A reconciliation between basic and adjusted earnings per share is shown in note 8. All figures and movements are shown before special items except for group basic earnings per share and group operating profit reported above.
1 – Continuing business excludes Britvic and hotel assets sold or held for sale at 31 December 2005.
2 – See appendix 3 for analysis of financial headlines.
Commenting on the results, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:
“This is a strong set of results with a solid performance across all three of our regions. 2005 was a year of significant change for IHG and a number of key strategic milestones were met. We executed on our asset disposal programme and successfully floated Britvic, to become a pure play, high growth hotel company, managing and franchising hotels using our attractive stable of brands. The record number of hotels we currently have under development gives us confidence we can grow this business and achieve our rooms target as we look to the years ahead."
RevPAR continues to increase across the business. InterContinental London's refurbishment will impact EMEA results again this year. Further progress made towards the room growth target, with 11,100 rooms signed so far this year, including almost 6,000 rooms in China with two important new partners.
For further information, please contact:
Investor Relations (Gavin Flynn/Paul Edgecliffe-Johnson):
+44 (0) 1753 410 176
+44 (0) 7808 098 972
Media Affairs (Leslie McGibbon):
+44 (0) 1753 410 425
+44 (0) 7808 094 471
Increase in pipeline of signed deals and rooms open
IHG continues to increase its pipeline, up 25,600 to 108,500 rooms, a 31% increase on 2004. This gives IHG confidence that the target of 50,000-60,000 net organic room additions by the end of 2008 will be achieved.
|Room Signings 70,000||
|Americas 49,800 +55%||
|EMEA 9,400 +38%||
|Asia Pacific 10,800 +89%||
IHG’s room count grew in the year:
|Room count 537,500||
Strengthening operating system
IHG continues to demonstrate the strength of its revenue delivery to hotel owners through its reservation channels and loyalty programme, Priority Club Rewards.
Continued expansion of reservations systems and Priority Club Rewards programme in the year:
IHG has commissioned major global consumer and brand positioning research, which will focus on all brands and major markets.
|Holiday Inn Express||
Americas: strong performance across the business
All IHG brands grew RevPAR in the Americas, with successful brand innovations which resonated with guests and owners.
RevPAR increased 10.5% in the year, with all brands performing well. Rate growth generated most of this increase. InterContinental in the US performed particularly well with 12.6% RevPAR growth, outperforming its market segment. US Holiday Inn showed 9.2% RevPAR growth, also outperforming its market segment. Extended stay brands Staybridge Suites and Candlewood Suites performed well throughout the year with RevPAR growth of 9.5% and 12.0% respectively.
Operating profit performance
Operating profit from continuing operations increased by 25% from $273m to $342m in the year. Continuing owned and leased operating profit grew from $7m to $28m, driven by excellent performance at the InterContinental New York and InterContinental Buckhead, Atlanta. Managed operating profit was up from $12m to $36m, driven by new management contracts and improved trading in the existing estate. Franchised operating profit was up 12% from $304m to $340m, driven by RevPAR increases and a $4m increase in fees from franchise sales. Investments in development headcount and technology led to an increase in regional overheads. Although the industry experienced one of the most extreme hurricane seasons, the financial impact to IHG was broadly neutral.
EMEA: maintained outperformance in UK market
In 2005 EMEA achieved solid revenue growth in the continuing business despite varying market conditions and terrorist activity.
RevPAR increased 5.6% in the year, but with considerable variances in performance across geographic markets. Holiday Inn UK RevPAR was up 4.6%, continuing its market outperformance. London properties realised positive RevPAR growth despite the terrorist attacks in the second half. RevPAR in France grew by 5.6% led by improving performance at InterContinental Paris Le Grand which has seen an increasing number of guests arriving from the US. RevPAR performance in Germany was flat, although the second half saw modest growth. The Middle East continued its strong performance with RevPAR up 18.7%.
Operating profit performance
Operating profit from continuing operations increased 96% in the year from £24m to £47m. Continuing owned and leased operating profit was up from £2m to £11m, driven by improvement in key European hotels including the InterContinental Paris Le Grand, cost savings from business restructuring following completion of the sale of the UK portfolio, and the impact of refurbishment at the InterContinental London, which reduced profit by £13m in the year. Managed operating profit was up 29% from £24m to £31m, largely as a result of strong performance in the Middle East and retaining management contracts on assets disposed. Excluding these contracts and prior year liquidated damages managed profit was up 15%. Franchised operating profit at £26m was broadly flat when adjusted for £7m of liquidated damages received in the first half on termination of IHG’s South African master franchise agreement. The regional overhead reduced by £2m to £21m.
Asia Pacific: continued strong growth
InterContinental, Crowne Plaza and Holiday Inn performed well with the number of hotels in the region increasing by 13 in the year. Express by Holiday Inn was introduced into China further increasing IHG’s brand offer to owners.
RevPAR increased 6.1% in the year. Greater China RevPAR increased 13.5%, driven by rate increases as strong demand for IHG brands continues. Australia and New Zealand had another good year with RevPAR increasing 8.8% also mainly rate driven.
Operating profit performance
Operating profit from continuing operations was up 27% from $30m to $38m. Continuing owned and leased operating profit grew by 12% from $17m to $19m due to increased profit at the InterContinental Hong Kong despite 60% of rooms under refurbishment in quarter three. Managed hotels operating profit increased by 16% from $25m to $29m in the year through robust trading, particularly in China after investment in expanding direct management resources and infrastructure to support growth there. The regional overhead remained flat at $15m.
Continuing business operating profit grew by 42%.
Appendix 1: Asset disposal programme detail
|Number of hotels||Proceeds||Net book value|
|Disposed to date*||144||£2.3bn||£2.2bn|
|On the market||7 on the market
24 held for sale
* Holiday Inn Dijon sold since date of last announcement
For a full list please visit www.ihgplc.com/investors
Appendix 2: Return of funds programme
|Timing||Total return||Returned to date||Still to be returned|
|£501m special dividend||Paid December 2004||£501m||£501m||Nil|
|First £250m share buyback||Completed in 2004||£250m||£250m||Nil|
|Second £250m share buyback||Ongoing||£250m||£211m||£39m|
|£996m capital return||Paid 8 July 2005||£996m||£996m||Nil|
|Third £250m share buyback||Yet to commence||£250m||-||£250m|
|£500m special dividend||Second quarter 2006||£500m||-||£500m|
Appendix 3: Financial headlines
|Full Year £m||Total||Americas||EMEA||Asia Pacific||Central|
|Franchised operating profit||214||190||186||167||26||21||2||2||-||-|
|Managed operating profit||67||44||20||6||31||24||16||14||-||-|
|Continuing owned and leased operating profit||37||15||15||4||11||2||11||9||-||-|
|Continuing hotels operating profit pre central overheads||255||191||187||150||47||24||21||17||-||-|
|Continuing hotels operating profit||190||134||187||150||47||24||21||17||(65)||(57)|
|Discontinued owned and leased operating profit||79||135||11||23||57||105||11||7||-||-|
|Total Hotels operating profit||269||269||198||173||104||129||32||24||(65)||(57)|
|Soft drinks operating profit||70||77|
|Group operating profit pre special items||339||346|
|Group operating profit post special items||317||297|
Appendix 4: Investor information for 2005 final dividend
|Ex-dividend date:||29 March 2006|
|Record date:||31 March 2006|
|Payment date:||5 June 2006|
|Dividend payment:||Ordinary shares 10.7p per share
ADR’s 18.7c per ADR
Presentation for Analysts and Shareholders
A presentation with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director) will commence at 9.00 am (London time) on 2 March at Crowne Plaza London – The City. There will be an opportunity to ask questions. The presentation will conclude at approximately 10.00 am (London time).
There will be a live audio webcast of the results presentation on the web address www.ihgplc.com/prelims06. 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
|International dial-in||+44 (0)1452 556 609|
US conference call
There will also be a conference call, primarily for US investors and analysts, at 9.30 am (Eastern Standard Time) on 2 March with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director). There will be an opportunity to ask questions. To access this please dial the relevant number below and use the access number 5267129.
|International dial-in||+44 (0) 1452 542 300|
|US Toll Free||1866 220 1452|
A recording of the conference call will also be available for 7 days. To access this please dial the relevant number below and use the access number 5267129 #.
|International dial-in||+44 (0) 1452 550 000|
|US Toll Free||1866 247 4222|
Note to Editors:
InterContinental Hotels Group PLC of the United Kingdom [LON:IHG, NYSE:IHG (ADRs)] is the world's largest hotel group by number of rooms. InterContinental Hotels Group owns, manages, leases or franchises, through various subsidiaries, over 3,600 hotels and 537,000 guest rooms in nearly 100 countries and territories around the world. The Group owns a portfolio of well recognised and respected hotel brands including InterContinental® Hotels & Resorts, Crowne Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts, Holiday Inn Express®, Staybridge Suites®, Candlewood Suites® and Hotel Indigo™, and also manages the world's largest hotel loyalty programme, Priority Club® Rewards.
InterContinental Hotels Group offers information and online reservations for all its hotel brands at www.ichotelsgroup.com and information for the Priority Club Rewards programme at www.priorityclub.com.
For the latest news from InterContinental Hotels Group, visit our online Press Office at www.ihgplc.com/media.
High resolution images to accompany this announcement are available for the media to download free of charge from www.vismedia.co.uk . This includes profile shots of the key executives.
Cautionary note regarding forward-looking statements
This announcement contains certain forward-looking statements as defined under US law (Section 21E of the Securities Exchange Act of 1934). These forward-looking statements can be identified by the fact that they do not relate to historical or current facts. Forward-looking statements often use words such as ‘target’, ‘expect’, ‘intend’, ‘believe’ or other words of similar meaning. 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. Factors that could affect the business and the financial results are described in “Risk Factors” in the InterContinental Hotels Group PLC Annual Report on Form 20-F filed with the United States Securities and Exchange Commission.
Last updated 25 January 2008