1st Quarter Results
InterContinental Hotels Group PLC
16 May 2006
16 May 2006
InterContinental Hotels Group PLC
First Quarter Results to 31 March 2006
First Quarter Headlines
• Continuing revenue up 22% from £153m to £186m, up 14% at constant exchange rates.
• Continuing operating profit up 40% from £30m to £42m, up 27% at constant exchange rates.
• Total operating profit, including discontinued operations, of £46m.
• Franchised operating profit up 25% to £55m. Managed operating profit up 36% to £19m.
• Adjusted earnings per share up 13% from 6.8p to 7.7p.
• Total gross revenue from all hotels in IHG's system up 9% to $3.4bn.*
• Global constant currency RevPAR growth of 11.6%. Strongest growth in Americas, up 13.0%, with continued rate
increases.
• Room count steady at 537,544 rooms. Pipeline up by 8,452 to 116,964.
* Total gross revenue is defined as total room revenue (i.e. excluding food and beverage) from franchised hotels
and total hotel revenue from managed, owned and leased hotels. It is not revenue attributable to IHG,
as it is derived mainly from hotels owned by third parties. The metric is highlighted as an indicator of the scale
and reach of IHG's brands.
All figures and movements unless otherwise noted are at actual exchange rates and before other operating income
and expenses. Constant exchange rate comparatives shown in appendix 4.
See appendix 3 for analysis of financial headlines.
Commenting on the results and trading, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:
"Results for the quarter were strong, helped by buoyant market conditions around the world and the impact of actions
taken during the second half of 2005. These changes included strengthened and refocused development teams, new operating
structures and revisions to our marketing approach in key locations. The disposal programme is on track, we remain
focused on enhancing the quality of our estate and our pipeline of new hotel signings, the largest in the industry,
continues to grow. The outlook for the rest of the year remains positive."
Americas: strong performance across all brands
Revenue performance
RevPAR increased 13.0% with rate generating most of the increase, up 8.4%. InterContinental, Holiday Inn and Candlewood
each outperformed their market segments, with RevPAR up 14.5%, 12.5% and 13.0% respectively. Holiday Inn Express,
Crowne Plaza and Staybridge Suites also showed continued good RevPAR growth, with 13.8%, 11.9% and 8.6% increases
respectively.
Operating profit performance
Operating profit from continuing operations increased 25% from $69m to $86m. Continuing owned and leased profit improved
from $2m to $4m, driven by increased rates at InterContinental New York and InterContinental Buckhead, Atlanta, but
impacted by pre opening costs at InterContinental Boston. Managed profit was up 38% to $11m, benefiting from retained
management contracts on assets disposed. Franchised profit increased 13% to $85m. Including discontinued operations,
total operating profit increased from $84m to $87m.
EMEA: RevPAR growth accelerating
Revenue performance
RevPAR increased 8.7%, with all major countries performing well. The Middle East had another outstanding quarter,
growing RevPAR by 27.9%. Germany achieved a 3.2% RevPAR gain in the quarter. France delivered a RevPAR increase of
2.3%, benefiting from continued improvement at InterContinental Paris Le Grand. In the UK, the Holiday Inn estate grew
RevPAR by 3.0%.
Operating profit performance
Operating profit from continuing operations increased 200% from £1m to £3m. Continuing owned and leased operations
generated a loss of £5m, with the improved performance at InterContinental Le Grand Paris, where occupancy increased
from 52% to 70%, outweighed by the impact of the closure of InterContinental London for refurbishment. The
InterContinental London is now expected to reopen towards the end of 2006. Managed profit was up 33% from £6m to £8m,
primarily as a result of retained management contracts on assets disposed. Franchised profit increased 25% from £4m to
£5m. Including discontinued operations, total operating profit reduced from £26m to £6m.
Asia Pacific: strong growth
Revenue performance
RevPAR increased 8.8%, mainly driven by rate. Occupancy increased from 70.4% to 72.3%. Crowne Plaza RevPAR increased
11.1%, and Holiday Inn RevPAR 10.4%. Greater China RevPAR increased 8.5%, driven by rate increases as strong demand for
IHG's brands continues.
Operating profit performance
Operating profit from continuing operations increased 18% from $11m to $13m. Owned and leased operating profit increased
33% from $6m to $8m as a result of excellent trading at InterContinental Hong Kong, driven by a nearly 20% rate
increase. Managed hotels profit was steady at $8m, after accounting for the cost of increased infrastructure in China.
Overheads
As previously disclosed, IHG expects that in 2006 regional and central overheads will increase ahead of inflation at
constant exchange rates. In the quarter, aggregated regional overheads were up £1m at £16m after continued
infrastructure investment in China. Central overheads increased by £3m to £17m. This included the cost of the first
phase of new global research aimed at gaining a deeper insight into customers' brand perceptions across the lodging
sector, and further developing IHG's franchise capability around the world. These projects have been planned for 2006 to
inform and direct management decision making and support performance in 2007 and beyond.
Increase in development pipeline size
IHG continues to increase its pipeline, in pursuit of the target of 50,000-60,000 net organic room additions by
the end of 2008.
• 18,131 rooms were signed; 9,975 in the Americas, 1,101 in EMEA and 7,055 in Asia Pacific.
• 116,964 rooms are now in the pipeline, up 8,452 since the start of the year.
• IHG's development activity in China continues to be successful. 11 hotels, 6,470 rooms, were signed in the
first quarter, including two InterContinentals and the world's largest Holiday Inn Express.
IHG maintains its focus on enhancing the quality of its portfolio, in tandem with growth.
• 8,343 rooms opened; 7,140 in the Americas and 1,203 in EMEA.
• 8,332 rooms exited; 5,922 in the Americas, 2,076 in EMEA and 334 in Asia Pacific. The majority were at IHG's
instigation.
• The room count at the end of the period remained steady at 537,544. 2,508 net InterContinental and Crowne
Plaza rooms were added, enhancing the mix of IHG's hotel portfolio and the distribution of IHG's upscale
brands.
Disposals and returns of funds
The disposal of 24 hotels in Continental Europe was announced during the first quarter, with a 15 year franchise
agreement, for which proceeds of approximately £240m have been received. Seven InterContinental branded hotels in
Continental Europe were put on the market in the quarter. The sale of IHG's shares in FelCor Lodging Trust Incorporated
("Felcor") was also completed for a total of $191m, generating a gain of £25m, following the renegotiation of IHG's
hotel management agreement with Felcor.
IHG's returns of funds to shareholders continued in the quarter, with the second £250m share buyback now completed, the
third £250m share buyback underway, and £500m proposed to be returned to shareholders on 22 June 2006 via a special
dividend. Upon completion of the third share buyback and the £500m special dividend, IHG will have returned £2.75bn to
its shareholders since Separation from Six Continents in April 2003.
Appendix 1: Asset disposal programme detail
Number of hotels Proceeds Net book value
Disposed to date 168 £2.5bn £2.4bn
On the market 7 - £0.4bn
Remaining hotels 22 - £0.9bn
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 Completed in 2004 £250m £250m Nil
buyback
Second £250m share Completed in 2006 £250m £250m Nil
buyback
£996m capital return Paid 8 July 2005 £996m £996m Nil
Third £250m share Underway £250m £20m £230m
buyback
£500m special dividend 22 June 2006 £500m - £500m
Total £2.75bn £2.02bn £0.73bn
*To 16 May 2006.
Appendix 3: Financial headlines
Q1 £m Total Americas EMEA Asia Pacific Central
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
Franchised operating profit 55 44 49 39 5 4 1 1 - -
Managed operating profit 19 14 6 4 8 6 5 4 - -
Continuing owned and leased 1 1 2 2 (5) (4) 4 3 - -
operating profit
Regional overheads (16) (15) (8) (8) (5) (5) (3) (2) - -
Continuing operating profit pre 59 44 49 37 3 1 7 6 - -
central overheads
Central overheads (17) (14) - - - - - - (17) (14)
Continuing operating profit 42 30 49 37 3 1 7 6 (17) (14)
Discontinued owned and leased 4 35 1 7 3 25 - 3 - -
operating profit
Total operating profit 46 65 50 44 6 26 7 9 (17) (14)
Appendix 4: Constant currency continuing operating profits before special items
for the period.
Americas EMEA Asia Pacific Total***
Actual Constant Actual Constant Actual Constant Actual Constant
currency* currency** currency* currency** currency* currency* currency**
currency**
Growth 32% 22% 200% 200% 17% 17% 40% 27%
Exchange rates USD:GBP EUR:GBP
Q1 2006 1.75 1.46
Q1 2005 1.90 1.44
* Sterling actual currency
** Translated at constant Q1 2005 exchange rates
*** After Central Overheads
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
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.
Conference call for Analysts and Shareholders
A conference call with Andrew Cosslett (Chief Executive) and Richard Solomons
(Finance Director) will commence at 8.00 am (London time) on 16 May. There will
be an opportunity to ask questions.
UK Local Rate 0800 953 0844
Standard International Dial In +44 (0)1452 562 716
Conference ID: 8468828
A recording of the conference call will be available for 7 days. To access this
please dial the relevant number below and use the access number 8468828#
UK dial in 0800 953 1533
International dial-in +44 (0)1452 550 000
US Q&A conference call
There will also be a conference call, primarily for US investors and analysts,
at 10am (Eastern Standard Time) on 16 May with Andrew Cosslett (Chief Executive)
and Richard Solomons (Finance Director). There will be an opportunity to ask
questions.
International dial-in +44 (0)1452 562 716
US Toll Free 1866 832 0717
Conference ID: 8509756
A recording of the conference will also be available for 7 days. To access this
please dial the relevant number below and use the access number 8509756#
International dial-in +44 (0)1452 550 000
US Toll Free 1866 247 4222
Website
The full release and supplementary data will be available on our website from
7.00 am (London time) on 16 May 2006. The web address is www.ihgplc.com/Q1
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 537,500 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(R) Hotels & Resorts, Crowne
Plaza(R) Hotels & Resorts, Holiday Inn(R) Hotels and Resorts, Holiday Inn
Express(R), Staybridge Suites(R), Candlewood Suites(R) and Hotel IndigoTM, and
also manages the world's largest hotel loyalty programme, Priority Club(R)
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
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.
INTERCONTINENTAL HOTELS GROUP PLC
GROUP INCOME STATEMENT
For the three months ended 31 March 2006
3 months ended 31 March 2006 3 months ended 31 March 2005
Continuing Discontinued Continuing Discontinued
operations operations operations operations
Total Total
£m £m £m £m £m £m
Revenue (note 3) 186 53 239 153 380 533
Cost of sales (90) (46) (136) (77) (295) (372)
Administrative expenses (39) - (39) (34) (17) (51)
____ ____ ____ ____ ____ ____
57 7 64 42 68 110
Depreciation and amortisation (15) (3) (18) (12) (22) (34)
Other operating income and 25 - 25 - - -
expenses (note 8)
____ ____ ____ ____ ____ ____
Operating profit (note 4) 67 4 71 30 46 76
Financial income 9 - 9 7 - 7
Financial expenses (10) - (10) (18) - (18)
____ ____ ____ ____ ____ ____
Profit before tax 66 4 70 19 46 65
UK tax (2) - (2) 5 (11) (6)
Foreign tax (16) (1) (17) (10) (3) (13)
____ ____ ____ ____ ____ ____
Total tax (note 9) (18) (1) (19) (5) (14) (19)
____ ____ ____ ____ ____ ____
Profit after tax 48 3 51 14 32 46
Gain on disposal of assets, net - 2 2 - 9 9
of tax credit of £1m (2005 £1m)
____ ____ ____ ____ ____ ____
Profit available for 48 5 53 14 41 55
shareholders
==== ==== ==== ==== ==== ====
Attributable to:
Equity holders of the parent 48 5 53 14 37 51
Minority equity interest - - - - 4 4
____ ____ ____ ____ ____ ____
Profit for the period 48 5 53 14 41 55
==== ==== ==== ==== ==== ====
Earnings per ordinary share
(note 10):
Basic 11.1p 1.2p 12.3p 2.3p 5.9p 8.2p
Diluted 10.9p 1.1p 12.0p 2.3p 5.8p 8.1p
Adjusted 7.0p 7.7p 2.3p 6.8p
===== ===== ===== =====
INTERCONTINENTAL HOTELS GROUP PLC
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the three months ended 31 March 2006
2006 2005
3 months 3 months
ended 31 March ended 31 March
£m £m
Income and expense recognised directly in equity
Losses on valuation of available-for-sale assets (1) (19)
Exchange differences on retranslation of foreign operations
(3) 6
_____ _____
(4) (13)
Transfers to the income statement
On disposal of available-for-sale assets (15) -
Tax on items above taken directly to or transferred from equity 8 -
_____ _____
Net expense recognised directly in equity (11) (13)
Profit for the period 53 55
_____ _____
Total recognised income and expense for the period 42 42
===== =====
Attributable to:
Equity holders of the parent 42 38
Minority equity interest - 4
_____ _____
42 42
===== =====
InterContinental Hotels Group PLC
GROUP CASH FLOW STATEMENT
For the three months ended 31 March 2006
2006 2005
3 months 3 months
ended 31 March ended 31 March
£m £m
Profit for the period 53 55
Adjustments for:
Net financial expenses 1 11
Income tax charge 19 19
Gain on disposal of assets, net of tax (2) (9)
Other operating income and expenses (25) -
Depreciation and amortisation 18 34
Equity settled share-based cost, net of payments 1 (1)
_____ _____
Operating cash flow before movements in working capital 65 109
Increase in inventories - (4)
Increase in receivables (18) (31)
Decrease in provisions and other payables (20) (28)
Decrease in employee benefit obligation - (29)
_____ _____
Cash flow from operations 27 17
Interest paid (10) (13)
Interest received 7 4
Tax paid (8) (12)
_____ _____
Net cash from operating activities 16 (4)
_____ _____
Cash flow from investing activities
Purchases of property, plant and equipment - Hotels (18) (25)
Purchases of associates and other financial assets - Hotels (4) (7)
Disposal of assets, net of cash disposed of - Hotels 26 239
Proceeds from other financial assets - Hotels 110 6
Purchases of property, plant and equipment - Soft Drinks - (16)
_____ _____
Net cash from investing activities 114 197
_____ _____
Cash flow from financing activities
Proceeds from the issue of share capital 2 3
Purchase of own shares (27) (47)
Net movement in shares in employee share trusts (8) -
Dividends paid to shareholders - (17)
Decrease in borrowings (124) (112)
_____ _____
Net cash from financing activities (157) (173)
_____ _____
Net movement in cash and cash equivalents in the period (27) 20
Cash and cash equivalents at beginning of the period 324 72
Exchange rate effects (1) (1)
_____ _____
Cash and cash equivalents at end of the period 296 91
===== =====
INTERCONTINENTAL HOTELS GROUP PLC
GROUP BALANCE SHEET
31 March 2006
2006 2005
31 March 31 December
£m £m
ASSETS
Property, plant and equipment 967 1,356
Goodwill 116 118
Intangible assets 122 120
Investment in associates 41 42
Other financial assets 114 113
_____ _____
Total non-current assets 1,360 1,749
_____ _____
Inventories 3 3
Trade and other receivables 249 252
Current tax receivable 18 22
Cash and cash equivalents 296 324
Other financial assets 6 106
_____ _____
Total current assets 572 707
Non-current assets classified as held for sale 672 279
______ ______
Total assets 2,604 2,735
===== =====
LIABILITIES
Loans and other borrowings (24) (2)
Trade and other payables (447) (468)
Current tax payable (326) (324)
_____ _____
Total current liabilities (797) (794)
_____ _____
Loans and other borrowings (267) (410)
Employee benefits (76) (76)
Provisions and other payables (109) (107)
Deferred tax payable (122) (210)
_____ _____
Total non-current liabilities (574) (803)
Liabilities classified as held for sale (119) (34)
_____ ______
Total liabilities (1,490) (1,631)
===== =====
Net assets (note 13) 1,114 1,104
===== =====
EQUITY
IHG shareholders' equity 1,094 1,084
Minority equity interest 20 20
______ ______
Total equity 1,114 1,104
===== =====
INTERCONTINENTAL HOTELS GROUP PLC
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
These interim financial statements have been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting'. The unaudited financial statements for the period ended 31 March 2006
and 31 March 2005 and the audited balance sheet for the year ended 31 December 2005 have been prepared in
accordance with International Financial Reporting Standards endorsed by the European Union and available
for use by listed European companies.
Details of the accounting policies applied in the period ended 31 March 2006 are set out in the 2005
InterContinental Hotels Group PLC (IHG) Annual Report and Financial Statements.
These interim financial statements are unaudited and do not constitute statutory accounts of the Group
within the meaning of Section 240 of the Companies Act 1985. The Annual Report and Financial Statements
for the year ended 31 December 2005, which contain an unqualified audit report, have been filed with the
Registrar of Companies.
A reclassification that reduced the 31 March 2005 administrative expenses by £6m and increased costs of
sales has been made.
2. Exchange rates
The results of overseas operations have been translated into sterling at the weighted average rates of
exchange for the period. In the case of the US dollar, the translation rate for the three months ended 31
March is £1= $1.75 (2005 3 months, £1 = $1.90). In the case of the euro, the translation rate for the
three months ended 31 March is £1 = €1.46 (2005 3 months, £1 = €1.44).
Foreign currency denominated assets and liabilities have been translated into sterling at the rates of
exchange on the last day of the period. In the case of the US dollar, the translation rate is £1=$1.73
(2005 31 March £1 = $1.88; 31 December £1 = $1.73). In the case of the euro, the translation rate is £1 =
€1.43 (2005 31 March £1 = €1.45; 31 December £1= €1.46).
Revenue
3.
2006 2005
3 months 3 months
ended 31 March ended 31 March*
£m £m
Hotels
Continuing operations
Americas (note 5) 106 83
EMEA (note 6) 41 40
Asia Pacific (note 7) 27 20
Central 12 10
____ ____
186 153
Discontinued operations
Hotels 53 191
Soft Drinks - 189
____ ____
53 380
____ ____
239 533
==== ====
* Other than for Soft Drinks which reflects 16 weeks ended 17 April 2005.
4. Operating profit
2006 2005
3 months 3 months
ended 31 March ended 31 March*
£m £m
Hotels
Continuing operations
Americas (note 5) 49 37
EMEA (note 6) 3 1
Asia Pacific (note 7) 7 6
Central (17) (14)
____ ____
42 30
Discontinued operations
Hotels 4 35
Soft Drinks - 11
____ ____
4 46
____ ____
46 76
Other operating income and expenses (note 8) 25 -
____ ____
Operating profit 71 76
==== ====
* Other than for Soft Drinks which reflects 16 weeks ended 17 April 2005.
5. Americas
2006 2005
3 months 3 months
ended 31 March ended 31 March
$m $m
Revenue
Owned & Leased 54 48
Managed 36 25
Franchised 96 85
____ ____
Continuing operations 186 158
Discontinued operations - Owned & Leased 6 61
____ ____
Total $m 192 219
==== ====
Sterling equivalent £m 109 115
==== ====
Operating profit
Owned & Leased 4 2
Managed 11 8
Franchised 85 75
____ ____
Continuing operations 100 85
Discontinued operations - Owned & Leased 1 15
____ ____
101 100
Regional overheads (14) (16)
____ ____
Total $m 87 84
==== ====
Sterling equivalent £m 50 44
==== ====
6. EMEA
2006 2005
3 months 3 months
ended 31 March ended 31 March
£m £m
Revenue
Owned & Leased 20 24
Managed 14 10
Franchised 7 6
____ ____
Continuing operations 41 40
Discontinued operations - Owned & Leased 50 143
____ ____
Total 91 183
==== ====
Operating profit
Owned & Leased (5) (4)
Managed 8 6
Franchised 5 4
____ ____
Continuing operations 8 6
Discontinued operations - Owned & Leased 3 25
____ ____
11 31
Regional overheads (5) (5)
____ ____
Total 6 26
==== ====
7. Asia Pacific
2006 2005
3 months 3 months
ended 31 March ended 31 March
$m $m
Revenue
Owned & Leased 32 27
Managed 13 10
Franchised 2 1
____ ____
Continuing operations 47 38
Discontinued operations - Owned & Leased - 30
____ ____
Total $m 47 68
==== ====
Sterling equivalent £m 27 36
==== ====
Operating profit
Owned & Leased 8 6
Managed 8 8
Franchised 1 1
____ ____
Continuing operations 17 15
Discontinued operations - Owned & Leased - 5
____ ____
17 20
Regional overheads (4) (4)
____ ____
Total $m 13 16
==== ====
Sterling equivalent £m 7 9
==== ====
8. Special items
2006 2005
3 months 3 months
ended 31 March ended 31 March
£m £m
Other operating income and expenses
Gain on sale of investment in FelCor Lodging Trust, Inc. 25 -
==== ====
Tax
Tax on other operating income and expenses (7) -
==== ====
All special items relate to continuing operations.
9. Tax
The tax charge on profit before tax, excluding the impact of special items (note 8), has been calculated
using an estimated effective annual tax rate of 28%.
10. Earnings per ordinary share
Basic earnings per ordinary share is calculated by dividing the profit for the period available for IHG
equity holders by the weighted average number of ordinary shares, excluding investment in own shares, in
issue during the period.
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 options
outstanding during the period.
2006 2005
3 months ended 3 months ended
31 March 31 March
Continuing Continuing
operations Total operations Total
£m £m £m £m
Basic earnings per share
Profit available for equity holders 48 53 14 51
Basic weighted average number of ordinary shares
(millions)
430 430 617 617
Basic earnings per share (pence) 11.1 12.3 2.3 8.2
==== ===== ==== =====
Adjusted earnings per share
Profit available for equity holders 48 53 14 51
Less adjusting items:
Other operating income and expenses (note 8) (25) (25) - -
Tax (note 8) 7 7 - -
Gain on disposal of assets, net of tax - (2) - (9)
____ _____ ____ _____
Adjusted earnings 30 33 14 42
Basic weighted average number of ordinary shares
(millions)
430 430 617 617
Adjusted earnings per share (pence) 7.0 7.7 2.3 6.8
==== ===== ==== =====
Diluted earnings per share
Profit available for equity holders 48 53 14 51
Diluted weighted average number of ordinary shares
(millions) (see below)
442 442 629 629
Diluted earnings per share (pence) 10.9 12.0 2.3 8.1
==== ===== ==== =====
2006 2005
31 March 31 March
millions millions
Diluted weighted average number of ordinary shares is calculated as:
Basic weighted average number of ordinary shares 430 617
Dilutive potential ordinary shares - employee share options 12 12
____ ____
442 629
==== ====
Adjusted earnings per ordinary share is disclosed in order to show performance undistorted by special
items, to give a more meaningful comparison of the Group's performance.
11. Cash flows from discontinued operations
2006 2005
3 months 3 months
ended 31 March ended 31 March
£m £m
Hotels
Operating profit before interest, depreciation and
amortisation
9 43
Investing activities (2) (9)
Financing activities (1) (14)
____ ____
6 20
==== ====
Soft Drinks
Operating profit before interest, depreciation and
amortisation
- 25
Investing activities - (16)
Financing activities - 64
____ ____
- 73
==== ====
12. Net debt
2006 2005
31 March 31 December
£m £m
Cash and cash equivalents 296 324
Loans and other borrowings (291) (412)
____ ____
5 (88)
==== ====
13. Net assets
2006 2005
31 March 31 December
£m £m
Hotels
Americas 300 369
EMEA 856 951
Asia Pacific 293 296
Central 90 88
____ ____
1,539 1,704
Net debt 5 (88)
Unallocated assets and liabilities (430) (512)
____ ____
1,114 1,104
==== ====
14. Movement in IHG shareholders' equity
2006 2005
3 months 3 months
ended 31 March ended 31 March
£m £m
At 1 January 1,084 1,817
Total recognised income and expense for the period 42 38
Issue of ordinary shares 3 3
Purchase of own shares (28) (67)
Movement in shares in employee share trusts and share (7) (1)
schemes
____ ____
At 31 March 1,094 1,790
==== ====
15. Contingencies
At 31 March 2006 the Group had contingent liabilities of £20m (2005 31 December, £20m), mainly comprising
guarantees given in the ordinary course of business.
16. Post balance sheet event
The disposal of 23 hotels in Continental Europe was announced on 13 March 2006. The disposal was
completed on 28 April 2006.
INDEPENDENT REVIEW REPORT TO INTERCONTINENTAL HOTELS GROUP PLC
Introduction
We have been instructed by the company to review the financial information for the three months ended 31
March 2006 which comprises the Group Income Statement, Group Statement of Recognised Income and Expense,
Group Cash Flow Statement, Group Balance Sheet and the related notes 1 to 16. We have read the other
information contained in the interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
This report is made solely to the company in accordance with guidance contained in Bulletin 1999/4 'Review
of interim financial information' issued by the Auditing Practices Board. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of, and
has been approved by, the directors. The directors are responsible for preparing the interim report in
accordance with the Listing Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent with those applied in
preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4 'Review of interim
financial information' issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying analytical procedures to the
financial information and underlying financial data, and based thereon, assessing whether the accounting
policies and presentation have been consistently applied, unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets, liabilities and transactions. It
is substantially less in scope than an audit performed in accordance with International Standards on
Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly we
do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the
financial information as presented for the three months ended 31 March 2006.
Ernst & Young LLP
London
15 May 2006
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