|Financial results||2009||2008||% change||% change CER|
|Total||Excluding LDs1||Total||Excluding LDs1|
|Adjusted operating profit 2||$179m||$291m||(38)%||(35)%||(41)%||(38)%|
|Total adjusted EPS 2||41.5¢||58.1¢||(29)%|
|Total basic EPS 3||(10.2)¢||56.0¢||(118)%|
All figures are before exceptional items unless otherwise noted. See appendix 3 and appendix 4 for analysis of financial headlines. Constant exchange rate comparatives shown in appendix 5. (% CER) = change in constant currency.
|1||Excluding $3m of significant liquidated damages (LDs) receipts in the first half 2009 and $22m in the first half 2008.|
|2||Hotels previously accounted for as discontinued operations have been re-presented as continuing operations and the relevant comparatives restated.|
|3||Total basic EPS after exceptional items.|
“Trading was very challenging throughout the first half of the year and we expect the remainder of 2009 to be tough.
“We have made good progress on improving efficiency and reducing costs as we make more effective use of our scale. We will continue to invest behind our system to drive revenue and grow market share.
“The continued out performance of our brands around the world is encouraging, as is our signings pace which, despite the continued scarcity of financing for developers, is still averaging around one deal a day. We are on track to open more than 400 hotels this year. We are making good progress with the global relaunch of Holiday Inn and over 1000 hotels have now completed this process. Feedback from relaunched hotels continues to be positive and we are still committed to completing the programme by the end of 2010.
“The outlook remains challenging, but we are confident that with our fee based business model, substantially reduced cost base, strong financial position and the renewal and refreshment of our brands supported by our system scale we will outperform the competition and be well positioned for the upturn.”
RevPAR declined 15.8% in the first half, with a second quarter decline of 18.0%. In the US, IHG’s brands outperformed the industry by 2.7 percentage points in the first half, driven by the resilience of the midscale brands which represent 80% of IHG’s rooms in this market. Revenues declined 25% to $375m. Excluding one $13m liquidated damages receipt in the first half of 2008, revenues declined 23%.
Operating profit declined 40% from $249m to $149m. Excluding the $13m liquidated damages receipt, operating profit declined 37%. A 28.6% decline in RevPAR from owned and leased hotels, partially offset by strong cost control at hotel level, drove the drop in these hotels’ operating profit from $26m to $4m. In the managed business, excluding the $13m liquidated damages receipt in the first half of 2008, a RevPAR decline of 18.4% caused a $34m drop in operating profit to a loss of $9m. This was primarily due to IHG funding shortfalls to the agreed owner’s priority return on a number of hotels managed for one owner. This operating profit decline is in line with the disclosed sensitivity that a 1% change in RevPAR has a $7m impact on annual operating profit across the global managed business, of which some $4m relates to the Americas. Franchised hotels’ operating profit fell by 18% to $177m driven by a 12% decline in royalty fees and an $11m reduction in fees associated with initial franchising, relicensing and termination, partially offset by a 5% increase in room count.
RevPAR declined 16.4% in the first half, with a second quarter decline of 20.3% reflecting the impact of the movement of Easter from March to April. The Middle East and the UK were the most resilient markets with first half RevPAR declines of 8.5% and 10.7% respectively. Revenues declined 31% (20% at constant exchange rates (CER)) to $186m. Excluding one liquidated damages receipt of $3m in the first half of 2009 and one of $9m in the first half of 2008, revenues declined 30% (18% CER).
Operating profit declined 35% (30% CER) from $89m to $58m or 31% (26% CER) excluding the net $6m impact of the two liquidated damages receipts. Owned and leased operating profit almost halved to $10m, primarily due to tough trading conditions at InterContinental Paris Le Grand. Managed hotels’ operating profit declined by $23m to $33m, or by $14m excluding the impact of one liquidated damages receipt in the first half of 2008. Continued growth in fees in the Middle East was offset by the impact of a 25.4% RevPAR decline across the European managed estate and the annualisation of the reduced contribution from a portfolio of hotels in the UK, first reported in the third quarter of 2008. Excluding the $3m liquidated damages receipt in the first half of 2009, franchised hotels’ operating profit declined $8m to $27m (9% at CER) driven by a RevPAR decline of 17.0% being partially offset by a 7% increase in room count.
RevPAR declined 17.9% in the first half, with a second quarter decline of 19.3%. Greater China was the weakest market with a first half RevPAR decline of 21.7%, significantly better than the industry down 33.3% which continues to be impacted by the recent increases in supply, particularly by international brands. Revenues declined 25% (22% CER) to $106m.
Operating profit declined 41% (34% CER) from $29m to $17m. Operating profit at owned and leased hotels fell by $9m to $11m primarily reflecting a RevPAR decline of 28.1% at the InterContinental Hong Kong. Managed hotels’ operating profit declined 35% (23% CER) to $17m driven by a 16.5% RevPAR decline.
Revenue delivery to hotel owners through reservation channels and loyalty programmes continued to improve:
The interest charge for the period fell $27m to $28m due to a reduction in interest rates and lower average net debt. Based on the position at the end of the half, the tax charge has been calculated using an estimated annual tax rate of 22% (2008: 28%). The reported tax rate may continue to vary year-on-year but is expected to increase in the medium to long term. The $162m exceptional impairment charge comprises (i) $57m write down of goodwill and a $32m intangible asset write off, both relating to the Americas managed operation; and (ii) $73m impairment to hotels including $14m in catch-up depreciation resulting from their re-presentation from held for sale to continuing operations.
$91m of cash was generated from operating activities in the six months to 30 June and $12m of cash was generated from disposals. Growth capital expenditure in the half was $9m and maintenance capital expenditure was $31m. Full year maintenance capital expenditure is still expected to be c.$75m.
IHG’s net debt was maintained at $1.3bn at the end of the first half, including the $203m finance lease on the InterContinental Boston. IHG remains well placed in terms of its banking facilities, with a $1.6bn revolving credit facility expiring May 2013 and a $0.5bn term loan expiring November 2010.
|Number of owned hotels||Proceeds||Net book value|
|Disposed since April 2003||183||$5.5bn||$5.2bn|
For a full list please visit www.ihg.com/Investors
|Six months to 30 June $m||Total||Americas||EMEA||Asia Pacific||Central|
|* 2008 comparatives restated for those owned hotels previously accounted for as discontinued operations, now re-presented as continuing operations.|
|Owned and leased operating profit||25||65||4||26||10||19||11||20||-||-|
|Managed operating profit||41||120||(9)||38||33||56||17||26||-||-|
|Franchised operating profit||209||253||177||215||30||35||2||3||-||-|
|Operating profit pre central overheads||224||367||149||249||58||89||17||29||-||-|
|Three months to 30 June $m||Total||Americas||EMEA||Asia Pacific||Central|
* 2008 comparatives restated for those owned hotels previously accounted for as discontinued operations, now re-presented as continuing operations.
|Owned and leased operating profit||18||40||5||16||9||14||4||10||-||-|
|Managed operating profit||21||62||(5)||15||17||35||9||12||-||-|
|Franchised operating profit||112||139||97||118||14||20||1||1||-||-|
|Operating profit pre central overheads||127||205||86||134||34||59||7||12||-||-|
|Actual currency*||Constant currency**||Actual currency*||Constant currency**||Actual currency*||Constant currency**||Actual currency*||Constant currency**|
* US dollar actual currency; ** Translated at constant 2008 exchange rates; *** After Central Overheads
Ex-dividend Date: 26 August 2009
Record Date: 28 August 2009
Payment Date: 2 October 2009
Dividend payment: Ordinary shares 7.3p per share: ADRs 12.2¢ per ADR
|Investor Relations (Alex Shorland-Ball; Catherine Dolton):||+44 (0) 1895 512 176|
|Media Affairs (Leslie McGibbon; Emma Corcoran):||+44 (0) 1895 512 425|
|+44 (0) 7808 094 471|
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.
A presentation with Andrew Cosslett (Chief Executive) and Richard Solomons (Chief Financial Officer and Head of Commercial Development) will commence at 9.30am (London time) on 11 August at Merrill Lynch Financial Centre, 2 King Edward Street, London, EC1A 1HQ. There will be an opportunity to ask questions. The presentation will conclude at approximately 10.30am (London time).
There will be a live audio webcast of the results presentation on the web address www.ihg.com/interims09. 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)203 037 9090
There will also be a conference call, primarily for US investors and analysts, at 10.00am (Eastern Standard Time) on 11 August with Andrew Cosslett (Chief Executive) and Richard Solomons (Chief Financial Officer and Head of Commercial Development). There will be an opportunity to ask questions.
|International dial-in:||+44 (0)20 7108 6370|
|US Toll Free:||866 692 5726|
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 5717.
|International dial-in:||+44 (0)207 108 6347|
|US Toll Free:||866 851 6712|
The full release and supplementary data will be available on our website from 7.00am (London time) on 11 August. The web address is www.ihg.com/interims09.
To watch a video of Andrew Cosslett reviewing our results visit our YouTube channel later today at www.youtube.com/ihgplc
InterContinental Hotels Group (IHG) [LON:IHG, NYSE:IHG (ADRs)] is the world's largest hotel group by number of rooms. IHG owns, manages, leases or franchises, through various subsidiaries, over 4,300 hotels and almost 630,000 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, Hotel Indigo®, Crowne Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts, Holiday Inn Express®, Staybridge Suites® and Candlewood Suites®, and also manages the world's largest hotel loyalty programme, Priority Club® Rewards with 44 million members worldwide.
IHG has nearly 1,600 hotels in its development pipeline, which will create 140,000 jobs worldwide over the next few years.
InterContinental Hotels Group PLC is the Group's holding company and is incorporated in Great Britain and registered in England and Wales.
IHG offers information and online reservations for all its hotel brands at www.ihg.com and information for the Priority Club Rewards programme at www.priorityclub.com. For the latest news from IHG, visit our online Press Office at www.ihg.com/media.
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 ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘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 11 August 2009