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 23 February 2016
 
 
InterContinental Hotels Group PLC
(Registrant's name)
 
 
Broadwater Park, Denham, Buckinghamshire, UB9 5HJ, United Kingdom
(Address of principal executive offices)
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
 
 
Form 20-F           Form 40-F
 
 
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
 
Yes           No
 
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable
 
 


 
 
EXHIBIT INDEX
 
     
           
99.1     Final Results
 
 
     
 
 
 
     
           
 





Exhibit No: 99.1
 


InterContinental Hotels Group PLC
Preliminary Results for the year to 31 December 2015
Strong results driven by disciplined execution of our winning strategy

Financial summary1
Reported
Underlying2
 
2015
2014
% Change
2015
2014
% Change
Revenue
$1,803m
$1,858m
(3)%
$1,522m
$1,409m
8%
Fee Revenue3
$1,349m
$1,255m
7%
$1,352m
$1,255m
8%
Operating profit
$680m
$651m
4%
$650m
$583m
11%
Adjusted EPS
174.9¢
158.3¢
10%
167.3¢
140.7¢
19%
Basic EPS4
520.0¢
158.3¢
228%
     
Total dividend per share
85.0¢
77.0¢
10%
     
Net debt
$529m
$1,533m
(65)%
     

 
1All figures before exceptional items unless otherwise noted.  2Excluding owned asset disposals, managed leases, significant liquidated damages and Kimpton; at constant FY14 exchange rates (CER).  Underlying adjusted EPS based on underlying EBIT, effective tax rate, and reported interest at actual exchange rates.  3Group revenue excluding owned & leased hotels, managed leases and significant liquidated damages; underlying excludes Kimpton.  4After exceptional items.
 

Richard Solomons, Chief Executive of InterContinental Hotels Group PLC, said:
“Our strong momentum in 2015 was driven by a clear strategy and disciplined execution. We delivered our highest room openings since 2009, our best signings since 2008, 11% underlying profit growth and 19% underlying EPS growth.
 
Our high quality, fee based, business continues to generate significant operating cash flows following the completion of our major asset disposal programme.  Reflecting this and our on-going focus on delivering shareholder value, we today announce a $1.5bn special dividend, which will take total funds returned since 2003 to $12bn.
 
We have strengthened our brand portfolio, adding Kimpton Hotels & Restaurants into the IHG family and accelerating signings across our mainstream and extended stay brands. Through effective online distribution management we grew our direct digital revenue more than any other channel, and building on our track record of innovation we are on course to begin the roll out of a next generation cloud based Guest Reservation System in 2017.
 
Looking into the medium term, despite economic and political uncertainty in some markets, the prospects for the hotel industry remain good and the strength of our business model gives us the confidence to propose a 10% increase in total dividend for the year.”
 
Financial Highlights
 
·  Strong revenue growth driven by both RevPAR and rooms
         - Global comparable RevPAR up 4.4% (Q4: 2.4%), led by rate up 3.1%, with RevPAR growth across all regions.
         - Net room growth of 4.8% (3.2% ex. Kimpton acquisition), with 44k room openings up 8% year-on-year.
         - $24.0bn total gross revenue from hotels in IHG’s system (up 5% year-on-year; 11% CER).
 
·  High quality business model with a focus on disciplined execution and capital allocation
        - > 95% profit now from the fee business; ~85% of fee revenue from hotel revenues.
        - Group fee margin of 46.3%, up 1.6%pts (1.3%pts CER); scale benefits and tight overhead control creates capacity to invest for further growth, whilst driving consistent fee margin progression.
        - Focused investment in our brands and asset recycling led to net capital expenditure of $226m (gross: $264m).
        - $1.5bn will be returned to shareholders via a special dividend with share consolidation, to be paid in Q2 2016.
        - Proposed 10% increase in total dividend to 85.0¢, reflects confidence in the future prospects of the business.
        - Return on capital employed of 57% up from 9% in 2004.
 
Strategic Progress
·  Strengthening our preferred brands
        - Record year for opening and signings for Kimpton Hotels & Restaurants, and in January 2016, we signed the first for the brand outside the Americas, in Amsterdam; other management agreements being negotiated in all regions.
        - Expanded our boutique footprint, opening Hotel Indigo Lower East Side New York, IHG’s 5,000th hotel, as well as adding our first property for the brand in AMEA, Hotel Indigo Bangkok Wireless Road.
        - Crowne Plaza RevPAR up 6.1% with new brand hallmarks driving higher guest satisfaction.
        - Innovative guest room and public area enhancements for the Holiday Inn Brand Family, which drove guest satisfaction levels to an all-time high and the most pipeline signings for seven years.
        - Momentum continued across our new brands, opening the first three HUALUXE Hotels and Resorts in China; a flagship property for EVEN Hotels in New York and signing a further six hotels for the brand into the pipeline.
 
·  Growing through targeted hotel distribution
         - Signed 78k rooms into the pipeline, up 13% year-on-year, led by the Americas.
         - Highest global room signings for seven years, demonstrating owners’ confidence in IHG and its brands.
         - 214k pipeline rooms of which ~ 45% are under construction and ~90% are in our ten priority markets.
         - 15% share of the active industry pipeline, more than three times current supply share.
 
·  Driving revenue delivery through technology and loyalty
        - Digital revenue of $4.2bn, up more than $0.4bn year-on-year, ahead of any other channel.
        - 40% of digital traffic from mobile devices, delivering gross revenue of $1.2bn, up from under $50m five years ago.
        - Enhanced IHG Rewards Club with the launch of Spire Elite, a new top tier of membership, and enhanced personalised member marketing campaigns, driving registrations up 35% year-on-year.
        - Industry’s first cloud-based Guest Reservation System on track to begin roll-out in 2017.
 
 
Americas – Double digit profit growth driven by rate led RevPAR increases and room growth
Comparable RevPAR increased 4.6% (Q4: up 2.9%), driven by 3.8% rate growth. US RevPAR was up 4.7%, led by Crowne Plaza up 6.6% and Hotel Indigo up 7.5%. Fourth quarter US RevPAR growth of 2.9% was impacted by our concentration in oil producing markets, where RevPAR was down 9.8%; the remainder of the estate grew 4.8%.
 
On an underlying1 basis revenue was up 9% and operating profit up 10%, driven by franchise royalty growth of 5% and an $8m (28%) increase in fees associated with the initial franchising and relicensing of hotels. Managed profit was impacted by costs relating to our 20% interest in InterContinental New York Barclay during its refurbishment (2015: $4m, 2014: $5m). Underlying1 owned profits increased 26%, driven by 7.1% RevPAR uplift at InterContinental Boston and 6.3% RevPAR growth at Holiday Inn Aruba. Reported revenue and profits both increased 10% (revenue 11% at CER, profit 12% at CER), benefiting from Kimpton operating profit of $18m which included previously disclosed liquidated damage receipts of $3m.
 
Opened 23k rooms (183 hotels), including four Holiday Inn Club Vacations properties (1k rooms), growing this portfolio by 30%. 15k rooms (104 hotels) were removed as we continue to focus on high quality brand representation.  We signed 38k rooms (325 hotels), including 78 hotels (8k rooms) for our extended stay brands.
 
2016:
The significant refurbishment and repositioning of InterContinental New York Barclay is planned to complete at the end of the first half. We expect to incur costs of $6m in the period before the hotel re-opens, which will result in improvements to the long-term profitability of the hotel. From the third quarter the hotel will start to contribute fees, which will increase to approximately $7m per annum once trading is fully ramped up.
 
To drive further growth across our brand portfolio we will invest an additional $7m, primarily into franchise development resources. Non-exceptional Kimpton integration costs are expected to be in line with 2015, at approximately $2m.
 
Europe – Robust trading in major markets and acceleration in signings pace
Comparable RevPAR increased by 5.4% (Q4: up 3.6%), driven by rate up 3.9%. UK RevPAR increased by 5.1%, led by rate growth in both London and the provinces. In Germany, our second major market, RevPAR growth was 4.4%, and across the rest of Europe our RevPAR grew in the mid-single digits, despite challenging trading conditions in Paris.
 
On an underlying1 basis revenue was up 8% and operating profit up 23%, with the transition of 61 UK managed hotels to franchise contracts driving a 14% increase in underlying1 franchise fees and cost efficiencies reducing regional overheads. Reported revenue declined 29% (17% at CER) and reported operating profit was down 12% (up 3% at CER), negatively impacted by foreign exchange translation and the sale of InterContinental Paris – Le Grand on 20 May 2015, which was retained on a long term management agreement.
 
Opened 5k rooms (36 hotels) including the landmark InterContinental London – The O2, and InterContinental Bordeaux – Le Grand, a conversion which marks our fifth open property for the brand in France.  We signed 9k rooms (48 hotels), including 14 properties in Germany, a record number in that country for the second year running, realised through our multi-development agreements.
 
AMEA – Solid growth led by RevPAR in Japan and new openings in priority markets
Comparable RevPAR increased 4.5% (Q4: up 0.2%), driven by growth in both rate and occupancy.  Trading across the region was mixed, with Japan continuing to outperform through rate led RevPAR growth of 14.6%, benefiting from international demand.  Australia increased 4.5%, while South East Asia grew 5.7%, led by recovery in Thailand after political disruption. However, the Middle East was impacted by declining oil prices, ending the year up 0.2%.
 
On an underlying1 basis, revenue was up 6% and operating profit increased 9%, driven by robust trading in the managed business, and net room growth of 7% across the region. Reported revenues declined 0.4% (up 10% at CER) and profit increased 2% (11% at CER), adversely impacted by foreign exchange translation.
 
We opened 7k rooms (22 hotels) and signed 12k rooms (35 hotels), our fastest pace in seven years.  This included strong growth in Indonesia, one of our priority markets, increasing our presence by more than 30% with the opening of five hotels (1k rooms), and signing a further four properties (1k rooms).
 
2016:
Of the 7k rooms opened in 2015, 3k are located in Makkah, Saudi Arabia.  Due to the highly seasonal nature of demand in this market, the stabilised annual contribution from these rooms is expected to be approximately $1m from 2016.

 
1Excluding owned asset disposals, managed leases, significant liquidated damages and Kimpton; at constant FY14 exchange rates (CER).

 
 
Greater China – Market out-performance and rooms growth drive strong fee revenue increase
Comparable RevPAR increased by 0.3%, with growth of 2.9% in mainland China offset by significant declines in Hong Kong and Macau; fourth quarter RevPAR declined by 0.9% with mainland China up 0.5%. IHG’s operational excellence in the region resulted in significant industry out-performance, with full year growth particularly strong in mainland tier 1 cities, up 6.0%, and the rest of the mainland showed marginal increases. Our strategy of using our mainstream brands to penetrate less developed cities impacted total RevPAR, which was down 2.3% for the region.
 
Underlying1 revenue was up 8% driven by the addition of 20k rooms into the managed estate over the last two years. Underlying1 profit declined by 11%, adversely impacted by $5m of on-going investment into building long term people capability, as well as the year-on-year impact from $5m of previously disclosed one-off upsides in 2014.  Reported revenue and operating profit declined by 14% (14% at CER) and 21% (20% at CER), respectively, both affected by the sale of InterContinental Hong Kong on 30 September 2015.
 
Opened 9k rooms (32 hotels) and signed 20k rooms (66 hotels), significantly ahead of the nearest international competitor on both metrics. The openings included the rebranded 495-room Crowne Plaza Sanya City Centre, whilst signings pace was up 24% year-on-year, driven by 13k Holiday Inn rooms entering the pipeline.
 
Highly cash generative business with disciplined approach to capital allocation
·  Significant free cash flow from operations
         - Free cash flow of $466m, up 45% year on year (2014: $321m).
 
·  Completion of transition to asset light with $1.3bn proceeds from major asset disposals
         - Completed the sale of InterContinental Paris – Le Grand for gross proceeds of €330m.
         - Sold InterContinental Hong Kong for proceeds of $928m after final working capital adjustments and cash tax, marking the successful conclusion of our major owned asset disposal programme.
 
·  Investing for growth
        - Acquisition of Kimpton Hotels & Restaurants completed in January 2015 for $430m before working capital. Future tax relief associated with the tax amortisation of the purchase consideration expected to be approximately $160m.
        - $264m gross capital expenditure in 2015 comprised: $115m maintenance capex and key money; $78m recyclable investments; and $71m system funded capital investments.  $17m proceeds received from asset recycling and $21m system fund depreciation received via working capital, resulting in $226m of net capital expenditure.
        - Gross capex guidance remains unchanged at up to $350m per annum into the medium term, including approximately $100m of system funded investment in 2016, primarily for development of our new Guest Reservation System.
 
·  Shareholder returns
        - Proposed 11% increase in the final dividend to 57.5¢, taking the total dividend for the year up 10% to 85.0¢, reflecting our confidence in the future prospects of the business.
        - $1.5bn, equating to 632.9¢ per share, will be returned via a special dividend with share consolidation.
 
·    Efficient balance sheet provides flexibility
        - Financial position remains robust, with an on-going commitment to an investment grade credit rating.
        - Entered into a new $1.3bn syndicated loan facility during the first half and in August issued a £300m, 10-year bond at a 3.750% coupon rate, the lowest funding rate IHG has achieved in the Sterling bond market.
        - Year-end net debt of $529m (including $224m finance lease on InterContinental Boston), down $1,004m on 2014 due to the proceeds from asset disposals, partially offset by the purchase of Kimpton.
 
Foreign exchange – volatile currency markets impact reported profit
The strong US dollar in 2015 reduced reported profit by $25m and adversely impacted RevPAR growth by 4.6%pts when translated at actual rates.  Europe and AMEA were the two regions most affected, with foreign exchange reducing RevPAR growth by 13.6%pts and 8.0%pts respectively.
 
Currency markets continue to be volatile and we expect foreign exchange to have an impact on 2016 reported profit. If the average exchange rate during January 2016 had existed throughout 2015, 2015 reported operating profit would have reduced by a further $4m.
 
A full breakdown of constant currency vs. actual currency RevPAR by region is set out in appendix 2.
 
Interest, tax, and exceptional items
Interest: Net financial expenses increased by $7m to $87m due to the bridging loan used to acquire Kimpton, which was subsequently re-financed by a £300m sterling bond in August.
 
Tax: Effective rate for 2015 was 30% (2014: 31%).  2016 tax rate expected to be low 30s.
 
Exceptional operating items: Net exceptional operating gain of $819m for the full year was driven predominantly by a gain on the disposal of hotels.
 
1Excluding owned asset disposals, managed leases, significant liquidated damages and Kimpton; at constant FY14 exchange rates (CER).
 
 

 
Appendix 1: RevPAR Movement Summary
 
Full Year 2015
Q4 2015
RevPAR
Rate
Occ.
RevPAR
Rate
Occ.
Group
4.4%
3.1%
0.8pts
2.4%
2.2%
0.1pts
Americas
4.6%
3.8%
0.5pts
2.9%
2.8%
0.0pts
Europe
5.4%
3.9%
1.0pts
3.6%
3.9%
(0.2)pts
AMEA
4.5%
2.1%
1.6pts
0.2%
0.8%
(0.4)pts
G. China
0.3%
(3.0)%
2.1pts
(0.9)%
(3.1)%
1.5pts


Appendix 2: RevPAR movement summary at constant exchange rates (CER) vs. actual exchange rates (AER)
 
 
Full Year 2015
Q4 2015
CER
AER
Difference
CER
AER
Difference
Group
4.4%
(0.2)%
(4.6)pts
2.4%
(1.7)%
(4.1)pts
Americas
4.6%
2.8%
(1.8)pts
2.9%
1.0%
(1.9)pts
Europe
5.4%
(8.2)%
(13.6)pts
3.6%
(5.9)%
(9.5)pts
AMEA
4.5%
(3.5)%
(8.0)pts
0.2%
(6.8)%
(7.0)pts
G. China
0.3%
(1.2)%
(1.5)pts
(0.9)%
(3.9)%
(3.0)pts


 
Appendix 3: Full Year System & Pipeline Summary (rooms)
 
 
System
Pipeline
Openings
Removals
Net
Total
YoY%
Signings
Total
Group
55,752
(21,679)
34,073
744,368
4.8%
81,041
213,916
Kimpton acquisition
11,325
-
11,325
11,325
-
2,603
2,603
Underlying Group
44,427
(21,679)
22,748
733,043
3.2%
78,438
211,313
Americas
22,942
(14,709)
8,233
468,250
1.8%
37,655
93,781
Europe
5,493
(2,990)
2,503
106,711
2.4%
8,826
20,532
AMEA
6,612
(1,915)
4,697
72,573
6.9%
12,441
38,216
G. China
9,380
(2,065)
7,315
85,509
9.4%
19,516
58,784


Appendix 4: Full Year financial headlines
 
Operating Profit $m
                                                                                                           Total
Americas
Europe
AMEA
G. China
Central
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
Franchised
669
639
575
544
77
78
12
12
5
5
-
-
Managed
241
228
64
47
28
30
90
88
59
63
-
-
Owned & leased
57
77
24
18
1
14
3
3
29
42
-
-
Regional overheads
(136)
(138)
(66)
(65)
(28)
(33)
(19)
(19)
(23)
(21)
-
-
Profit pre central overheads
831
806
597
544
78
89
86
84
70
89
-
-
Central overheads
(151)
(155)
-
-
-
-
-
-
-
-
(151)
(155)
Group Operating profit
680
651
597
544
78
89
86
84
70
89
(151)
(155)


Appendix 5: Constant exchange rate (CER) and underlying operating profit movement before exceptional items
 
Total***
Americas
Europe
AMEA
G. China
 
Reported
Actual*
CER**
Actual*
CER**
Actual*
CER**
Actual*
CER**
Actual*
CER**
 
Growth/ (decline)
4%
8%
10%
12%
(12)%
3%
2%
11%
(21)%
(20)%
 
               
Underlying****
Growth/ (decline)
Total***
Americas
Europe
AMEA
G. China
 
11%
10%
23%
9%
(11)%
 
Exchange rates:
GBP:USD
EUR:USD
* US dollar actual currency
         
2015
0.65
0.90
** Translated at constant 2014 exchange rates
         
2014
0.61
0.75
*** After central overheads
         
     
**** At CER and excluding: Kimpton, owned asset disposals, results from managed lease hotels and significant liquidated damages (see below for definitions)
 
Appendix 6: Definitions
 
CER: constant exchange rates with 2014 exchange rates applied to 2015.
Comparable RevPAR: Revenue per available room for hotels that have traded for all of 2014 and 2015, reported at CER.
Fee revenue: Group revenue excluding owned & leased hotels, managed leases and significant liquidated damages.
Fee margin: adjusted for owned and leased hotels, managed leases, significant liquidated damages and Kimpton.
Managed lease hotels: properties structured for legal reasons as operating leases but with the same characteristics as management contracts
Americas: Revenue 2015 $38m; 2014 $38m; EBIT 2015 $nil, 2014 $nil. Europe:  Revenue 2015 $75m; 2014 $90m; EBIT 2015 $1m, 2014 $2m. AMEA: Revenue 2015 $46m; 2014 $41m; EBIT 2015 $5m, 2014 $4m.
Owned asset disposals: InterContinental Hong Kong was sold on 30 September 2015 (2015: $98m revenue and $29m EBIT, 2014: $139m revenue and $42m EBIT) InterContinental Paris – Le Grand was sold on 20 May 2015 (2015: $30m revenue and $1m EBIT, 2014: $111m revenue and $14m EBIT); InterContinental Mark Hopkins San Francisco was sold on 27 March 2014 (2015: $nil revenue and $nil EBIT, 2014: $9m revenue and $nil EBIT) and 80% of IHG’s interest in the InterContinental New York Barclay was disposed of on 31 March 2014 retaining the remaining 20% in a joint venture (2015: $nil revenue and $nil EBIT, 2014: $14m revenue and $(1)m EBIT).
Significant liquidated damages: $3m in 2015 ($3m Americas managed in Q2), and $7m in 2014 ($4m Americas franchised in Q1, $3m Americas franchised in Q2).
Total gross revenue: total rooms revenue from franchised hotels and total hotel revenue from managed, owned and leased hotels. Other than owned and leased hotels, it is not revenue attributable to IHG, as it is derived mainly from hotels owned by third parties.
Total RevPAR: Revenue per available room including hotels that have opened or exited in either 2014 or 2015, reported at CER.
 


Appendix 7: Investor information for proposed 2015 final dividend
Ex-dividend date:
31 March 2016
Record date:
1 April 2016
Payment date:
13 May 2016
Dividend payment:
ADRs: 57.5 cents per ADR;    Ordinary shares: 40.3 pence per share.
Note: As from the interim dividend 2016, the ordinary dividend per ordinary share will be translated into Pence Sterling at a date closer to the payment date; this date and the basis for calculation will be announced at H1 results.


Appendix 8: Investor information for proposed special dividend
Ex-dividend date:
9 May 2016
Record date:
6 May 2016
Payment date:
23 May 2016
Dividend payment:
ADRs: 632.9 cents per ADR.  The corresponding amount in Pence Sterling per ordinary share will be announced on 12 May 2016, calculated based on the average of the market exchange rates for the three dealing days commencing 9 May 2016.

For further information, please contact:
Investor Relations (Catherine Dolton; Adam Smith; Matt Woollard):
+44 (0)1895 512 176
+44 (0)7808 098 724
Media Relations (Yasmin Diamond; Zoë Bird):
+44 (0)1895 512 008
+44 (0)7736 746 167
     
Presentation for Analysts and Shareholders:
A presentation with Richard Solomons, Chief Executive Officer and Paul Edgecliffe-Johnson, Chief Financial Officer will commence at 9:30am London time on 23 February at Goldman Sachs, Rivercourt, 120 Fleet Street, London, EC4A 2BE.  There will be an opportunity to ask questions.  The presentation will conclude at approximately 10:30am.
 
There will be a live audio webcast of the results presentation on the web address www.ihgplc.com/prelimswebcast.   The archived webcast of the presentation is expected to be on this website later on the day of the results and will remain on it for the foreseeable future.  There will also be a live dial-in facility:
 
UK toll:
UK toll free:
US toll:
Passcode:
+44 (0)20 3003 2666
0808 109 0700
+1 212 999 6659
IHG Investor
A replay of the conference call will also be available following the event – details are below.
Replay:
Pin:
+44 (0)20 8196 1998
3891343#
 
US conference call and Q&A:
There will also be a conference call, primarily for US investors and analysts, at 9:00am New York Time on 23 February with Richard Solomons, Chief Executive Officer and Paul Edgecliffe-Johnson, Chief Financial Officer. There will be an opportunity to ask questions.
UK toll:
US toll:
US toll free:
Passcode:
+44 (0)20 3003 2666
+1 212 999 6659
+1 866 966 5335
IHG Investor
A replay of the conference call will also be available following the event – details are below.
Replay:
Pin:
+44 (0)20 8196 1998
5409921#
 
Website:
The full release and supplementary data will be available on our website from 7:00am (London time) on 23 February. The web address is www.ihgplc.com/prelims16.
 
 
Notes to Editors:
IHG® (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is a global organisation with a broad portfolio of hotel brands, including InterContinental® Hotels & Resorts, Kimpton® Hotels & Restaurants, HUALUXE® Hotels and Resorts, Crowne Plaza® Hotels & Resorts, Hotel Indigo®, EVEN™ Hotels, Holiday Inn® Hotels & Resorts, Holiday Inn Express®, Staybridge Suites® and Candlewood Suites®.
 
IHG franchises, leases, manages or owns more than 5,000 hotels and 744,000 guest rooms in nearly 100 countries, with more than 1,300 hotels in its development pipeline. IHG also manages IHG® Rewards Club, the world’s first and largest hotel loyalty programme with more than 92 million members worldwide.
 
InterContinental Hotels Group PLC is the Group’s holding company and is incorporated in Great Britain and registered in England and Wales. More than 350,000 people work across IHG’s hotels and corporate offices globally.
 
Visit www.ihg.com for hotel information and reservations and www.ihgrewardsclub.com for more on IHG Rewards Club. For our latest news, visit: www.ihg.com/media and follow us on social media at: www.twitter.com/ihg, www.facebook.com/ihg and www.youtube.com/ihgplc.
 
 
Cautionary note regarding forward-looking statements:
This announcement contains certain forward-looking statements as defined under United States law (Section 21E of the Securities Exchange Act of 1934) and otherwise.  These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts.  Forward-looking statements often use words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’ or other words of similar meaning.  These statements are based on assumptions and assessments made by InterContinental Hotels Group PLC’s management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.  By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty.  There are a number of factors that could cause actual results and developments to differ materially from those expressed in or implied by, such forward-looking statements.  The main factors that could affect the business and the financial results are described in the ‘Risk Factors’ section in the current InterContinental Hotels Group PLC’s Annual report and Form 20-F filed with the United States Securities and Exchange Commission.




This Business Review provides a commentary on the performance of InterContinental Hotels Group PLC (the Group or IHG) for the financial year ended 31 December 2015.

GROUP PERFORMANCE
 
12 months ended 31 December
Group results
2015
2014
%
 
$m
$m
change
Revenue
     
 
Americas
955
871
9.6
 
Europe
265
374
(29.1)
 
AMEA
241
242
(0.4)
 
Greater China
207
242
(14.5)
 
Central
135
129
4.7
   
____
____
___
 
1,803
1,858
(3.0)
 
____
____
___
Operating profit
     
 
Americas
597
544
9.7
 
Europe
78
89
(12.4)
 
AMEA
86
84
2.4
 
Greater China
70
89
(21.3)
 
Central
(151)
(155)
2.6
   
____
____
___
Operating profit before exceptional items
680
651
4.5
Exceptional operating items
819
29
-
 
___
___
___
 
1,499
680
120.4
Net financial expenses
(87)
(80)
(8.8)
 
___
___
___
Profit before tax
1,412
600
135.3
 
___
___
___
Earnings per ordinary share
     
 
Basic
520.0¢
158.3¢
228.5
 
Adjusted
174.9¢
158.3¢
10.5
         
Average US dollar to sterling exchange rate
$1 : £0.65
$1 : £0.61
6.6


During the year ended 31 December 2015, revenue decreased by $55m (3.0%) to $1,803m primarily as a result of the disposal of owned hotels in line with the Group’s asset-light strategy. Operating profit before exceptional items increased by $29m (4.5%) to $680m.

On 16 January 2015, the Group completed the acquisition of Kimpton Holding Group LLC (Kimpton) for cash consideration of $430m before working capital adjustments and cash acquired, resulting in the addition of 62 hotels (11,325 rooms) into the IHG System.

On 20 May 2015, the Group completed the sale of InterContinental Paris – Le Grand for gross proceeds of €330m and, on 30 September 2015, the Group completed the sale of InterContinental Hong Kong for proceeds of $928m after final working capital adjustments and cash tax.

On an underlying1 basis, revenue and operating profit increased by $113m (8.0%) and $67m (11.5%) respectively. The underlying results exclude the impact of owned hotel disposals in 2015 and the prior-year, the results of managed lease hotels, Kimpton, and significant liquidated damages receipts (2015: $3m; 2014: $7m).

At constant currency, net central overheads increased by $5m (3.2%) to $160m compared to 2014 (but at actual currency decreased by $4m (2.6%) to $151m).

Profit before tax increased by $812m to $1,412m, primarily due to the gain on sale of InterContinental Paris – Le Grand and InterContinental Hong Kong. Basic earnings per ordinary share increased by 228.5% to 520.0¢, whilst adjusted earnings per ordinary share increased by 10.5% to 174.9¢.

1 Underlying excludes the impact of owned-asset disposals, significant liquidated damages, Kimpton, and the results from managed lease hotels, translated at constant currency by applying prior- year exchange rates.

 
12 months ended 31 December
 
2015
2014
%
Global total gross revenue
$bn
$bn
change
       
InterContinental
4.5
4.7
(4.3)
Kimpton
1.1
-
-
Crowne Plaza
4.2
4.2
-
Hotel Indigo
0.3
0.3
-
Holiday Inn
6.2
6.4
(3.1)
Holiday Inn Express
6.1
5.7
7.0
Staybridge Suites
0.8
0.7
14.3
Candlewood Suites
0.7
0.6
16.7
Other brands
0.1
0.2
(50.0)
 
____
____
____
Total
24.0
22.8
5.3
 
____
____
____
 
                                               Hotels
Rooms
Global hotel and room count
at 31 December
 
2015
Change
over 2014
 
2015
Change
over 2014
         
Analysed by brand
       
 
InterContinental
 184
4
 62,040
805
 
Kimpton
 61
61
 10,976
10,976
 
HUALUXE
 3
3
 798
798
 
Crowne Plaza
 406
-
 113,284
(278)
 
Hotel Indigo
 65
4
 7,664
933
 
EVEN Hotels
 3
1
 446
150
 
Holiday Inn1
1,226
14
 228,100
2,941
 
Holiday Inn Express
 2,425
60
 236,406
7,296
 
Staybridge Suites
 220
15
 23,964
1,555
 
Candlewood Suites
 341
19
 32,328
1,620
 
Other
98
11
28,362
7,277
   
____
____
______
_____
Total
5,032
192
744,368
34,073
   
____
____
______
_____
Analysed by ownership type
       
 
Franchised
 4,219
123
 530,748
15,764
 
Managed
 806
71
 211,403
19,282
 
Owned and leased
 7
(2)
 2,217
(973)
   
____
____
______
_____
Total
5,032
192
744,368
34,073
   
____
____
______
_____

 
1 Includes 47 Holiday Inn Resort properties (11,518 rooms) and 16 Holiday Inn Club Vacations properties (5,231 rooms) (2014: 42 Holiday Inn Resort properties (9,904 rooms) and 12 Holiday Inn Club Vacations properties (4,027 rooms)).

 
Hotels
Rooms
Global pipeline
at 31 December
 
2015
Change
over 2014
 
2015
Change
over 2014
         
Analysed by brand
       
 
InterContinental
 52
2
 15,676
12
 
Kimpton
 18
18
 3,366
3,366
 
HUALUXE
 21
(3)
 6,632
(919)
 
Crowne Plaza
 84
(8)
 23,181
(2,155)
 
Hotel Indigo
 63
-
 9,208
112
 
EVEN Hotels
 8
5
 1,262
678
 
Holiday Inn1
 256
(13)
 52,204
(509)
 
Holiday Inn Express
 602
80
 75,605
12,651
 
Staybridge Suites
 114
15
 12,641
1,733
 
Candlewood Suites
 98
9
 8,720
1,003
 
Other
14
4
5,421
4,172
   
____
____
______
_____
Total
1,330
109
213,916
20,144
   
____
____
______
_____
Analysed by ownership type
       
 
Franchised
905
62
 102,169
7,439
 
Managed
424
 47
 111,545
 12,707
 
Owned and Leased
1
-
 202
(2)
   
____
____
______
_____
Total
1,330
109
213,916
20,144
   
____
____
______
_____

 
1 Includes 14 Holiday Inn Resort properties (3,548 rooms) (2014: 18 Holiday Inn Resort properties (4,412 rooms)).


THE AMERICAS
 
12 months ended 31 December
 
2015
2014
%
Americas results
$m
$m
change
       
Revenue
     
 
Franchised
661
630
4.9
 
Managed
166
103
61.2
 
Owned and leased
128
138
(7.2)
 
____
____
____
Total
 
955
871
9.6
 
____
____
____
Operating profit before exceptional items
     
 
Franchised
575
544
5.7
 
Managed
64
47
36.2
 
Owned and leased
24
18
33.3
   
____
____
____
 
663
609
8.9
Regional overheads
(66)
(65)
(1.5)
 
____
____
____
Total
 
597
544
9.7
 
____
____
____

 
Americas Comparable RevPAR movement on previous year
12 months ended
31 December 2015
Franchised
 
 
Crowne Plaza
6.7%
 
Holiday Inn
4.6%
 
Holiday Inn Express
4.1%
 
All brands
4.6%
Managed
 
 
InterContinental
2.4%
 
Kimpton
4.1%
 
Crowne Plaza
9.6%
 
Holiday Inn
5.7%
 
Staybridge Suites
4.2%
 
Candlewood Suites
6.7%
 
All brands
4.7%
Owned and leased
 
 
All brands
6.7%

Americas results
Franchised revenue increased by $31m (4.9%) to $661m, including the impact of the $7m liquidated damages receipts in 2014 (7.9% excluding these liquidated damages and on a constant currency basis). Royalties1 growth of 5.1% was driven by comparable RevPAR growth of 4.6%, including 4.6% for Holiday Inn and 4.1% for Holiday Inn Express, together with 1.2% rooms growth. Operating profit increased by $31m (5.7%) to $575m, including an $8m increase in fees associated with the initial franchising and relicensing of hotels. Excluding the benefit of significant liquidated damages (2015: $nil; 2014: $7m) and on a constant currency basis, operating profit increased by $47m (8.8%) to $584m.

Managed revenue increased by $63m (61.2%) to $166m, and operating profit increased by $17m (36.2%) to $64m. Revenue and operating profit included $38m (2014: $38m) and $nil (2014: $nil) respectively from one managed lease property. Kimpton contributed $59m to managed estate revenue and $18m to operating profit, including $3m of significant liquidated damages. Managed operating profit was impacted by costs relating to our 20% interest in InterContinental New York Barclay during its refurbishment (2015: $4m; 2014: $5m). Excluding results from both Kimpton and managed lease hotels and on a constant currency basis, revenue increased by $9m (13.8%) and operating profit increased by $2m (4.3%).

Owned and leased revenue decreased by $10m (7.2%) to $128m, and operating profit increased by $6m (33.3%) to $24m, following the disposal of two owned hotels (InterContinental Mark Hopkins San Francisco and an 80% interest in InterContinental New York Barclay) during 2014. Excluding these two hotels and on a constant currency basis, owned and leased revenue and operating profit increased by $13m and $5m, respectively, reflecting improved trading at InterContinental Boston and at Holiday Inn Aruba.

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

 
Hotels
Rooms
Americas hotel and room count
at 31 December
 
2015
Change
over 2014
 
2015
Change
over 2014
         
Analysed by brand
       
 
InterContinental
 50
-
 17,109
212
 
Kimpton
 61
61
 10,976
10,976
 
Crowne Plaza
 172
(9)
 46,316
(2,050)
 
Hotel Indigo
 40
1
 5,071
520
 
EVEN Hotels
 3
1
 446
150
 
Holiday Inn1
772
2
 135,995
(285)
 
Holiday Inn Express
 2,106
46
 186,972
4,371
 
Staybridge Suites
 211
14
 22,662
1,462
 
Candlewood Suites
 341
19
 32,328
1,620
 
Other
84
6
21,700
2,582
   
____
____
______
_____
Total
3,840
141
479,575
19,558
   
____
____
______
_____
Analysed by ownership type
       
 
Franchised
3,548
71
 422,230
5,015
 
Managed
287
70
 55,715
14,543
 
Owned and leased
5
-
 1,630
-
   
____
____
______
_____
Total
3,840
141
479,575
19,558
   
____
____
______
_____

 
1 Includes 23 Holiday Inn Resort properties (5,902 rooms) and 16 Holiday Inn Club Vacations properties (5,231 rooms) (2014: 20 Holiday Inn Resort properties (4,864 rooms) and 12 Holiday Inn Club Vacations properties (4,027 rooms)).

 
Hotels
Rooms
Americas pipeline
at 31 December
 
2015
Change
over 2014
 
2015
Change
over 2014
         
Analysed by brand
       
 
InterContinental
 4
(3)
 1,545
(792)
 
Kimpton
 18
18
 3,366
3,366
 
Crowne Plaza
 15
(3)
 2,490
(716)
 
Hotel Indigo
 30
(1)
 4,024
(235)
 
EVEN Hotels
 8
5
 1,262
678
 
Holiday Inn1
 125
(14)
 18,203
(1,952)
 
Holiday Inn Express
 449
60
 43,945
6,820
 
Staybridge Suites
 105
15
 11,230
1,636
 
Candlewood Suites
 98
9
 8,720
1,003
 
Other
13
3
1,599
381
   
____
____
______
_____
Total
865
89
96,384
10,189
   
____
____
______
_____
Analysed by ownership type
       
 
Franchised
809
69
85,863
6,883
 
Managed
55
20
10,319
3,308
 
Owned and leased
1
-
202
(2)
   
____
____
______
_____
Total
865
89
96,384
10,189
   
____
____
______
_____

 
1 Includes seven Holiday Inn Resort properties (1,657 rooms) (2014: nine Holiday Inn Resort properties (1,916 rooms)).

EUROPE
 
12 months ended 31 December
 
2015
2014
%
Europe results
$m
$m
change
       
Revenue
     
 
Franchised
104
104
-
 
Managed
131
159
(17.6)
 
Owned and leased
30
111
(73.0)
 
____
____
____
Total
 
265
374
(29.1)
 
____
____
____
Operating profit before exceptional items
     
 
Franchised
77
78
(1.3)
 
Managed
28
30
(6.7)
 
Owned and leased
1
14
(92.9)
   
____
____
____
 
106
122
(13.1)
Regional overheads
(28)
(33)
15.2
 
____
____
____
Total
 
78
89
(12.4)
 
____
____
____

 
 
Europe comparable RevPAR movement on previous year
12 months ended
31 December
2015
   
Franchised
 
 
All brands
5.3%
     
Managed
 
 
All brands
6.2%
     
Europe results
Franchised revenue remained flat at $104m, whilst operating profit decreased by $1m (1.3%) to $77m. On a constant currency basis, revenue and operating profit increased by $15m (14.4%) and $11m (14.1%) respectively, following the transition of UK managed hotels to franchise contracts.

Managed revenue decreased by $28m (17.6%) and operating profit decreased by $2m (6.7%). Revenue and operating profit included $75m (2014: $90m) and $1m (2014: $2m) respectively from managed leases. Excluding properties operated under this arrangement, and on a constant currency basis, revenue decreased by $2m (2.9%) and operating profit increased by $3m (10.7%), impacted by the transition of UK managed hotels to franchise contracts.

The one remaining hotel in the owned and leased estate, InterContinental Paris – Le Grand, was sold on 20 May 2015 for gross proceeds of €330m. Owned and leased revenue decreased by $81m (73.0%) to $30m and operating profit decreased by $13m (92.9%) to $1m.

 
Hotels
Rooms
Europe hotel and room count
at 31 December
 
2015
Change
over 2014
 
2015
Change
over 2014
         
Analysed by brand
       
 
InterContinental
 32
2
 9,886
514
 
Crowne Plaza
 88
5
 20,269
874
 
Hotel Indigo
 19
2
 1,790
222
 
Holiday Inn1
 285
1
 46,150
428
 
Holiday Inn Express
 228
2
 27,525
387
 
Staybridge Suites
 6
1
 877
93
 
Other
 2
-
 214
(15)
   
____
____
______
_____
Total
660
13
106,711
2,503
   
____
____
______
_____
Analysed by ownership type
       
 
Franchised
 615
50
 94,410
10,394
 
Managed
 45
(36)
 12,301
(7,421)
 
Owned and leased
 -
(1)
 -
(470)
   
____
____
______
_____
Total
660
13
106,711
2,503
   
____
____
______
_____

 
1 2015 and 2014 include two Holiday Inn Resort properties (212 rooms).

 
 
Hotels
Rooms
Europe pipeline
at 31 December
 
2015
Change
over 2014
 
2015
Change
over 2014
         
Analysed by brand
       
 
InterContinental
 5
2
 882
37
 
Crowne Plaza
 11
(3)
 2,673
(244)
 
Hotel Indigo
 11
(1)
 1,403
35
 
Holiday Inn
 37
-
 7,834
890
 
Holiday Inn Express
 45
1
 7,198
824
 
Staybridge Suites
 4
-
 511
97
 
Other
 -
-
 31
-
   
____
____
______
_____
Total
113
(1)
20,532
1,639
   
____
____
______
_____
Analysed by ownership type
       
 
Franchised
88
(7)
 14,127
131
 
Managed
25
6
 6,405
1,508
   
____
____
______
_____
Total
113
(1)
20,532
1,639
   
____
____
______
_____

ASIA, MIDDLE EAST AND AFRICA (AMEA)
 
12 months ended 31 December
 
2015
2014
%
AMEA results
$m
$m
change
       
Revenue
     
 
Franchised
16
16
-
 
Managed
189
187
1.1
 
Owned and leased
36
39
(7.7)
   
____
____
____
Total
 
241
242
(0.4)
 
____
____
____
Operating profit before exceptional items
     
 
Franchised
12
12
-
 
Managed
90
88
2.3
 
Owned and leased
3
3
-
   
____
____
____
 
105
103
1.9
Regional overheads
(19)
(19)
-
 
____
____
____
Total
 
86
84
2.4
 
____
____
____

 
AMEA comparable RevPAR movement on previous year
12 months ended
31 December
2015
   
Franchised
 
 
All brands
(0.5)%
 
Managed
 
 
All brands
5.4%


AMEA results
Franchised revenue and operating profit remained flat at $16m and $12m respectively. On a constant currency basis, revenue and operating profit increased by $1m (6.3%) and $1m (8.3%) respectively.

Managed revenue increased by $2m (1.1%) to $189m and operating profit increased by $2m (2.3%) to $90m. Comparable RevPAR increased by 5.4%, with the majority of rooms opening in the last quarter of 2015. Revenue and operating profit included $46m (2014: $41m) and $5m (2014: $4m) respectively from one managed lease property. Excluding results from this hotel and on a constant currency basis, revenue increased by $9m (6.2%), whilst operating profit increased by $6m (7.1%).

In the owned and leased estate, revenue decreased by $3m (7.7%) to $36m and operating profit remained flat at $3m. On a constant currency basis, revenue increased by $3m (7.7%) and operating profit increased by $1m (33.3%).

 
Hotels
Rooms
AMEA hotel and room count
at 31 December
 
2015
Change
over 2014
 
2015
Change
over 2014
         
Analysed by brand
       
 
InterContinental
 68
1
 21,238
(186)
 
Crowne Plaza
 71
2
 20,011
323
 
Hotel Indigo
 1
1
 192
192
 
Holiday Inn1
 91
6
 20,984
1,234
 
Holiday Inn Express
 27
3
 5,886
591
 
Staybridge Suites
 3
-
 425
-
 
Other
6
1
3,837
2,543
   
____
____
______
_____
Total
267
14
72,573
4,697
   
____
____
______
_____
Analysed by ownership type
       
 
Franchised
 52
2
 11,924
355
 
Managed
 213
12
 60,062
4,342
 
Owned and leased
 2
-
 587
-
   
____
____
______
_____
Total
267
14
72,573
4,697
   
____
____
______
_____

 
1 Includes 15 Holiday Inn Resort properties (3,169 rooms) (2014: 14 Holiday Inn Resort properties (3,003 rooms)).


 
Hotels
Rooms
AMEA pipeline
at 31 December
 
2015
Change
over 2014
 
2015
Change
over 2014
         
Analysed by brand
       
 
InterContinental
 22
-
 5,349
(455)
 
Crowne Plaza
 19
3
 5,301
889
 
Hotel Indigo
 13
3
 2,281
458
 
Holiday Inn1
 45
(5)
11,529
(1,701)
 
Holiday Inn Express
 43
4
 9,344
1,167
 
Staybridge Suites
 5
-
 900
-
 
Other
-
-
3,512
3,512
   
____
____
______
_____
Total
147
5
38,216
3,870
   
____
____
______
_____
Analysed by ownership type
       
 
Franchised
8
-
2,179
425
 
Managed
139
5
36,037
3,445
   
____
____
______
_____
Total
147
5
38,216
3,870
   
____
____
______
_____

 
1 Includes four Holiday Inn Resort properties (1,071 rooms) (2014: seven Holiday Inn Resort properties (1,729 rooms)).

GREATER CHINA
 
12 months ended 31 December
 
2015
2014
%
Greater China results
$m
$m
Change
       
Revenue
     
 
Franchised
4
4
-
 
Managed
105
99
6.1
 
Owned and leased
98
139
(29.5)
   
____
____
____
Total
 
207
242
(14.5)
 
____
____
____
Operating profit before exceptional items
     
 
Franchised
5
5
-
 
Managed
59
63
(6.3)
 
Owned and leased
29
42
(31.0)
   
____
____
____
 
93
110
(15.5)
Regional overheads
(23)
(21)
(9.5)
 
____
____
____
Total
 
70
89
(21.3)
 
____
____
____

 
Greater China comparable RevPAR movement on previous year
12 months ended
31 December
2015
   
Managed
 
 
All brands
 
1.1%

Greater China results
Franchised revenue and operating profit remained flat at $4m and $5m respectively.

Managed revenue increased by $6m (6.1%) to $105m, whilst operating profit decreased by $4m (6.3%) to $59m, impacted by the investment in people capability and previously disclosed one-off upsides in 2014. Comparable RevPAR increased by 1.1%, whilst the Greater China System size grew by 10.4%, driving a 4.8% increase in total gross revenue derived from rooms business. Total gross revenue derived from non-rooms business increased by 7.9%, due primarily to increased food and beverage revenue. On a constant currency basis, revenue increased by $8m (8.1%) to $107m, whilst operating profit decreased by $3m (4.8%) to $60m.

The one remaining hotel in the owned and leased estate, InterContinental Hong Kong, was sold on 30 September 2015 for proceeds of $928m after final working capital adjustments and cash tax. Owned and leased revenue decreased by $41m (29.5%) to $98m and operating profit decreased by $13m (31.0%) to $29m.

 
Hotels
Rooms
Greater China hotel and room count
at 31 December
 
2015
Change
over 2014
 
2015
Change
over 2014
         
Analysed by brand
       
 
InterContinental
 34
1
 13,807
265
 
HUALUXE
 3
3
 798
798
 
Crowne Plaza
 75
2
 26,688
575
 
Hotel Indigo
 5
-
 611
(1)
 
Holiday Inn1
 78
5
 24,971
1,564
 
Holiday Inn Express
 64
9
 16,023
1,947
 
Other
 6
4
 2,611
2,167
   
____
____
______
_____
Total
265
24
85,509
7,315
   
____
____
______
_____
Analysed by ownership type
       
 
Franchised
4
-
 2,184
-
 
Managed
261
25
 83,325
7,818
 
Owned and leased
-
(1)
 -
(503)
   
____
____
______
_____
Total
265
24
85,509
7,315
   
____
____
______
_____

 
1 Includes seven Holiday Inn Resort properties (2,235 rooms) (2014: six Holiday Inn Resort properties (1,825 rooms)).

 
Hotels
Rooms
Greater China pipeline
at 31 December
 
2015
Change
over 2014
 
2015
Change
over 2014
         
Analysed by brand
       
 
InterContinental
 21
3
 7,900
1,222
 
HUALUXE
 21
(3)
 6,632
(919)
 
Crowne Plaza
 39
(5)
 12,717
(2,084)
 
Hotel Indigo
 9
(1)
 1,500
(146)
 
Holiday Inn1
 49
6
 14,638
2,254
 
Holiday Inn Express
 65
15
 15,118
3,840
 
Other
1
1
 279
279
   
____
____
______
_____
Total
205
16
58,784
4,446
   
____
____
______
_____
Analysed by ownership type
       
 
Managed
205
16
58,784
4,446
   
____
____
______
_____
Total
205
16
58,784
4,446
   
____
____
______
_____

 
1 Includes three Holiday Inn Resort properties (820 rooms) (2014: two Holiday Inn Resort properties (767 rooms)).

CENTRAL
 
12 months ended 31 December
 
2015
2014
%
Central results
$m
$m
change
       
Revenue
135
129
4.7
Gross central costs
(286)
(284)
(0.7)
 
____
____
____
Net central costs
 
(151)
(155)
(2.6)
 
____
____
____

Central results
Net central costs decreased by $4m (2.6%) compared to 2014 (a $5m or 3.2% increase to $160m at constant currency). Central revenue, which mainly comprises technology fee income, increased by $6m (4.7%) to $135m, driven by increases in both comparable RevPAR (4.4%) and IHG System size (4.8%) (3.2% excluding Kimpton). At constant currency, gross central costs increased by $13m (4.6%) compared to 2014 (a $2m or 0.7% increase at actual currency).
 

SYSTEM FUND
 
12 months ended 31 December
 
 
2015
2014
%
 
System Fund assessments
$m
$m
change
 
         
Assessment fees and contributions received from hotels
1,351
1,271
6.3
 
Proceeds from sale of IHG Rewards Club points
222
196
13.3
 
 
____
____
____
 
Total
 
1,573
1,467
7.2
 
 
____
____
____
 
   
System Fund assessments
In addition to franchise or management fees, hotels within the IHG System pay assessments and contributions (other than for Kimpton and InterContinental) which are collected by IHG for specific use within the System Fund. The System Fund also receives proceeds from the sale of IHG Rewards Club points. The System Fund is managed for the benefit of hotels in the IHG System with the objective of driving revenues for the hotels.

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

In the year to 31 December 2015, System Fund income increased by 7.2% to $1,573m primarily as a result of a 6.3% increase in assessment fees and contributions from hotels resulting from increased hotel room revenues, reflecting increases in RevPAR and IHG System size. Continued strong performance in co-branded credit card schemes drove the 13.3% increase in proceeds from the sale of IHG Rewards Club points.

OTHER FINANCIAL INFORMATION

Exceptional operating items
Exceptional operating items totalled a net gain of $819m. The gain included $871m related primarily to the profit on sale of InterContinental Paris Le Grand and InterContinental Hong Kong, and $9m related to the sale of an associate investment. Exceptional charges included $6m reorganisation costs relating to the completion of a project to implement more efficient processes and procedures in the Global Technology function; $5m corporate development costs; $10m Kimpton integration costs; and $36m impairment charges relating to two hotels in The Americas and an associate investment in the AMEA region.
 
Exceptional operating items are treated as exceptional by reason of their size or nature and are excluded from the calculation of adjusted earnings per ordinary share in order to provide a more meaningful comparison of performance.

Net financial expenses
Net financial expenses increased by $7m to $87m, reflecting the issue of £300m 3.75% public bonds in August 2015, that was used to refinance the bridging loan used to acquire Kimpton.
 
Financing costs included $2m (2014: $2m) of interest costs associated with IHG Rewards Club where interest is charged on the accumulated balance of cash received in advance of the redemption of points awarded. Financing costs in 2015 also included $20m (2014: $19m) in respect of the InterContinental Boston finance lease.
 

Taxation
The effective rate of tax on operating profit excluding the impact of exceptional items was 30% (2014: 31%). Excluding the impact of prior-year items, the equivalent tax rate would be 36% (2014: 35%). This rate is higher than the average UK statutory rate of 20.25% (2014: 21.5%), 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 charge of $8m (2014: $29m). In 2015, the charge comprised $56m relating to the disposal of InterContinental Hong Kong and InterContinental Paris – Le Grand, a credit of $21m in respect of the 2014 disposal of an 80% interest in InterContinental New York Barclay reflecting the judgement that state tax law changes would now apply to the deferred gain, and credits of $27m for current and deferred tax relief on other operating exceptional items of current and prior years. In 2014, the charge comprised $56m relating to the disposal of an 80% interest in InterContinental New York Barclay, offset by a credit of $27m relating to a restructuring of the UK hotel portfolio and other reorganisation costs.

Net tax paid in 2015 totalled $110m (2014: $136m) including $1m (2014: $nil) in respect of disposals. Tax paid represents an effective rate of 8% (2014: 23%) on total profits and is lower than the effective income statement tax rate of 30% (2014: 31%) primarily due to exceptional accounting gains taxable on a deferred basis, without which the equivalent effective rate would be 20%. The remaining difference was primarily due to the impact of deferred taxes (including the realisation of assets such as tax losses), the receipt of refunds in respect of prior-years and provisions for tax for which no payment of tax has currently been made.

Dividends
The Board has proposed a final dividend per ordinary share of 57.5¢ (40.3p). With the interim dividend per ordinary share of 27.5¢ (17.7p), the full-year dividend per ordinary share for 2015 will total 85.0¢ (58.0p), an increase of 10.4% over 2014.

In February 2016, the Board proposed a $1.5bn return of funds to shareholders by way of a special dividend and share consolidation.

Earnings per ordinary share
Basic earnings per ordinary share increased by 228.5% to 520.0¢ from 158.3¢ in 2014. Adjusted earnings per ordinary share increased by 10.5% to 174.9¢ from 158.3¢ in 2014.

Share price and market capitalisation
The IHG share price closed at £26.58 on 31 December 2015, up from £25.95 on 31 December 2014. The market capitalisation of the Group at the year end was £6.3bn.

Capital structure and liquidity management
The Group successfully refinanced its bank debt in March 2015, putting in place a $1.275bn revolving syndicated bank facility which matures in March 2020 (the Syndicated Facility), with two one-year extension options exercisable in 2016 and 2017. The Group also put in place a $75m revolving bilateral facility (the Bilateral facility) in October 2015 which also matures in March 2020 and has two one-year extension options exercisable in 2016 and 2017. The facilities were undrawn at 31 December 2015.

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

In August 2015, the Group issued £300m of public bonds at a 3.750% coupon rate, the lowest funding rate the Group has achieved in the Sterling bond market. The bonds are repayable in 2025, extending the maturity profile of the Group’s debt. This is in addition to £250m of public bonds which are repayable on 9 December 2016 and £400m of public bonds which are repayable on 28 November 2022.

Additional funding is provided by the 99-year finance lease (of which 90 years remain) on InterContinental Boston and other uncommitted bank facilities. In the Group’s opinion, the available facilities are sufficient for the Group’s present liquidity requirements.

Net debt of $529m (2014: $1,533m) is analysed by currency as follows:

 
2015
2014
 
$m
$m
     
Borrowings
   
 
Sterling
1,405
1,028
 
US dollar
253
557
 
Euros
4
103
 
Other
4
7
Cash and cash equivalents
   
 
Sterling
(619)
(21)
 
US dollar
(460)
(54)
 
Euros
(15)
(25)
 
Canadian dollar
(8)
(14)
 
Chinese renminbi
(4)
(8)
 
Other
(31)
(40)
   
____
____
Net debt
529
1,533
 
____
____
     
Average debt levels
1,420
1,322
 
____
____
 



INTERCONTINENTAL HOTELS GROUP PLC
GROUP INCOME STATEMENT
For the year ended 31 December 2015

 
Year ended 31 December 2015
Year ended 31 December 2014
 
 
Before
exceptional
items
Exceptional
items
(note 4)
 
 
Total
Before
exceptional
items
Exceptional
items
(note 4)
 
 
Total
 
$m
$m
$m
$m
$m
$m
             
Revenue (note 3)
1,803
-
1,803
1,858
-
1,858
Cost of sales
(640)
-
(640)
(741)
-
(741)
Administrative expenses
(395)
(25)
(420)
(382)
(101)
(483)
Share of (losses)/profits of associates and joint ventures
(3)
-
(3)
(4)
-
(4)
Other operating income and expenses
11
880
891
16
130
146
 
_____
____
____
_____
____
____
 
776
855
1,631
747
29
776
             
Depreciation and amortisation
(96)
-
(96)
(96)
-
(96)
Impairment charges
-
(36)
(36)
-
-
-
 
_____
____
_____
_____
____
____
             
Operating profit (note 3)
680
819
1,499
651
29
680
Financial income
5
-
5
3
-
3
Financial expenses
(92)
-
(92)
(83)
-
(83)
 
_____
____
_____
_____
____
____
             
Profit before tax
593
819
1,412
571
29
600
             
Tax (note 5)
(180)
(8)
(188)
(179)
(29)
(208)
 
_____
____
_____
_____
____
____
Profit for the year from continuing operations
413
811
1,224
392
-
392
 
 =====
====
=====
=====
====
====
             
Attributable to:
           
 
Equity holders of the parent
411
811
1,222
391
-
391
 
Non-controlling interest
2
-
2
1
-
1
   
____
____
_____
____
____
____
   
413
811
1,224
392
-
392
 
====
====
=====
====
====
====
             
Earnings per ordinary share
(note 6)
           
Continuing and total operations:
           
 
Basic
   
520.0¢
   
158.3¢
 
Diluted
   
513.4¢
   
156.4¢
 
Adjusted
174.9¢
   
158.3¢
   
 
Adjusted diluted
172.7¢
   
156.4¢
   
 
=====
 
=====
=====
 
=====
             
     

INTERCONTINENTAL HOTELS GROUP PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2015


 
2015
Year ended
31 December
$m
2014
Year ended
31 December
$m
     
Profit for the year
1,224
392
     
Other comprehensive income
   
     
Items that may be subsequently reclassified to profit or loss:
   
Gains on valuation of available-for-sale financial assets, net of related tax charge of $nil (2014 $1m)
2
11
Exchange (losses)/gains on retranslation of foreign operations, net of related tax charge of $1m (2014 credit of $1m)
(2)
42
Exchange losses reclassified to profit on hotel disposal (note 9)
2
-
 
_____
____
 
2
53
Items that will not be reclassified to profit or loss:
   
Re-measurement gains/(losses) on defined benefit plans, net of related tax charge of $4m (2014 credit of $7m)
9
(18)
Tax related to pension contributions
7
2
 
_____
____
 
16
(16)
     
 
_____
____
Total other comprehensive income for the year
18
37
 
_____
____
Total comprehensive income for the year
1,242
429
 
=====
====
     
Attributable to:
   
 
Equity holders of the parent
1,240
428
 
Non-controlling interest
2
1
 
_____
_____
 
1,242
429
 
=====
=====


   
INTERCONTINENTAL HOTELS GROUP PLC
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2015

 
Year ended 31 December 2015
 
Equity share capital
Other reserves*
Retained earnings
Non-controlling interest
 
Total equity
 
$m
$m
$m
$m
$m
           
At beginning of the year
178
(2,539)
1,636
8
(717)
           
Total comprehensive income for the year
-
2
1,238
2
1,242
Movement in shares in employee share trusts
-
15
(62)
-
(47)
Equity-settled share-based cost
-
-
24
-
24
Tax related to share schemes
-
-
5
-
5
Equity dividends paid
-
-
(188)
-
(188)
Exchange adjustments
(9)
9
-
-
-
 
_____
_____
_____
____
____
At end of the year
169
(2,513)
2,653
10
319
 
=====
=====
=====
====
====


 
Year ended 31 December 2014
 
Equity share capital
Other reserves*
Retained earnings
Non-controlling interest
 
Total equity
 
$m
$m
$m
$m
$m
           
At beginning of the year
189
(2,605)
2,334
8
(74)
           
Total comprehensive income for the year
-
53
375
1
429
Repurchase of shares
-
-
(110)
-
(110)
Transaction costs relating to shareholder returns
-
-
           (1)
-
(1)
Movement in shares in employee share trusts
-
2
(60)
-
(58)
Equity-settled share-based cost
-
-
28
-
28
Tax related to share schemes
-
-
12
-
12
Equity dividends paid
-
-
(942)
(1)
(943)
Exchange adjustments
(11)
11
-
-
-
 
_____
_____
____
____
____
At end of the year
178
(2,539)
1,636
8
(717)
 
=====
=====
=====
====
====

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

All items above are shown net of tax.

INTERCONTINENTAL HOTELS GROUP PLC
GROUP STATEMENT OF FINANCIAL POSITION
31 December 2015
 
2015
31 December
2014
31 December
 
$m
$m
ASSETS
   
Property, plant and equipment
428
741
Goodwill and other intangible assets
1,226
643
Investment in associates and joint ventures
136
116
Trade and other receivables
3
3
Retirement benefit assets
-
8
Other financial assets
284
252
Non-current tax receivable
37
34
Deferred tax assets
49
87
 
_____
_____
Total non-current assets
2,163
1,884
 
_____
_____
Inventories
3
3
Trade and other receivables
462
448
Current tax receivable
4
4
Derivative financial instruments
-
2
Other financial assets
-
5
Cash and cash equivalents
1,137
162
 
_____
_____
Total current assets
1,606
624
Assets classified as held for sale
-
310
 
_____
_____
Total assets (note 3)
3,769
2,818
 
=====
=====
LIABILITIES
   
Loans and other borrowings
(427)
(126)
Derivative financial instruments
(3)
-
Trade and other payables
(839)
(769)
Provisions
(15)
(1)
Current tax payable
(85)
(47)
 
_____
_____
Total current liabilities
(1,369)
(943)
 
_____
_____
Loans and other borrowings
(1,239)
(1,569)
Retirement benefit obligations
(129)
(146)
Trade and other payables
(578)
(627)
Provisions
-
(9)
Deferred tax liabilities
(135)
(147)
 
_____
_____
Total non-current liabilities
(2,081)
(2,498)
Liabilities classified as held for sale
-
(94)
 
_____
_____
Total liabilities
(3,450)
(3,535)
 
=====
=====
Net assets/(liabilities)
319
(717)
 
=====
=====
EQUITY
   
Equity share capital
169
178
Capital redemption reserve
11
12
Shares held by employee share trusts
(18)
(35)
Other reserves
(2,888)
(2,896)
Unrealised gains and losses reserve
113
111
Currency translation reserve
269
269
Retained earnings
2,653
1,636
 
_____
_____
IHG shareholders’ equity
309
(725)
Non-controlling interest
10
8
 
_____
_____
Total equity
319
(717)
 
=====
=====


INTERCONTINENTAL HOTELS GROUP PLC
GROUP STATEMENT OF CASH FLOWS
For the year ended 31 December 2015

 
2015
Year ended
31 December
2014
Year ended
31 December
 
$m
$m
     
Profit for the year
1,224
392
Adjustments reconciling profit for the year to cash flow from operations (note 10)
 
(414)
 
361
 
_____
_____
Cash flow from operations
810
753
Interest paid
(75)
(76)
Interest received
2
2
Tax paid on operating activities
(109)
(136)
 
_____
_____
Net cash from operating activities
628
543
 
_____
_____
Cash flow from investing activities
   
Purchase of property, plant and equipment
(42)
(84)
Purchase of intangible assets
(157)
(162)
Investment in other financial assets
(28)
(5)
Investment in associates and joint ventures
(30)
(15)
Loan advances to associates and joint ventures
(25)
(3)
Acquisition of business, net of cash acquired (note 8)
(438)
-
Capitalised interest paid
(4)
(2)
Disposal of hotel assets, net of costs and cash disposed (note 9)
1,277
345
Proceeds from other financial assets
6
49
Loan repayments by associates and joint ventures
22
-
Proceeds from disposal of associates and joint ventures
9
-
Tax paid on disposals
(1)
-
 
_____
_____
Net cash from investing activities
589
123
 
_____
_____
Cash flow from financing activities
   
Purchase of own shares
-
(110)
Purchase of own shares by employee share trusts
(47)
(68)
Dividends paid to shareholders
(188)
(942)
Dividend paid to non-controlling interests
-
(1)
Transaction costs relating to shareholder returns
-
(1)
Issue of long-term bonds
458
-
Other new borrowings
400
-
New borrowings repaid
(400)
-
(Decrease)/increase in other borrowings
(355)
382
Proceeds from foreign exchange swaps
22
-
Close-out of currency swaps
-
4
 
_____
_____
Net cash from financing activities
(110)
(736)
 
_____
_____
Net movement in cash and cash equivalents in the year
1,107
(70)
Cash and cash equivalents, net of overdrafts, at beginning of the year
55
134
Exchange rate effects
(64)
(9)
 
_____
_____
Cash and cash equivalents, net of overdrafts, at end of the year
1,098
55
 
_____
_____


INTERCONTINENTAL HOTELS GROUP PLC
NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS


1.
Basis of preparation
 
 
The audited consolidated financial statements of InterContinental Hotels Group PLC (the Group or IHG) for the year ended 31 December 2015 have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.   Other than the changes listed below, they have been prepared on a consistent basis using the accounting policies set out in the InterContinental Hotels Group PLC Annual Report and Financial Statements for the year ended 31 December 2014.
 
 
With effect from 1 January 2015, the Group has adopted Amendments to IAS 19 ‘Defined Benefit Plans: Employee Contributions’, and Annual Improvements to IFRSs 2010 – 2012 Cycle and 2011 – 2013 Cycle. The adoption of these amendments has had no material impact on the consolidated financial statements.
 

2.
Exchange rates
 
 
 
The results of operations have been translated into US dollars at the average rates of exchange for the year. In the case of sterling, the translation rate is $1= £0.65 (2014 $1=£0.61). In the case of the euro, the translation rate is $1 = €0.90 (2014 $1 = €0.75).
 
Assets and liabilities have been translated into US dollars at the rates of exchange on the last day of the year. In the case of sterling, the translation rate is $1=£0.68 (2014 $1 = £0.64). In the case of the euro, the translation rate is $1 = €0.92 (2014 $1 = €0.82).
 
 
 
3.
Segmental information
   
       
 
Revenue
   
   
2015
2014
   
$m
$m
       
 
Americas
955
871
 
Europe
265
374
 
AMEA
241
242
 
Greater China
207
242
 
Central
135
129
   
_____
_____
 
Total revenue
1,803
1,858
   
=====
====
       
 
All results relate to continuing operations.

 
Profit
2015
$m
2014
$m
       
 
Americas
597
544
 
Europe
78
89
 
AMEA
86
84
 
Greater China
70
89
 
Central
(151)
(155)
   
_____
____
 
Reportable segments’ operating profit
680
651
 
Exceptional operating items (note 4)
819
29
   
_____
____
 
Operating profit
1,499
680
       
 
Net finance costs
(87)
(80)
   
_____
____
 
Profit before tax
1,412
600
   
=====
====
       
 
All results relate to continuing operations.
   

 
Assets
2015
$m
2014
$m
       
 
Americas
1,355
919
 
Europe
383
626
 
AMEA
260
244
 
Greater China
148
394
 
Central
396
346
   
_____
____
 
Segment assets
2,542
2,529
       
 
Unallocated assets:
   
 
Non-current tax receivable
37
34
 
Deferred tax assets
49
87
 
Current tax receivable
4
4
 
Derivative financial instruments
-
2
 
Cash and cash equivalents
1,137
162
   
_____
____
 
Total assets
3,769
2,818
   
=====
====

4.
Exceptional items
   
2015
$m
2014
$m
 
Exceptional operating items
   
   
Administrative expenses:
   
   
Venezuelan currency losses (a)
(4)
(14)
   
Reorganisation costs (b)
(6)
(29)
   
Corporate development costs (c)
(5)
-
   
Kimpton acquisition costs (d)
-
(7)
   
Kimpton integration costs (e)
(10)
-
   
Pension settlement cost (f)
-
(6)
   
UK portfolio restructuring (g)
-
(45)
     
_______
_______
     
(25)
(101)
   
Other operating income and expenses:
   
   
Gain on disposal of hotels (note 9)
871
130
   
Gain on disposal of investment in associate (h)
9
-
     
_____
____
   
880
130
 
    Impairment charges:
   
   
Property, plant and equipment (i)
(27)
-
   
Associates (j)
(9)
-
   
_____
____
   
(36)
-
   
_____
____
   
819
29
   
=====
====
 
Tax
   
   
Tax on exceptional operating items (k)
(8)
(29)
     
=====
====
         
       

 
All items above relate to continuing operations. These items are treated as exceptional by reason of their size or nature.
 
a)
Arises from changes to the Venezuelan exchange rate mechanisms and the adoption of the SIMADI exchange rate in 2015 and the SICAD II exchange rate in 2014, these being the most accessible exchange rates open to the Group for converting its bolivar earnings into US dollars.  The exceptional losses arise from the re-measurement of the Group’s bolivar assets and liabilities to the relevant exchange rates, being approximately $1 = 190VEF on adoption of SIMADI and approximately $1 = 50VEF on adoption of SICAD II.  The Group has used the SIMADI exchange rate for translating the results of its Venezuelan operations since 1 April 2015.
 
b)
Relates to the implementation of more efficient processes and procedures in the Group’s Global Technology infrastructure to help mitigate future cost increases, together with, in 2014, costs incurred in introducing a new HR operating model across the business to provide enhanced management information and more efficient processes.  These restructuring programmes have now been completed.
 
c)
Primarily legal costs related to development opportunities.
 
d)
Related to acquisition transaction costs incurred in the period to 31 December 2014 on the acquisition of Kimpton, which completed on 16 January 2015 (see note 8).
 
e)
Relates to the initial costs of integrating Kimpton into the operations of the Group.  The integration programme remains in progress and further costs will be incurred in 2016.
 
f)
In 2014, resulted from the partial cash-out of the UK unfunded pension arrangements.
 
g)
Related to the costs of securing a restructuring of the UK hotel portfolio which resulted in the transfer of 61 managed hotels to franchise contracts.
 
h)
Relates to the disposal of an associate investment in the AMEA region.
 
i)
An impairment charge of $27m has been recognised during the year relating to two hotels in North America following a re-assessment of their recoverable amounts.
 
j)
An impairment charge of $9m has been recognised during the year relating to an associate investment in the AMEA region following a re-assessment of its recoverable amount.
 
k)
In 2015, comprises a charge of $56m relating to disposal of hotels, a credit of $21m in respect of the 2014 disposal of an 80.1% interest in InterContinental New York Barclay reflecting the judgment that state tax law changes would now apply to the deferred gain, and credits of $27m for current and deferred tax relief on other operating exceptional items of current and prior periods.  In 2014, the charge comprised $56m relating to the disposal of an 80.1% interest in InterContinental New York Barclay offset by a credit of $27m relating to a restructuring of the UK hotel portfolio and other reorganisation costs.

5.
Tax
 
 
The tax charge on profit from continuing operations, excluding the impact of exceptional items (note 4), has been calculated using a tax rate of 30% (2014 31%) analysed as follows:

 
Year ended 31 December
2015
2015
2015
2014
 
2014
2014
   
Profit
$m
Tax
$m
Tax
rate
Profit
$m
Tax
$m
Tax
rate
               
 
Before exceptional items
593
(180)
 30%
571
(179)
31%
 
Exceptional items
819
(8)
 
29
(29)
 
   
____
____
 
____
____
 
   
1,412
(188)
 
600
(208)
 
   
====
====
 
====
====
 
 
Analysed as:
           
   
UK tax
 
(2)
   
(5)
 
   
Foreign tax
 
(186)
   
(203)
 
     
____
   
____
 
     
(188)
   
(208)
 
     
====
   
=====
 

6.
Earnings per ordinary share
 
 
Basic earnings per ordinary share is calculated by dividing the profit for the year available for IHG equity holders by the weighted average number of ordinary shares, excluding investment in own shares, in issue during the year.
 
Diluted earnings per ordinary share is calculated by adjusting basic earnings per ordinary share to reflect the notional exercise of the weighted average number of dilutive ordinary share awards outstanding during the year.
 
Adjusted earnings per ordinary share is disclosed in order to show performance undistorted by exceptional items, to give a more meaningful comparison of the Group’s performance.

 
Continuing and total operations
2015
2014
 
 
         
 
Basic earnings per ordinary share
     
 
Profit available for equity holders ($m)
1,222