements continue to be prepared on going concern basis.
 
 
DIRECTORS’ RESPONSIBILITY STATEMENT
 
The Directors confirm that to the best of their knowledge:
 
The condensed set of Financial Statements has been prepared in accordance with IAS 34;
The Interim Management Report includes a fair review of the important events during the first six months, and their impact on the financial statements and a description of the principal risks and uncertainties for the remaining six months of the year, as required by DTR 4.2.7R; and
The Interim Management Report includes a fair review of related party transactions and changes therein, as required by DTR 4.2.8R.
 
 
On behalf of the Board
 
 
Keith Barr                                                       
Paul Edgecliffe-Johnson
Chief Executive Officer                                                       
Chief Financial Officer
 
6 August 2019             
6 August 2019
 
 
 
INTERCONTINENTAL HOTELS GROUP PLC
GROUP INCOME STATEMENT
For the six months ended 30 June 2019
 
 
 
2019
6 months ended
30 June
$m
2018
6 months ended
30 June Restated*
$m
Continuing operations
 
 
 
 
 
Revenue from fee business
730
719
Revenue from owned, leased and managed
lease hotels
 
282
 
181
System Fund revenues
675
618
Reimbursement of costs
593
595
 
____
____
Total revenue (notes 4 and 5)
2,280
2,113
 
 
 
Cost of sales
(391)
(298)
System Fund expenses
(628)
(630)
Reimbursed costs
(593)
(595)
Administrative expenses before exceptional items
(160)
(138)
Share of losses of associates and joint ventures
-
(3)
Other operating income
5
7
Depreciation and amortisation
(56)
(55)
 
____
____
Operating profit before exceptional items (note 4)
457
401
 
 
 
Exceptional items (note 6)
(15)
(53)
 
_____
_____
Operating profit (note 4)
442
348
Financial income
3
2
Financial expenses
(70)
(49)
 
_____
_____
Profit before tax
375
301
 
 
 
Tax (note 7)
(69)
(68)
 
_____
_____
Profit for the period from continuing operations
306
233
 
_____
_____
 
 
 
Attributable to:
 
 
 
Equity holders of the parent
306
233
 
Non-controlling interest
-
-
 
 
_____
_____
 
 
306
233
 
_____
_____
 
 
 
Earnings per ordinary share (note 8)
 
 
Continuing and total operations:
 
 
 
Basic
167.2¢
122.6¢
 
Diluted
166.3¢
122.0¢
 
Adjusted
143.2¢
145.3¢
 
Adjusted diluted
142.4¢
144.5¢
 
_____
_____
 
 
 
* Restated for the adoption of IFRS 16 (see note 2).
 
 
 
 
INTERCONTINENTAL HOTELS GROUP PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2019
 
 
2019
6 months ended
30 June
 
$m
2018
6 months ended
30 June
Restated*
$m
 
 
 
Profit for the period
306
233
 
 
 
Other comprehensive income
 
 
 
 
 
Items that may be subsequently reclassified to profit or loss:
 
 
 
Gains on cash flow hedges, net of related tax charge of $2m (2018 $nil)
 
4
 
-
 
Costs of hedging
(2)
-
 
Hedging losses reclassified to financial expenses
4
-
 
Exchange gains on retranslation of foreign operations, including related tax credit of $1m (2018 $1m)
 
25
 
19
 
_____
_____
 
31
19
Items that will not be reclassified to profit or loss:
 
 
 
Gains/(losses) on equity instruments classified as fair value through other comprehensive income
 
6
 
(7)
 
Re-measurement (losses)/gains on defined benefit plans, net of related tax credit of $2m (2018 charge of $2m)
 
(6)
 
7
 
_____
_____
Total other comprehensive income for the period
31
19
 
_____
_____
Total comprehensive income for the period
337
252
 
_____
_____
Attributable to:
 
 
 
Equity holders of the parent
337
251
 
Non-controlling interest
-
1
 
_____
_____
 
337
252
 
_____
_____
 
 
* Restated for the adoption of IFRS 16 (see note 2).
 
 
 
 
 
 
INTERCONTINENTAL HOTELS GROUP PLC
GROUP STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2019
 
 
6 months ended 30 June 2019
 
 
Equity share capital
Other reserves*
Retained earnings
Non-controlling interest
 
Total equity
 
$m
$m
$m
$m
$m
At beginning of the period (as previously reported)
146
(2,397)
1,166
8
(1,077)
Impact of adopting IFRS 16 (note 2)
-
1
(55)
-
(54)
 
_____
_____
_____
_____
_____
At beginning of the period (restated)
146
(2,396)
1,111
8
(1,131)
 
 
 
 
 
 
Total comprehensive income for the period
-
37
300
-
337
Transfer of treasury shares to employee share trusts
 
-
 
(19)
 
19
 
-
 
-
Purchase of own shares by employee share trusts
 
-
 
(3)
 
-
 
-
 
(3)
Release of own shares by employee share trusts
 
-
 
23
 
(23)
 
-
 
-
Equity-settled share-based cost
-
-
20
-
20
Tax related to share schemes
-
-
3
-
3
Equity dividends paid
-
-
(649)
-
(649)
Transaction costs relating to shareholder returns
 
-
 
-
 
(1)
 
-
 
(1)
Exchange adjustments
(1)
1
-
-
-
 
_____
_____
_____
_____
_____
At end of the period
145
(2,357)
780
8
(1,424)
 
_____
_____
_____
_____
_____
 
 
 
6 months ended 30 June 2018
 
 
Equity share capital
Other reserves*
Retained earnings
Non-controlling interest
 
Total equity
 
$m
$m
$m
$m
$m
At beginning of the period (as previously reported)
 
154
 
(2,431)
 
969
 
7
 
(1,301)
Impact of adopting IFRS 16 (note 2)
-
-
(53)
-
(53)
 
_____
_____
_____
_____
_____
At beginning of period (restated)
154
(2,431)
916
7
(1,354)
 
 
 
 
 
 
Total comprehensive income for the period
-
11
240
1
252
Transfer of treasury shares to employee share trusts
 
-
 
(17)
 
17
 
-
 
-
Purchase of own shares by employee share trusts
 
-
 
(3)
 
-
 
-
 
(3)
Release of own shares by employee share trusts
 
-
 
24
 
(24)
 
-
 
-
Equity-settled share-based cost
-
-
19
-
19
Tax related to share schemes
-
-
2
-
2
Equity dividends paid
-
-
(130)
(1)
(131)
Exchange adjustments
(4)
4
-
-
-
 
_____
______
_____
_____
_____
At end of the period
150
(2,412)
1,040
7
(1,215)
 
_____
_____
_____
_____
_____
 
 
*
Other reserves comprise the capital redemption reserve, shares held by employee share trusts, other reserves, fair value reserve, cash flow hedging reserve and currency translation reserve.
All items above are shown net of tax.
 
 
 
 
INTERCONTINENTAL HOTELS GROUP PLC
GROUP STATEMENT OF FINANCIAL POSITION
30 June 2019
 
 
2019
30 June
2018
31 December
Restated*
 
$m
$m
ASSETS
 
 
Property, plant and equipment
284
273
Right-of-use assets
540
513
Goodwill and other intangible assets
1,461
1,143
Investment in associates and joint ventures
105
104
Other financial assets
268
260
Derivative financial instruments
16
7
Tax receivable
40
31
Deferred tax assets
65
63
Contract costs
60
55
Contract assets
274
270
 
_______
_______
Total non-current assets
3,113
2,719
 
_______
_______
Inventories
6
5
Trade and other receivables
772
610
Tax receivable
33
27
Other financial assets
4
1
Derivative financial instruments
-
1
Cash and cash equivalents
188
704
Contract costs
5
5
Contract assets
21
20
 
_______
_______
Total current assets
1,029
1,373
 
_______
_____
Total assets (note 4)
4,142
4,092
 
______
______
LIABILITIES
 
 
Loans and other borrowings
(58)
(104)
Lease liabilities
(63)
(55)
Trade and other payables
(494)
(616)
Deferred revenue
(607)
(572)
Provisions
(11)
(10)
Tax payable
(51)
(50)
 
______
______
Total current liabilities
(1,284)
(1,407)
 
______
______
Loans and other borrowings
(2,295)
(1,910)
Lease liabilities
(634)
(615)
Retirement benefit obligations
(98)
(91)
Trade and other payables
(148)
(125)
Deferred revenue
(949)
(934)
Provisions
(18)
(17)
Deferred tax liabilities
(140)
(124)
 
______
_______
Total non-current liabilities
(4,282)
(3,816)
 
______
_______
Total liabilities
(5,566)
(5,223)
 
______
_______
Net liabilities
(1,424)
(1,131)
 
______
_______
EQUITY
 
 
Equity share capital
145
146
Capital redemption reserve
10
10
Shares held by employee share trusts
(3)
(4)
Other reserves
(2,864)
(2,865)
Fair value reserve
53
47
Cash flow hedging reserve
2
(4)
Currency translation reserve
445
420
Retained earnings
780
1,111
 
______
_______
IHG shareholders’ equity
(1,432)
(1,139)
Non-controlling interest
8
8
 
_______
_______
Total equity
(1,424)
(1,131)
 
______
______
* Restated for the adoption of IFRS 16 (see note 2).
 
 
 
 
 
 
INTERCONTINENTAL HOTELS GROUP PLC
GROUP STATEMENT OF CASH FLOWS
For the six months ended 30 June 2019
 
 
 
 
2019
6 months ended
30 June
2018
6 months ended
30 June
Restated*
 
$m
$m
 
 
 
Profit for the period
306
233
Adjustments reconciling profit for the period to cash flow from operations before contract acquisition costs (note 11)
 
3
 
123
 
_____
_____
Cash flow from operations before contract acquisition costs
309
356
Contract acquisition costs
(17)
(25)
 
_____
_____
Cash flow from operations
292
331
Interest paid
(33)
(21)
Interest received
2
1
Tax paid on operating activities
(67)
(5)
 
_____
_____
Net cash from operating activities
194
306
 
_____
_____
Cash flow from investing activities
 
 
Purchase of property, plant and equipment
(31)
(16)
Purchase of intangible assets
(46)
(56)
Investment in associates and joint ventures
-
(1)
Investment in other financial assets
(5)
(31)
Acquisition of businesses, net of cash acquired (note 10)
(299)
-
Capitalised interest paid
(2)
(3)
Repayments of other financial assets
5
2
 
_____
_____
Net cash from investing activities
(378)
(105)
 
_____
_____
Cash flow from financing activities
 
 
Purchase of own shares by employee share trusts
(3)
(3)
Dividends paid to shareholders
(649)
(130)
Dividends paid to non-controlling interest
-
(1)
Transaction costs relating to shareholder returns
(1)
-
Lease repayments
(22)
(17)
Increase in other borrowings
376
65