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Second Quarter and First Half Results to 30 June 2004


  Second Quarter First Half
30 June 2004
30 June 2003
£m pro forma
30 June 2004
30 June 2003
£m pro forma
- Turnover 387 367 5.4% 735 708 3.8%
- EBItdA 107 84 27.4% 190 152 25.0%
- Operating Profit 69 46 50.0% 113 75 50.7%
Soft Drinks            
- Turnover 178 171 4.1% 366 335 9.3%
- EBItdA 42 40 5.0% 64 61 4.9%
- Operating Profit 30 31 (3.2%) 40 39 2.6%
- Turnover 565 538 5.0% 1,101 1,043 5.6%
- EBItdA 149 124 20.2% 254 213 19.2%
- Operating Profit 99 77 28.6% 153 114 34.2%
- Profit before tax 93 67 38.8% 143 92 55.4%
Earnings per share            
- Basic 28.5p * - 36.9p * -
- Adjusted 9.0p 5.4p 66.7% 14.2p 7.6p 86.8%
Dividend per share       4.30p 4.05p 6.2%
Note: EBItdA, operating profit, profit before tax and adjusted earnings per share are stated before exceptional items. * Not stated as no direct comparables

Strong trading and operating performance:

  • Adjusted earnings per share grew by 86.8% to 14.2p in the first half and by 66.7% to 9.0p in the second quarter
  • Strong first half and second quarter trading with Hotels operating profit up 50.7% to £113m in the first half and 50.0% to £69m in the second quarter, as recovery continues in the US, the UK and Asia Pacific and cost reductions are delivered
  • Interim dividend raised by 6.2%, to 4.30p per share from 4.05p (interim 2003); the Board anticipates this will be approximately 30% of full year dividend

Focused strategy and execution, with announcement of additional asset disposals and further return of funds to shareholders:

  • Strategic focus remains to develop our brands and grow the managed and franchised business leading to better returns on capital employed
  • Further £1.3bn net book value portfolio of hotels, predominantly in the UK plus the InterContinental Paris, placed on market today; aiming to retain management or franchise contracts on majority of disposals. A total of £589m of hotels already on market and more than £330m of completed disposals to date which, with today’s announcement, brings total announced or completed hotel disposals to more than £2.2bn since separation.
  • The next step in our ongoing programme is a further £750m of funds to be returned to shareholders, in addition to the current £250m, comprising a special dividend of £500m to be paid in December 2004 (with associated share consolidation) and a further share buyback of £250m. This second phase of share buyback will be undertaken once the existing £250m programme is finished (£213m has been completed as of today). A current total of £1bn of funds committed to be returned to shareholders since separation, subject to no significant adverse change in market conditions.

Commenting on current trading, Richard North, Chief Executive, InterContinental Hotels Group PLC said

“This is a strong set of results reflecting improvements in operating performance coupled with recovery in key markets such as the US, UK and Hong Kong. Western Europe, and particularly Paris, remains a challenge.

The asset disposal programme is now well underway and we are stepping up our returns to shareholders with a further £750 million package. All in all we are making real progress executing the strategy we set out at separation in April 2003, transforming the company to one which is all about brands, managing and franchising. We remain positive about the future".

Trading and Operating Overview: continued strong performance

  • Group operating profit for the first half up by 34.2%; adjusted earnings per share up 86.8% aided by (1) the reduced tax charge in 2004, (2) reduced interest charge due to lower net debt of £520m as at 30 June 2004 (from £942m as at 30 June 2003) and (3) the ongoing benefit of the share buyback programme
  • Hotels operating profit up 50.7% for the first half:
    • Americas operating profit up 10.7% from $131m to $145m, driven by continued strong RevPAR gains in New York and growth in franchise business; sterling operating profit down 2.4% after the impact of foreign exchange
    • EMEA operating profit improved from £32m to £50m, up 56.3%, driven by market share gains in the UK but also one off liquidated damages of approximately £4m from the InterContinental Barcelona contract
    • Asia Pacific operating profit up from $3m to $17m, driven by strong performance of InterContinental Hong Kong versus weak comparables. The region has now recovered to 2002 operating profit levels
    • First half regional and central overheads of $108m, versus $122m in 2003, as the planned cost savings continue to be delivered to target. Full year total overheads forecast still flat year on year at constant currency.
  • Room revenue delivered to hotels in our system through our reservation channels in the first half is up 26.3% from $1.6bn to $2.1bn:
    • 33.6% of total rooms revenue now delivered through our channels
    • Internet channel revenue growth of 59% and an increase in share of web delivery through IHG’s own sites to 79%; internet revenue now represents 11% of total system revenue for IHG
  • Revenue to our hotels from Priority Club Rewards members up 16.5% year on year from $1.3bn to $1.5bn:
    • More than 28% of system room nights now booked by Priority Club Rewards members
    • Now in excess of 21 million members, the largest number in any hotel loyalty programme worldwide.
  • Relative RevPAR outperformance across most major markets, particularly UK, US Upper Upscale and US Express
  • Almost 13,000 rooms (gross) added to system globally year-to-date, offset by planned, quality-driven terminations in US Holiday Inn estate and Owned and Leased disposals, to give net growth of 2,589 rooms
  • Global hotel pipeline growth of 8.1% from 67,849 rooms as at 30 June 2003 to 73,324 as at 30 June 2004
  • Following the latest actuarial review, IHG is discussing with the UK Hotels Pension Plan Trustees a one-off contribution to the plan to be made in last quarter of 2004 of approximately £50m, effectively eliminating the current estimated deficit
  • Significant tax credit position still expected for full year. P&L tax charge before exceptional items expected to be 18%; exceptional tax credits of £138m recognised in the first half
  • Capex spending remains under tight control; full-year 2004 forecast reduced from £300m to £250m for hotels. 2005 spend expected to be below or equal to 2004, including first phase of refurbishment of the InterContinental London.
  • Improvement in key financial metrics with Return on Capital Employed up to 5.6% from 4.3%* and strong cashflow** generation of £125m in 6 months to 30 June 2004 versus £80m for same period in 2003

*Based on trailing 12 months; as defined in listing particulars **Cashflow pre-disposal proceeds and return of funds

Strategic overview: focused strategy and execution, with announcement of additional asset disposals and further return of funds to shareholders:

  • Key priorities are to develop brands and grow managed and franchised business; clear strategic focus to drive Return on Capital Employed as we move into the next phase of IHG’s ongoing transformation:
    • Strengthen the core business through focus on brand differentiation and system delivery
    • Grow managed and franchised fee-income business in key depth markets
    • Develop the organisation and people to drive further cost improvement
    • Continue the asset disposal programme
    • Return funds to shareholders
  • Continued asset disposals:
    • A further portfolio of hotels has been placed on the market today with a net book value of approximately £1.3bn, predominantly in the UK plus the InterContinental Paris; our intention is to retain management and franchise contracts on the majority of these hotels. Estimated 2004 EBIT of these hotels would be approximately £85m (EBItdA of £130m)
    • £337m of proceeds from hotels sold since separation, slightly ahead of net book value, with Holiday Inn, Preston, UK and Staybridge Suites, Eatontown, USA sold since last update on 12 July 2004
    • £589m of hotels actively being marketed, including the US hotels announced in July 2004
    • In total, more than £2.2bn of hotels currently on the market or disposed. This represents more than 50% of the net book value of IHG’s property assets as at separation.
  • Next phase of IHG’s ongoing return of funds programme announced – further £750m of funds to shareholders, bringing total announced since separation to £1bn:
    • £213m of the £250m initial return of funds complete. 26.9 million shares were purchased as of 30 June. 39.8 million purchased to date at an average price of 534p
    • Special dividend of £500m, with associated share consolidation, to be paid in December 2004
    • Further share buyback programme will commence with up to £250m of repurchases following completion of the remaining £37m of the current programme.
    • These returns are expected to be funded, in part, through disposal proceeds from the almost £1bn of assets already sold or announced as on the market. Further returns of funds are expected to be funded primarily by asset sales and will be considered in light of selective reinvestment in the business, maintaining appropriate gearing and remaining considerate of all stakeholders interests.

Britvic: revenue growth of 9.3% Ytd, with profit growth of 2.6%

  • Britvic delivered turnover up 4.1% from £171m to £178m in the second quarter and up 9.3% from £335m to £366m for the first half, Operating profit was up from £39m to £40m for the first half but down from £31m to £30m in the second quarter. This performance is due to reinvestment in the Pepsi brand, which gained market share and investment in new Robinson brand extensions. Capital expenditure remains on track at £80m in 2004 with £39m spent to date. As already announced, an IPO of Britvic is planned to take place between 1 January 2005 and 31 December 2008 but no firm date has yet been set.

Current Trading

Trading remains strong in our key profit regions of the UK, where we are gaining significant market share, the US and Hong Kong. We continue to see strong occupancy growth across all brands led by the return of the business traveller. Room rate growth has begun in key urban locations such as London and New York, but we still do not expect broad-based rate improvement before 2005. The European market remains weak, with Paris in particular very depressed and hard to predict. Booking lead times remain short particularly in incentive and meetings business.

For further information, please contact:

Investor enquiries:
Investor mainline: +44 (0) 1753 410 176
Gavin Flynn: +44 (0) 7808 098 972
Paul Edgecliffe-Johnson: +44 (0) 7808 098 867
Media enquiries:
Dee Cayhill: +44 (0) 1753 410 423
Leslie McGibbon: +44 (0) 7808 094 471

Download full Interim Results announcement (PDF format)

Appendix 1: Selected RevPAR performance (comparable, year on year change)

  April May June Quarter 1 Quarter 2 Half 1 Ytd (Jan-July)
IC O&L 12.5% 16.4% 13.8% 5.4% 14.3% 10.0% 10.2%
CP NA (system) 8.7% 8.5% 9.2% 5.7% 8.9% 7.6% 7.4%
HI NA (system) 8.9% 4.9% 5.7% 4.3% 6.5% 5.4% 5.3%
Express NA (system) 8.5% 4.6% 7.1% 7.6% 6.7% 7.0% 6.8%
IC O&L 23.6% 4.8% 2.9% (1.4%) 8.5% 4.0% 1.9%
HI UK Regions (0.0%) 7.8% 7.6% 8.3% 5.3% 6.7% 6.4%
HI UK London 37.0% 30.7% 18.6% 16.8% 27.7% 22.3% 21.4%
Asia Pacific              
IC O&L (v 2003) 410.5% 340.5% 136.8% 12.9% 270.4% 73.6% 70.9%
IC O&L (v 2002) 8.8% 18.8% 11.0% 12.5% 12.8% 12.7% 14.1%

Appendix 2: Summary detail of disposals and properties for sale to date (since separation)

Total number of hotels disposed or for sale: 137 hotels, £2.2bn net book value plus proceeds

Sold to date: 30 hotels (4,404 rooms), sale proceeds of £337m

Hotel Rooms
IC MayFair, UK
IC Central Park South, USA 208
CP Midland Manchester, UK 303
CP Vanuatu, Vanuatu 140
HI South Bend, USA 229
HI Sheffield West, UK 138
HI Middlesborough/Teeside, UK 134
HI Gatwick Crawley, UK 217
HI Preston, UK 129
HI Newcastle, Aus 72
HI Adelaide, Aus 193
HI Darwin, Aus 183
Posthouse Epping, UK 79
SBS Houston Galleria, USA 93
SBS Antonio, USA 118
SBS Myrtle Beach, USA 119
SBS Burlington, USA 141
SBS Columbia, USA 118
SBS Atlanta Perimeter, USA 143
SBS Denver, USA 115
SBS Charlotte, USA 117
SBS Austin, USA 121
SBS Auburn Hills, USA 118
SBS Carmel Mountain, USA 116
SBS Fort Lauderdale, USA 141
SBS Portland, USA 117
SBS Boston, USA 133
SBS Sorrento, USA 131
SBS Alpharetta, USA 118
SBS Eatontown, USA 131

Currently on market: 31 hotels, net book value of £589m (including US portfolio of 20 hotels, net book value £505m; £15m of EBIT and £39m of EBItdA)

   Comprising: IC Edinburgh; CP United Nations, New York; IC Miami; IC Chicago; 27 others

New to market today: 76 hotels, net book value £1.3bn (estimated 2004 EBIT of approximately £85m; EBItdA of £130m)

   Comprising: IC Paris, HI Mayfair; HI Kensington; major part of UK portfolio

Appendix 3: Investor information for 2004 interim dividend

Ex-dividend Date: 22 September 2004

Record Date: 24 September 2004

Payment Date: 18 October 2004

Presentation for Analysts and Shareholders
A presentation with Richard North (Chief Executive) and Richard Solomons (Finance Director) will commence at 9.30 am (London time) on 9 September at Cazenove, 20 Moorgate, London. There will be an opportunity to ask questions. The presentation will conclude at approximately 10.30 am (London time).

Presentation for Media
A presentation with Richard North (Chief Executive) and Richard Solomons (Finance Director) will commence at 11.30 am (London time) on 9 September at Cazenove, 20 Moorgate, London. There will be an opportunity to ask questions. The presentation will conclude at approximately 12.15 pm (London time).

There will be a live video and audio webcast of the presentation of the results on the web address The 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 be a call, primarily for US investors and analysts, at 2.30pm (London time) on 9 September with Richard North and Richard Solomons available to answer questions on the results.

International dial-in Tel: +44 (0)1452 542 300
UK dial-in Tel: 0800 953 1444
USA dial-in Tel: 1866 220 1452

The full release and supplementary data will be available on our website from 7.00 am (London time) on 9 September. The web address is

Note to Editors:

InterContinental Hotels Group PLC of the United Kingdom [LON:IHG, NYSE:IHG (ADRs)] is the world's most global hotel company and the largest by number of rooms. InterContinental Hotels Group owns, manages, leases or franchises, through various subsidiaries, more than 3,500 hotels and 538,000 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 IndigoTM, and also has a controlling interest in Britvic, the second largest soft drinks manufacturer in the UK which it intends to IPO at some point after January 1 2005.

InterContinental Hotels Group offers information and reservations capability on the Internet – for InterContinental Hotels & Resorts, for Crowne Plaza Hotels & Resorts, for Holiday Inn Hotels & Resorts, for Holiday Inn Express hotels, for Staybridge Suites hotels, for Candlewood Suites hotels, for Hotel Indigo properties and for the Group's rewards programme,

For the latest news from InterContinental Hotels Group, visit our online Press Office at

Download full Interim Results announcement (PDF format)

Last updated 25 January 2008

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