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Interco. Hotels Grp (IHG)

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Tuesday 18 February, 2014

Interco. Hotels Grp

Final Results

RNS Number : 3100A
InterContinental Hotels Group PLC
18 February 2014
 



InterContinental Hotels Group PLC

Preliminary Results for the year to 31 December 2013

Strong progress in our 10th anniversary year driven by focus on high quality growth

 

Financial summary1

2013

20122


% Change YoY

Actual

CER4

Underlying5

Revenue

$1,903m

$1,835m

4%

4%

4%

Fee revenue

$1,176m

$1,135m

4%

4%

-

Operating profit

$668m

$605m

10%

10%

8%

Adjusted basic EPS

158.3¢

139.0¢

14%

-

-

Basic EPS3

140.9¢

187.1¢

(25)%

-

-

Total dividend per share

70.0¢

64.0¢

9%

-

-

Net debt

$1,153m

$1,074m

-

-

-

 

 

Richard Solomons, Chief Executive of InterContinental Hotels Group PLC, said:

 

"2013 marked IHG's tenth anniversary as a standalone company, and was another year of strong performance.  We delivered good underlying growth in revenues and profits, further reduced the capital intensity of the business and continued to generate high returns.

Over the last 12 months we entered into agreements to dispose of three owned InterContinental hotels, with total gross proceeds of almost $830m.  This includes InterContinental Mark Hopkins, San Francisco which we have announced today.  At the same time we are continuing to invest behind our award-winning brands and technology platforms to meet changing consumer behaviours and sustain our industry-leading position.

We opened 237 hotels and signed a further 444 hotels into our pipeline, the highest number for five years, thereby reinforcing our already strong brand distribution platform and with it the promise of further high quality growth. 

Our decision to increase our ordinary dividend by 9% reflects our confidence in our proven strategy to deliver high quality growth.  Our preferred portfolio of brands, brought to life by talented people and best in class delivery systems, will enable us to continue to drive out-performance in an industry which has compelling long term prospects.  Looking into 2014, although economic conditions in some markets remain uncertain, forward bookings data is encouraging and we are confident that we will deliver another year of growth."

 

Delivering high quality, sustainable growth

 

$21.6bn of total gross revenue from hotels in IHG's system, up 2% (3% CER)

 

Global comparable RevPAR growth of 3.8%, with rate up 1.8% and occupancy up 1.3%pts

 


-

Americas 4.3% (US 4.2%); Europe 1.7%; AMEA 6.1%; Greater China 1.0%.

 


-

Q4 global comparable RevPAR growth of 4.4%: Americas 4.0%; Europe 4.9%; AMEA 6.4%; Greater China 2.4%.

 

System size of 687k rooms (4,697 hotels)

 


-

Net growth of 1.6%, 2.3% excluding 17 hotel removals for which significant liquidated damages totalling $46m were received.

 


-

 

-

35k rooms (237 hotels) opened6, 25k rooms removed (142 hotels).  20k room openings and 18k room removals for the Holiday Inn brand family reflects our continued commitment to improving the quality of our largest brand.

65k rooms (444 hotels) signed6, up 22% year on year.

 


-

-

Pipeline of 180k rooms (1,120 hotels) with over 45% under construction.

5% global industry supply, 12% active industry pipeline; well positioned to deliver sustainable high quality growth.

 

Building preferred brands

 


-

-

Clear focus on the needs of target guests has driven increased guest satisfaction across each brand globally. Good momentum for our new brands with 21 HUALUXE Hotels & Resorts and 5 EVEN Hotels in the pipeline.

 


-

 

IHG Rewards Club relaunch, including free internet for all members (an industry first), has driven a 10%pt increase in awareness of IHG as a brand family. 

 

Growing margins

 


-

Group fee margin of 43.2%, up 1.3%pts2, with scale benefits and cost efficiencies more than offsetting increased investment for future growth.  Continued focus on sustainable fee margin progression over the medium term.

Capital Expenditure

 

Growth capital expenditure of $129m includes our first three owned EVEN Hotels, and was more than funded by $444m net cash proceeds from disposals.  Maintenance capital expenditure of $140m.

In 2014 we expect to remain at the top end of our previously guided $250m-350m capital expenditure range due to increased investment in brands and technology platforms.  IHG's 20% share of InterContinental New York Barclay's c.$175m refurbishment cost will be in addition to this.

Progress on asset disposals

InterContinental London Park Lane disposal completed on 1 May with up to 60 year management contract.

Disposal of 80% interest in InterContinental New York Barclay agreed with a c.$175m refurbishment, repositioning and extension of the hotel and up to 50 year management contract. Deal completion expected in Q1'14.

InterContinental Mark Hopkins, San Francisco disposal announced today for gross cash proceeds of $120m.


1 All figures are before exceptional items unless otherwise noted. 2 2012 restated for adoption of IAS 19R.

3 After exceptional items.

4 CER =constant exchange rates.

5 At CER & excluding owned asset disposals, results from managed lease hotels & significant liquidated damages 

 

6 Openings & signings include 4k rooms on US Army bases in H1 2013            

 

See appendix 3 for financial headlines and appendix 5 for definitions

 



 

 

Americas - Good performance driven by solid RevPAR growth

Comparable RevPAR increased 4.3%, with 2.6% rate growth; fourth quarter RevPAR increased 4.0%.  US RevPAR was up 4.2%, with 3.0% growth in the fourth quarter, despite weaker trading conditions in October during the US government shut down.  

Reported revenue increased 9% (10% at CER) to $916m and operating profit increased 13% (13% at CER) to $550m.  On an underlying5 basis, revenue and operating profit were both up 7%. This was driven predominantly by the franchise business where royalties were up 5% and fees associated with the initial franchising, relicensing and termination of hotels increased $6m. This was partly offset by an $8m decrease in fees received due to the hotels that exited in Q1 for which $31m of liquidated damages were received. Owned profits increased 25%, driven by RevPAR growth of 10.0% and 9.0% respectively at our InterContinental hotels in Boston and San Francisco.

We opened 20k6 rooms (173 hotels), including 12k rooms for the Holiday Inn brand family. Removals of 18k rooms (112 hotels) resulted from our on-going focus on high quality growth and included 2.5k rooms (8 hotels) related to the significant liquidated damages receipt in Q1. We signed 34k6 rooms (305 hotels) up 33% year on year.  Signings included four hotels for the new EVEN Hotels brand, with the first of these due to open H1 2014, and 21k rooms for the Holiday Inn brand family.

2014:

In the first half of 2014 we expect to receive one $4m significant liquidated damages payment in our Americas franchise business.  In 2013 the owned operating profit from the InterContinental New York Barclay was $14m and was $6m from InterContinental Mark Hopkins, San Francisco.  The refurbishment of InterContinental New York Barclay is expected to have a $5m negative impact on Americas managed operating profit in 2014.

 

Europe - Solid growth led by priority markets

Comparable RevPAR increased 1.7% led by a 1.5%pt increase in occupancy. In the first nine months RevPAR grew 0.7%, then accelerated sharply in the fourth quarter to 4.9%. RevPAR growth was resilient in our priority markets, despite tough comparatives, with an increase of 3.0% in the UK and 0.8% in Germany. In France RevPAR grew 2.6%, with 5.3% growth at our owned InterContinental hotel in Paris.

Reported revenue decreased 8% (10% at CER) to $400m and operating profit decreased 6% (8% at CER) to $105m.  On an underlying5 basis, revenue increased 3% and operating profit increased 10%, driven by a 7% increase in franchise royalty fees and a $3m property tax recovery at InterContinental Paris Le Grand.

Openings of 4k rooms (21 hotels) included two iconic InterContinental hotels, one in Marseille, France and the other in Davos, Switzerland.  We also opened three new properties for the Hotel Indigo brand, in prime locations in Tel Aviv, Barcelona and Dusseldorf.  We signed 8k rooms (50 hotels) of which seven hotels were in London, including InterContinental London The O2, our third hotel for the InterContinental brand in the city. We also signed seven hotels under multiple development agreements in Germany and Russia, covering several of our brands.

2014:

Our flagship owned InterContinental Paris Le Grand will commence an $8m refurbishment programme to enhance the historic Salon Opera ballroom and c.15% of the guest rooms; this is expected to have a $5m negative profit impact in 2014.

 

AMEA -  Strong trading in key markets with increasing developing markets contribution

Comparable RevPAR increased 6.1%, with 6.4% growth in the fourth quarter. Strong trading in South East Asia and Japan led the performance with RevPAR up 9.9% and 9.6% respectively. Trading was solid in Australasia, up 4.5% and the Middle East, up 2.9%, despite geopolitical unrest continuing to impact our business in Egypt and Lebanon. An increasing mix of new rooms opening in developing markets means that total RevPAR grew 2.8%.

Reported revenue increased 6% (12% CER) to $230m and operating profit decreased 2% (increased 1% at CER) to $86m, including one $6m significant liquidated damages receipt in the second half.  On an underlying5 basis, revenue was down 3% and operating profit down 8%. This reflects good underlying growth in our continuing managed business offset by a $10m fee reduction; $6m from long standing contracts renewed onto standard market terms, as previously disclosed, and $4m from some older hotels that we have removed from the system.

We opened 4k rooms (20 hotels) including five hotels in India and two hotels in Indonesia as well as our first InterContinental hotels in Osaka, Japan and Lagos, Nigeria, both flagships for the brand in those countries. We signed 9k rooms (36 hotels) in the region, 75% of which were for the Holiday Inn brand family and included a 1.2k room Holiday Inn in Makkah.  We also signed an iconic InterContinental hotel in Sydney which is expected to open in the second half of 2014 following a comprehensive refurbishment.

2014:

Given the favourable long-term outlook in several of our markets in AMEA, there are a number of significant refurbishment programmes scheduled to take place in 2014 which we expect to have a $4m negative impact on IHG's fee income in the year.

 

5 At CER and excluding: owned asset disposals, results from managed lease hotels and significant liquidated damages

Openings and signings both include 4k rooms on US Army bases in H1 2013.  

 

Greater China - scale and premium position drove resilient performance despite challenging conditions

Comparable RevPAR increased 1.0% with 2.4% growth in the fourth quarter. IHG's scale and strength in the region drove significant outperformance compared to the industry throughout 2013. This reflects the resilience of our business despite the ongoing industry-wide challenges, including the impact of the China-Japan territorial island dispute, natural disasters in some regions and the slower macroeconomic conditions. An increasing mix of new rooms openings in developing markets means that total RevPAR was down 1.3% in 2013.

Reported revenue increased 3% (3% CER) to $236m and operating profit was up 1% (2% CER) to $82m. Managed profit was flat at $51m, reflecting 12% net room growth offset by the challenging trading conditions and our increased investment to drive future growth. Operating profit at our owned InterContinental hotel in Hong Kong increased by 4% with strong profit conversion and an 11% increase in food & beverage profits, despite flat RevPAR growth principally due to reduced Japanese business.

We opened 8k rooms in the year in Greater China, taking our system size in the region up 11% to 69k rooms (208 hotels), our 8th consecutive year of double digit room growth.  Almost 90% of our signings in the year were outside primary cities, reflecting the alignment of our development strategy to future industry growth drivers.  Openings included six hotels each for our InterContinental and Crowne Plaza brands, and two for Hotel Indigo, including the first for the brand in Hong Kong. Almost half of our 15k room signings were for the Holiday Inn brand family. 2k rooms signed for HUALUXE Hotels & Resorts in the year taking the pipeline for this brand to 21 hotels (7k rooms).  

 

Sources and uses of cash - strong free cash flow generation

Cash generation: Free cash flow of $502m up 11% year on year (2012: $454m).  $444m net cash inflow from asset disposals.

Ordinary dividend: up 9% to 70 cents, 11% compound annual growth since 2003.

Good progress with return of funds to shareholders: $355m special dividend without share consolidation paid in October 2013. The $500m share buyback programme is 78% complete with 13.9m shares repurchased to date for $390m, with 9.8m shares repurchased during 2013 for $283m.

 

 

 

 

 

 

 

 

 

 

 

Interest, debt, tax, pension and exceptional items

Interest: 2013 charge of $73m (2012: $54m) reflects the increase in average net debt year on year, and the issuance of a £400m bond in November 2012.

Net debt: $1,153m at the end of the period (including the $215m finance lease on the InterContinental Boston). This is up $79m on the 2012 position of $1,074m as a result of the return of funds to shareholders in the year partly offset by the cash inflow from the disposal of the InterContinental London Park Lane.

Tax: Effective rate for 2013 is 29% (2012: 27%).  2014 tax rate expected to be in low 30s, as previously guided.

Pension: In August 2013 the trustees of IHG's UK pension plan completed a buy-in of the Group's UK funded defined benefit obligations with the insurer Rothesay Life as an initial step towards the full buy-out of the liabilities. As part of IHG's wider strategy to de-risk the balance sheet, this move removes the need for any further cash contributions by IHG in respect of these obligations.

Exceptional operating items: Net exceptional credit before tax of $5m (2012: $4m net charge).  This includes an exceptional accounting charge of $147m related to the UK pension plan buy-in and a net credit of $166m related to the gain on disposal of the InterContinental London Park Lane.

Adoption of IAS 19 (Revised) Employee Benefits: adoption of this new accounting policy from 1 January 2013 has resulted in an additional $9m charge to operating profit for 2012, as reflected in the restated 2012 accounts.

 

 


 

 

 

 

 



 

 

 

Full Year 2013

Q4 2013

RevPAR

Rate

Occ.

RevPAR

Rate

Occ.

Group

3.8%

1.8%

1.3pts

4.4%

1.8%

1.6pts

Americas

4.3%

2.6%

1.1pts

4.0%

2.1%

1.1pts

Europe

1.7%

(0.4)%

1.5pts

4.9%

1.1%

2.5pts

AMEA

6.1%

3.0%

2.1pts

6.4%

3.9%

1.8pts

G. China

1.0%

(1.7)%

1.6pts

2.4%

(2.4)%

3.0pts

 

Appendix 2: Full Year System & Pipeline Summary (rooms)


System

Pipeline

Openings

Removals

Net

Total

YoY%

Signings

Total

Group

35,467

(24,576)

10,891

686,873

1.6%

65,461

180,461

Americas

19,775

(17,968)

1,807

451,424

0.4%

33,884

76,018

Europe

3,528

(3,489)

39

102,066

0.0%

7,542

17,779

AMEA

4,495

(2,394)

2,101

64,838

3.3%

8,687

32,074

G. China

7,669

(725)

6,944

68,545

11.3%

15,348

54,590

 

Appendix 3: Full Year financial headlines

 

Operating Profit $m

Total

Americas

Europe

AMEA

G. China

Central

2013

20121

2013

2012

2013

20121

2013

2012

2013

2012

2013

2012

Franchised

595

547

499

466

79

65

12

12

5

4

-

-

Managed

247

221

74

48

30

32

92

90

51

51

-

-

Owned & leased

111

125

30

24

30

50

4

6

47

45

-

-

Regional overheads

(130)

(126)

(53)

(52)

(34)

(35)

(22)

(20)

(21)

(19)

-

-

Profit pre central overheads

823

767

550

486

105

112

86

88

82

81

-

-

Central overheads

(155)

(162)

-

-

-

-

-

-

-

-

(155)

(162)

Group Operating profit

668

605

550

486

105

112

86

88

82

81

(155)

(162)

1 2012 restated for the adoption on IAS 19R

 


 

 

Appendix 4: 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**

CER**

Growth/ (decline)

10%

10%

13%

13%

(6)%

(8)%

(2)%

1%

1%

2%







Underlying****

Growth/ (decline)

Total***

Americas

Europe

AMEA

G. China

8%

7%

10%

(8)%

2%

Exchange rates:

GBP:USD

EUR:USD

* US dollar actual currency

 

2013

0.64

0.75

** Translated at constant 2012 exchange rates

 

2012

0.63

0.78

*** After central overheads

 




**** At CER and excluding: owned asset disposals, results from managed lease hotels and significant liquidated damages (see below for definitions)

 

Appendix 5: Definitions

Total gross revenue: total room revenue 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.

Owned asset disposals: InterContinental London was sold on 1 May 2013. It accounted for $89m revenue and $33m profit in 2012 and $22m revenue and $8m profit in 2013 as an owned hotel. 

Significant liquidated damages: total $46m in 2013 ($31m Americas managed in Q1, $9m Europe franchised in Q2, $6m AMEA managed in Q4) and $3m 2012 (Americas managed in Q4).

Comparable RevPAR: Revenue per available room for hotels that have traded for a full 12 months in both years, reported at CER.

Total RevPAR: Revenue per available room including results from hotels that have opened or exited in either year, 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 and significant liquidated damages receipts.

Managed lease hotels: properties structured for legal reasons as operating leases but with the same characteristics as management contracts

Americas: Revenue 2013 $34m; 2012 $34m; EBIT 2013 nil, 2012 nil. Europe:  Revenue 2013 $89m; 2012 $80m; EBIT 2013 $2m, 2012 $2m. AMEA: Revenue 2013 $21m; 2012 nil; EBIT 2013 $1m, 2012 nil.

 

Appendix 6: Investor Information for 2013 final dividend

Ex-dividend date:

19 March 2014

Record date:

21 March 2014

Payment date:

9 May 2014

Dividend payment:

Ordinary shares = 28.1 pence  per share

ADRs = 47.0 cents per ADR

 



 

 

 

For further information, please contact:

Investor Relations (Catherine Dolton; Isabel Green):

+44 (0)1895 512176


Media Relations (Yasmin Diamond; Zoe Bird):

+44 (0)1895 512008


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 UK time on 18 February at Bank of America Merrill Lynch Financial Centre, 2 King Edward Street, London, EC1A 1HQ.  There will be an opportunity to ask questions.  The presentation will conclude at approx. 10.30am.

There will be a live audio webcast of the results presentation on the web address www.ihg.com/prelims14.  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

Hotel

A replay of the conference call will also be available following the event - details are below. 

Replay

Pin

+44 (0)20 8196 1998

8855942

US conference call and Q&A:

There will also be a conference call, primarily for US investors and analysts, at 9.00am Eastern Standard Time on 18 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

Hotel

A replay of the conference call will also be available following the event - details are below. 

Replay

Pin

+44 (0)20 8196 1998

5245113

Website:

The full release and supplementary data will be available on our website from 7.00 am (London time) on 18 February. The web address is www.ihg.com/prelims14.

Notes to Editors:

IHG (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is a global organisation with a broad portfolio of nine hotel brands, including InterContinental® Hotels & Resorts, Hotel Indigo®, Crowne Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts, Holiday Inn Express®, Staybridge Suites®, Candlewood Suites®, EVEN™ Hotels and HUALUXE™ Hotels & Resorts.

IHG manages IHG® Rewards Club, the world's first and largest hotel loyalty programme with over 77 million members worldwide. The programme was relaunched in July 2013, offering enhanced benefits for members including free internet across all hotels, globally.

IHG franchises, leases, manages or owns 4,700 hotels and 687,000 guest rooms in nearly 100 countries and territories. With more than 1,100 hotels in its development pipeline, IHG expects to recruit around 90,000 people into additional roles across its estate 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.

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, www.twitter.com/ihg, www.facebook.com/ihg or www.youtube.com/ihgplc.

 

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 '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.

 

 

 

 

 

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 2013.

 

Group Performance

 

12 months ended 31 December

Group results

2013

20121

%

 

$m

$m

change

Revenue

 

 

 

 

Americas

916

837

9.4

 

Europe

400

436

(8.3)

 

AMEA

230

218

5.5

 

Greater China

236

230

2.6

 

Central

121

114

6.1

 

 

____

____

_____

 

1,903

1,835

3.7

 

____

____

____

Operating profit

 

 

 

 

Americas

550

486

13.2

 

Europe

105

112

(6.3)

 

AMEA

86

88

(2.3)

 

Greater China

82

81

1.2

 

Central

(155)

(162)

4.3

 

 

____

____

_____

Operating profit before exceptional items

668

605

10.4

Exceptional operating items

5

(4)

225.0

 

___

___

___

 

673

601

12.0

Net financial expenses

(73)

(54)

(35.2)

 

___

___

___

Profit before tax

600

547

9.7

 

___

___

___

Earnings per ordinary share

 

 

 

 

Basic

140.9¢

187.1¢

(24.7)

 

Adjusted

158.3¢

139.0¢

13.9

 

 

 

 

 

Average US dollar to sterling exchange rate

$1 : £0.64

$1 : £0.63

1.6

 

Revenue increased by $68m (3.7%) to $1,903m and operating profit before exceptional items increased by $63m (10.4%) to $668m during the 12 months ended 31 December 2013.

 

On 1 May 2013, IHG completed the disposal of its leasehold interest in the InterContinental London Park Lane for gross proceeds of $469m and entered into a 30-year management contract with three 10-year extension rights.

 

On an underlying basis, defined as Group results excluding those from the InterContinental London Park Lane whilst under IHG ownership, results from managed lease hotels, together with the benefit of $46m liquidated damages receipts in 2013 and a $3m liquidated damages receipt in 2012, revenue and operating profit increased by $68m (4.2%) and $44m (7.8%) respectively when translated at constant currency and applying 2012 exchange rates.

 

Fee revenue2 increased by 4.3%, with Group RevPAR growth of 3.8% over the period (including an increase in average daily rate of 1.8%) and IHG System size growth of 1.6% to 686,873 rooms.

 

At constant currency, net central overheads decreased from $162m to $157m in 2013 ($155m at actual currency), helped by continued tight cost control, as well as additional technology fee income.

 

Operating profit margin was 43.2%, up 1.3 percentage points on 2012, after adjusting for owned and leased hotels, managed leases and significant liquidated damages.

 

Profit before tax increased by $53m to $600m. Adjusted earnings per ordinary share increased by 13.9% to 158.3¢.

 

____________

1 With effect from 1 January 2013 the Group has adopted IAS 19 (Revised) ‘Employee Benefits’ resulting in an additional charge to operating profit before exceptional items of $9m for the year ended 31 December 2012.
2 Fee revenue is defined as Group revenue excluding revenue from owned and leased hotels, managed leases and significant liquidated damages at constant currency.

 

 

 

12 months ended 31 December

 

2013

2012

%

Global total gross revenue

$bn

$bn

change

 

 

 

 

InterContinental

4.5

4.5

-

Crowne Plaza

4.0

4.0

-

Holiday Inn

6.2

6.3

(1.6)

Holiday Inn Express

5.2

4.8

8.3

Staybridge Suites

0.6

0.6

-

Candlewood Suites

0.6

0.5

20.0

Hotel Indigo

0.2

0.2

-

Other brands

0.3

0.3

-

 

____

____

____

Total

21.6

21.2

1.9

 

____

____

____

 

Total gross revenue

One measure of IHG System performance is the growth in total gross revenue, defined as total room revenue from franchised hotels and total hotel revenue from managed, owned and leased hotels. Total gross revenue is not revenue attributable to IHG, as it is derived mainly from hotels owned by third parties.

 

Total gross revenue increased by 1.9% (2.8% increase at constant currency) to $21.6bn. Total gross revenue for Holiday Inn decreased by $0.1bn (1.6%), primarily because the number of rooms open under the brand fell by 6,911, driven by the removal of 10,933 rooms in the US reflecting the Group's ongoing focus on quality.

 



 

 

Hotels

Rooms

Global hotel and room count

at 31 December

 

2013

Change

over 2012

 

2013

Change

over 2012

 

 

 

 

 

Analysed by brand

 

 

 

 

 

InterContinental

178

8

60,103

2,789

 

Crowne Plaza

391

(1)

108,891

584

 

Holiday Inn*

1,216

(31)

224,577

(6,911)

 

Holiday Inn Express

2,258

66

214,597

8,966

 

Staybridge Suites

196

7

21,518

822

 

Candlewood Suites

312

13

29,778

1,103

 

Hotel Indigo

55

5

6,199

538

 

Other

91

28

21,210

3,000

 

 

____

____

______

_____

Total

4,697

95

686,873

10,891

 

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

3,977

43

502,187

1,395

 

Managed

711

53

180,724

9,726

 

Owned and leased

9

(1)

3,962

(230)

 

 

____

____

______

_____

Total

4,697

95

686,873

10,891

 

 

____

____

______

_____

 

* Includes 10 Holiday Inn Club Vacations (3,701 rooms) and 38 Holiday Inn Resort properties (8,818 rooms) (2012: 10 Holiday Inn Club Vacations (3,701 rooms) and 37 Holiday Inn Resort properties (8,806 rooms)).

 

Global hotel and room count

During 2013, the global IHG System (the number of hotels and rooms which are franchised, managed, owned or leased by the Group) increased by 95 hotels (10,891 rooms).

 

The Group continued to expand its global footprint, opening hotels in 33 different countries and territories. More than a third of 2013 openings were in developing markets, as classified by The World Bank, with 21% of the closing rooms balance located in these markets, representing an increase of two percentage points from 31 December 2012. Removals of 142 hotels (24,576 rooms) increased from the previous year (104 hotels, 16,288 rooms) reflecting the Group's ongoing focus on improving the quality of the estate.

 

Openings of 237 hotels (35,467 rooms) were 4.6% higher than in 2012. This included 115 hotel openings (12,448 rooms) in the Holiday Inn brand family in The Americas and 33 hotels (4,061 rooms) as part of the US government's Privatisation of Army Lodgings (PAL) initiative. 23 hotels (7,669 rooms) were opened in Greater China across five brands in 2013, up 1.1% from last year, with the Europe and AMEA regions contributing openings of 21 hotels (3,528 rooms) and 20 hotels (4,495 rooms) respectively.

 

In May 2013, the Group completed the disposal of its leasehold interest in the InterContinental London Park Lane and on 19 December 2013, announced the disposal of an 80% interest in the InterContinental New York Barclay for gross proceeds of $240m, with IHG holding the remaining 20% interest. The transaction is expected to be completed in the first quarter of 2014. The Group has secured a 30-year management contract on the hotel, with two 10-year extension rights at IHG's discretion.  In February 2014, the Group signed an agreement to sell the InterContinental Mark Hopkins San Francisco for $120m in cash and enter into a long-term management contract on the hotel.  The hotel had a net book value of $90m at 31 December 2013.

 

Hotels

Rooms

Global pipeline

at 31 December

 

2013

Change

over 2012

 

2013

Change

over 2012

 

 

 

 

 

Analysed by brand

 

 

 

 

 

InterContinental

51

3

16,860

1,147

 

Crowne Plaza

94

(4)

28,369

(2,814)

 

Holiday Inn*

264

21

50,241

5,253

 

Holiday Inn Express

473

21

54,744

2,984

 

Staybridge Suites

80

9

8,728

1,184

 

Candlewood Suites

80

2

6,914

172

 

Hotel Indigo

51

4

6,807

938

 

EVEN Hotels

5

4

880

650

 

HUALUXE

21

6

6,804

1,900

 

Other

1

1

114

17

 

 

____

____

______

_____

Total

1,120

67

180,461

11,431

 

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

778

34

86,785

3,884

 

Managed

339

30

93,176

7,047

 

Owned and Leased

3

3

500

500

 

 

____

____

______

_____

Total

1,120

67

180,461

11,431

 

 

____

____

______

_____

 

 

Hotels

Rooms

Global pipeline signings

at 31 December

 

2013

Change

over 2012

 

2013

Change

over 2012

 

 

 

 

 

Total

444

88

65,461

11,649

 

 

____

____

______

_____

 

* Includes 1 Holiday Inn Club Vacations (120 rooms) and 14 Holiday Inn Resort properties (3,163 rooms) (2012: nil Holiday Inn Club Vacations (nil rooms) and 12 Holiday Inn Resort properties (2,390 rooms)).

 

Global pipeline

At the end of 2013, the global pipeline totalled 1,120 hotels (180,461 rooms), an increase of 67 hotels (11,431 rooms) on 31 December 2012. The IHG pipeline represents hotels where a contract has been signed and the appropriate fees paid.

The continued global demand for IHG brands is demonstrated by the Group signing hotels in 38 different countries and territories in 2013, 40% of which were in developing markets. 51% of the closing pipeline at 31 December 2013 was in developing markets, up by one percentage point compared to the previous year, including 30% in Greater China. More than 45% of the pipeline is under construction.

Excluding 35 hotels (4,118 rooms) signed as part of the US government's PAL initiative, signings increased from 356 hotels (53,812 rooms) to 409 hotels (61,343 rooms) in 2013. This included 280 hotels (39,555 rooms) in the Holiday Inn brand family, up by 22.7% compared to 2012. More than half of this growth was contributed by Greater China, with signings increasing by 4,121 rooms to 7,343 rooms. The Greater China region signed a further 27 hotels (8,005 rooms) across other IHG brands, including the 1,002-room Holiday Inn Express Changbaishan, whilst the pipeline for HUALUXE Hotels & Resorts increased to 21 hotels (6,804 rooms). Four EVEN Hotels (644 rooms), of which three are owned and leased, were signed in The Americas, with the pipeline for this brand standing at five hotels (880 rooms) at the end of 2013. Active management out of the pipeline of deals that have become dormant or no longer viable reduced the pipeline by 18,563 rooms, compared to 31,344 rooms in 2012.



 

THE AMERICAS

 

12 months ended 31 December

 

2013

2012

%

Americas results

$m

$m

change

 

 

 

 

Revenue

 

 

 

 

Franchised

576

541

6.5

 

Managed

128

97

32.0

 

Owned and leased

212

199

6.5

 

____

____

____

Total

 

916

837

9.4

 

____

____

____

Operating profit before exceptional items

 

 

 

 

Franchised

499

466

7.1

 

Managed

74

48

54.2

 

Owned and leased

30

24

25.0

 

 

____

____

_____

 

603

538

12.1

Regional overheads

(53)

(52)

(1.9)

 

____

____

____

Total

 

550

486

13.2

 

____

____

____

 

 

 

Americas Comparable RevPAR movement on previous year

12 months ended

31 December

2013

 

 

Franchised

 

 

Crowne Plaza

4.8%

 

Holiday Inn

2.6%

 

Holiday Inn Express

3.4%

 

All brands

3.2%

Managed

 

 

InterContinental

12.6%

 

Crowne Plaza

13.9%

 

Holiday Inn

10.6%

 

Staybridge Suites

19.8%

 

Candlewood Suites

19.3%

 

All brands

13.9%

Owned and leased

 

 

All brands

6.0%

 

Americas results

In The Americas, the largest proportion of rooms is operated under the franchise business model (91% of rooms in The Americas operate under this model) primarily in the upper midscale segment (Holiday Inn brand family). Similarly, in the upscale segment, Crowne Plaza is predominantly franchised, whereas the majority of the InterContinental branded hotels are operated under franchise and management agreements. With 3,616 hotels (451,424 rooms), The Americas represented 66% of the Group's room count and 67% of the Group's operating profit before central overheads and exceptional operating items during the year ended 31 December  2013. The key profit producing region is the US, although the Group is also represented in each of Latin America, Canada, Mexico and the Caribbean.

Revenue and operating profit before exceptional items increased by $79m (9.4%) to $916m and by $64m (13.2%) to $550m respectively. On an underlying basis, revenue and operating profit increased by $52m (6.5%) and $36m (7.5%) respectively. Revenue and operating profit were adversely impacted by $8m lower fees on the exit of eight Holiday Inn hotels owned by FelCor Lodging Trust but were positively impacted by the benefit of a $31m liquidated damages receipt in 2013 in the managed business, compared to $3m in 2012.

The franchise business drove most of the growth in the region (excluding the liquidated damages in the managed estate). Franchised revenue increased by $35m (6.5%) to $576m. Royalties growth of 4.7% was driven by RevPAR growth of 3.2%, including 3.4% for Holiday Inn Express, together with a 0.7% increase in available rooms. Operating profit increased by $33m (7.1%) to $499m. Fees from initial franchising, relicensing and termination of hotels also increased by $6m compared to 2012.

 

Managed revenue increased by $31m (32.0%) to $128m and operating profit increased by $26m (54.2%) to $74m. Revenue and operating profit included $34m (2012 $34m) and $nil (2012 $nil) respectively from one managed lease property. Excluding results from this hotel, as well as the benefit of the $31m liquidated damages in 2013 and the $3m in 2012, revenue grew by $4m (6.7%) and operating profit decreased by $2m (4.4%) on a constant currency basis.

 

Owned and leased revenue increased by $13m (6.5%) to $212m and operating profit grew by $6m (25.0%) to $30m. The increase in revenue was driven by RevPAR growth of 6.0%.

 

 

Hotels

Rooms

Americas hotel and room count

at 31 December

 

2013

Change

over 2012

 

2013

Change

over 2012

 

 

 

 

 

Analysed by brand

 

 

 

 

 

InterContinental

51

(2)

17,453

(303)

 

Crowne Plaza

176

(7)

47,057

(1,673)

 

Holiday Inn*

786

(34)

138,830

(7,831)

 

Holiday Inn Express

1,985

54

174,431

6,033

 

Staybridge Suites

188

5

20,309

522

 

Candlewood Suites

312

13

29,778

1,103

 

Hotel Indigo

37

-

4,344

37

 

Other

81

32

19,222

3,919

 

 

____

____

______

_____

Total

3,616

61

451,424

1,807

 

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

3,394

40

408,875

1,026

 

Managed

217

21

40,147

564

 

Owned and leased

5

-

2,402

217

 

 

____

____

______

_____

Total

3,616

61

451,424

1,807

 

 

____

____

______

_____

 

* Includes 10 Holiday Inn Club Vacations (3,701 rooms) and 18 Holiday Inn Resort properties (4,438 rooms) (2012: 10 Holiday Inn Club Vacations (3,701 rooms) and 17 Holiday Inn Resort properties (4,240 rooms)).

 

Americas hotel and room count

The Americas System size increased by 61 hotels (1,807 rooms) to 3,616 hotels (451,424 rooms) during 2013. 173 hotels (19,775 rooms) opened in the year, compared to 148 hotels (16,618 rooms) in 2012 and included 33 hotels (4,061 rooms) as part of the US government's PAL initiative. Openings included 115 hotels (12,448 rooms) in the Holiday Inn brand family, representing more than 60% of the regions openings. 19 hotels (1,705 rooms) opened as Staybridge Suites hotels and Candlewood Suites hotels, IHG's extended-stay brands.

 

112 hotels (17,968 rooms) were removed from the Americas System in 2013, compared to 66 hotels (9,199 rooms) in 2012. More than 60% of 2013 removals were Holiday Inn hotels in the US (53 hotels, 10,933 rooms). 13 Crowne Plaza hotels (3,326 rooms) were removed in 2013, partly reflecting the impact of the Group's Crowne Plaza repositioning programme. The increase in removals reflects the Group's ongoing focus on improving the quality of the estate, particularly Holiday Inn.



 

 

Hotels

Rooms

Americas pipeline

at 31 December

 

2013

Change

over 2012

 

2013

Change

over 2012

 

 

 

 

 

Analysed by brand

 

 

 

 

 

InterContinental

6

2

1,437

512

 

Crowne Plaza

16

-

3,228

(509)

 

Holiday Inn*

139

-

19,344

517

 

Holiday Inn Express

358

13

33,488

1,100

 

Staybridge Suites

71

7

7,495

847

 

Candlewood Suites

80

2

6,914

172

 

Hotel Indigo

23

-

3,118

42

 

EVEN Hotels

5

4

880

650

 

Other

1

1

114

114

 

 

____

____

______

_____

Total

699

29

76,018

3,445

 

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

678

19

72,019

1,729

 

Managed

18

7

3,499

1,216

 

Owned and leased

3

3

500

500

 

 

____

____

______

_____

Total

699

29

76,018

3,445

 

 

____

____

______

_____

 

* Includes 1 Holiday Inn Club Vacations (120  rooms) and 5 Holiday Inn Resort properties (694 rooms) (2012: nil Holiday Inn Club Vacations (nil rooms) and 5 Holiday Inn Resort properties (640 rooms)).

 

Americas pipeline

The Americas pipeline totalled 699 hotels (76,018 rooms) as at 31 December 2013, representing an increase of 29 hotels (3,445 rooms) over 31 December 2012. Strong signings of 305 hotels (33,884 rooms), demonstrating the continued demand for IHG brand hotels, were ahead of last year by 79 hotels (8,348 rooms) and included 35 hotels (4,118 rooms) signed as part of the US government's PAL initiative. The majority of 2013 signings were within the Holiday Inn brand family (193 hotels, 20,544 rooms), up by 8.9% compared to 2012. Four more hotels (644 rooms) were added for the EVEN Hotels brand, taking the total pipeline to five hotels (880 rooms), with the first hotel for the brand expected to open in 2014. Staybridge Suites and Candlewood Suites, IHG's extended stay hotel brands, also contributed signings of 57 hotels (5,406 rooms), up by 50.2% compared to 2012.

103 hotels (10,664 rooms) were terminated from the pipeline in 2013, significantly down from terminations in 2012 (183 hotels, 20,795 rooms).



 

EUROPE

 

12 months ended 31 December

 

2013

2012

%

Europe results

$m

$m

change

 

 

 

 

Revenue

 

 

 

 

Franchised

104

91

14.3

 

Managed

156

147

6.1

 

Owned and leased

140

198

(29.3)

 

____

____

 

Total

 

400

436

(8.3)

 

____

____

____

Operating profit before exceptional items

 

 

 

 

Franchised

79

65

21.5

 

Managed

30

32

(6.3)

 

Owned and leased

30

50

(40.0)

 

 

____

____

_____

 

139

147

(5.4)

Regional overheads

(34)

(35)

2.9

 

____

____

____

Total

 

105

112

(6.3)

 

____

____

____

 

 

 

Europe comparable RevPAR movement on previous year

12 months ended

31 December

2013

 

 

Franchised

 

 

All brands

1.5%

 

 

 

Managed

 

 

All brands

2.0%

 

 

 

Owned and leased

 

 

InterContinental

5.3%

 

 

 

 

Europe results

In Europe, the largest proportion of rooms is operated under the franchise business model primarily in the upper midscale segment (Holiday Inn and Holiday Inn Express). Similarly, in the upscale segment, Crowne Plaza is predominantly franchised whereas the majority of the InterContinental branded hotels are operated under management agreements. Comprising 629 hotels (102,066 rooms) at the end of 2013, Europe represented 15% of the Group's room count and 13% of the Group's operating profit before central overheads and exceptional operating items during the year ended 31 December 2013. Profits are primarily generated from hotels in the UK and Continental European gateway cities.

 

Revenue and operating profit before exceptional items decreased by $36m (8.3%) to $400m and by $7m (6.3%) to $105m respectively. On an underlying basis, revenue and operating profit increased by $9m (3.4%) and $8m (10.4%) respectively. Overall, RevPAR in Europe increased by 1.7%. The UK achieved RevPAR growth of 3.0%, with particularly strong performance in the final quarter of 2013 with RevPAR increasing 7.3%. RevPAR in Germany increased by 0.8% despite a weaker year-on-year trade fair calendar, whilst IHG hotels in the Commonwealth of Independent States (CIS) collectively achieved RevPAR growth of 2.7%.

 

Franchised revenue increased by $13m (14.3%) to $104m, whilst operating profit increased by $14m (21.5%) to $79m. Excluding the benefit of a $9m liquidated damages receipt in 2013, revenue and operating profit increased by $4m (4.4%) and $5m (7.7%) respectively. Growth was mainly driven by an increase in royalties of 7.0% (6.3% at constant currency) reflecting RevPAR growth of 1.5%, partly offset by a 0.2% decline in available rooms.

 

Managed revenue increased by $9m (6.1%) to $156m and operating profit decreased by $2m (6.3%) to $30m. Revenue and operating profit included $89m (2012 $80m) and $2m (2012 $2m) respectively from managed leases. Excluding properties operated under this arrangement and on a constant currency basis, revenue was flat and operating profit decreased by $1m (3.3%).

 

In the owned and leased estate, revenue decreased by $58m (29.3%) to $140m and operating profit decreased by $20m (40.0%) to $30m. At constant currency and excluding the impact of the disposal of the InterContinental London Park Lane, the

 

 

Group's remaining owned hotel in Europe, the InterContinental Paris Le Grand, delivered a revenue increase of $5m (4.6%) with RevPAR growth of 5.3%. Operating profit increased by $4m (23.5%), benefitting from a one-off $3m property tax recovery in the year.

 

Hotels

Rooms

Europe hotel and room count

at 31 December

 

2013

Change

over 2012

 

2013

Change

over 2012

 

 

 

 

 

Analysed by brand

 

 

 

 

 

InterContinental

31

1

9,525

131

 

Crowne Plaza

83

(1)

19,522

(44)

 

Holiday Inn*

282

(6)

45,621

(989)

 

Holiday Inn Express

215

3

25,371

468

 

Staybridge Suites

5

1

784

179

 

Hotel Indigo

13

3

1,243

294

 

 

____

____

______

_____

Total

629

1

102,066

39

 

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

528

-

79,517

(382)

 

Managed

100

2

22,079

868

 

Owned and leased

1

(1)

470

(447)

 

 

____

____

______

_____

Total

629

1

102,066

39

 

 

____

____

______

_____

 

* Includes 2 Holiday Inn Resort properties (212 rooms) (2012: 3 Holiday Inn Resort properties (362 rooms)).

 

Europe hotel and room count

During 2013, Europe System size increased by one hotel (39 rooms) to 629 hotels (102,066 rooms). The Group opened 21 hotels (3,528 rooms) in Europe in 2013, compared to 39 hotels (5,477 rooms) in 2012. 2013 openings included two InterContinental hotels, the 194-room InterContinental Marseille - Hotel Dieu, the fourth for the brand in France, and the 216-room InterContinental Davos in Switzerland. Three further Hotel Indigo properties (293 rooms) were opened in 2013, comprising a third hotel for the brand in Germany and first openings in Spain and Israel.

20 hotels (3,489 rooms) left the Europe System in the period, compared to 23 hotels (3,335 rooms) in the previous year.

 

Hotels

Rooms

Europe pipeline 

at 31 December

 

2013

Change

over 2012

 

2013

Change

over 2012

 

 

 

 

 

Analysed by brand

 

 

 

 

 

InterContinental

2

-

653

249

 

Crowne Plaza

12

-

2,624

(145)

 

Holiday Inn

35

15

6,612

2,345

 

Holiday Inn Express

43

-

6,016

(268)

 

Staybridge Suites

3

2

298

130

 

Hotel Indigo

15

2

1,576

284

 

 

____

____

______

_____

Total

110

19

17,779

2,595

 

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

97

14

14,119

1,933

 

Managed

13

5

3,660

662

 

 

____

____

______

_____

Total

110

19

17,779

2,595

 

 

____

____

______

_____

 

Europe pipeline

The Europe pipeline totalled 110 hotels (17,779 rooms) as at 31 December 2013, representing an increase of 19 hotels (2,595 rooms) over 31 December 2012. New signings of 50 hotels (7,542 rooms), compared to 48 hotels (7,023 rooms) in 2012, included 18 hotel signings in the UK (2,436 rooms), including signings for six different brands in London, notably the 453-room InterContinental London - The O2. The Group also signed six new hotels (1,116 rooms) in Germany and ten new hotels (1,737 rooms) in countries in the CIS.

10 hotels (1,419 rooms) were removed from the pipeline in 2013, compared to 16 hotels (3,044 rooms) in 2012.

 

ASIA, MIDDLE EAST & AFRICA (AMEA)

 

12 months ended 31 December

 

2013

2012

%

AMEA results

$m

$m

change

 

 

 

 

Revenue

 

 

 

 

Franchised

16

18

(11.1)

 

Managed

170

152

11.8

 

Owned and leased

44

48

(8.3)

 

 

____

____

_____

Total

 

230

218

5.5

 

____

____

____

Operating profit before exceptional items

 

 

 

 

Franchised

12

12

-

 

Managed

92

90

2.2

 

Owned and leased

4

6

(33.3)

 

 

____

____

_____

 

108

108

-

Regional overheads

(22)

(20)

(10.0)

 

____

____

____

Total

 

86

88

(2.3)

 

____

____

_____

 

 

AMEA comparable RevPAR movement on previous year

12 months ended

31 December

2013

 

 

Franchised

 

 

All brands

9.6%

Managed

 

 

All bands

5.6%

 

AMEA results

In AMEA, 81% of rooms are operated under the managed business model. The region's hotels are in the luxury, upscale and upper midscale segments. Comprising 244 hotels (64,838 rooms) at 31 December 2013, AMEA represented 9% of the Group's room count and 10% of the Group's operating profit before central overheads and exceptional operating items during the year ended 31 December 2013.

Revenue increased by $12m (5.5%) to $230m and operating profit decreased by $2m (2.3%) to $86m. On an underlying basis, revenue and operating profit decreased by $6m (2.8%) and $7m (8.0%) respectively. The results included a $6m benefit from liquidated damages in 2013. RevPAR increased by 6.1%, with 3.0% growth in average daily rate. AMEA is a geographically diverse region and performance is impacted by political and economic factors affecting different countries. The Middle East delivered RevPAR growth of 2.9%, driven by strength in the United Arab Emirates and Saudi Arabia, though continuing political uncertainty impacted some of our other markets in the region, particularly Egypt and Lebanon. Performance in Japan was strong, with RevPAR increasing by 9.6%, whilst Australia also achieved solid RevPAR growth of 2.8%. RevPAR growth in developing markets remained buoyant, led by 12.2% RevPAR growth in Indonesia. Revenue and operating profit growth were muted by a $6m negative year-on-year impact from the renewal of a small number of long-standing contracts onto current commercial terms. In addition, there was a $4m negative impact from similar contracts that were not renewed.

Franchised revenue decreased by $2m (11.1%) to $16m, whilst operating profit was flat at $12m.

 

Managed revenue and operating profit increased by $18m (11.8%) to $170m and by $2m (2.2%) to $92m respectively. During 2013, a new property opened under an operating lease structure, with the same characteristics as a management contract, contributing revenue of $21m and operating profit of $1m. Excluding this property together with the benefit of the $6m liquidated damages receipt in 2013, revenue and operating profit decreased by $4m (2.6%) and $4m (4.4%) respectively at constant currency. RevPAR increased by 5.6%, with AMEA System size up 2.6%.

 

In the owned and leased estate, revenue and operating profit decreased by $4m (8.3%) to $44m and by $2m (33.3%) to $4m respectively, driven by a 7.3% RevPAR decline.



 

 

Hotels

Rooms

AMEA hotel and room count

at 31 December

 

2013

Change

over 2012

 

2013

Change

over 2012

 

 

 

 

 

Analysed by brand

 

 

 

 

 

InterContinental

67

2

21,383

592

 

Crowne Plaza

67

2

19,078

519

 

Holiday Inn*

81

6

18,464

1,024

 

Holiday Inn Express

16

4

3,500

623

 

Staybridge Suites

3

1

425

121

 

Other

10

(3)

1,988

(778)

 

 

____

____

______

_____

Total

244

12

64,838

2,101

 

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

51

3

11,611

751

 

Managed

191

9

52,640

1,350

 

Owned and leased

2

-

587

-

 

 

____

____

______

_____

Total

244

12

64,838

2,101

 

 

____

____

______

_____

 

* Includes 14 Holiday Inn Resort properties (2,965 rooms) (2012: 14 Holiday Inn Resort properties (3,311 rooms)).

 

AMEA hotel and room count

The AMEA hotel and room count in the year increased by 12 hotels (2,101 rooms) to 244 hotels (64,838 rooms). The level of openings increased from 16 hotels (4,243 rooms) in 2012 to 20 hotels (4,495 rooms) in 2013. This included two hotel openings (624 rooms) for the InterContinental brand, including the 272-room InterContinental Osaka, and five hotels in India (818 rooms) in 2013, including Crowne Plaza and Holiday Inn conversions in New Delhi's emerging business district of Mayur Vihar.

 

Eight hotels (2,394 rooms) were removed from the AMEA System in 2013, compared to 12 hotels (2,589 rooms) in 2012.

 

 

Hotels

Rooms

AMEA pipeline

at 31 December

 

2013

Change

over 2012

 

2013

Change

over 2012

 

 

 

 

 

Analysed by brand

 

 

 

 

 

InterContinental

21

1

5,378

12

 

Crowne Plaza

14

(4)

4,048

(1,297)

 

Holiday Inn*

49

2

12,341

1,446

 

Holiday Inn Express

39

4

7,980

889

 

Staybridge Suites

6

-

935

207

 

Hotel Indigo

8

2

1,392

460

 

 

____

____

______

_____

Total

137

5

32,074

1,717

 

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

3

1

647

222

 

Managed

134

4

31,427

1,495

 

 

____

____

______

_____

Total

137

5

32,074

1,717

 

 

____

____

______

_____

 

* Includes 6 Holiday Inn Resort properties (1,579 rooms) (2012: 4 Holiday Inn Resort properties (900 rooms)).

 

AMEA pipeline

The AMEA pipeline totalled 137 hotels (32,074 rooms) as at 31 December 2013, compared to 132 hotels (30,357 rooms) as at 31 December 2012. Signings of 36 hotels (8,687 rooms) were broadly in line with last year and included 26 hotels (6,546 rooms) in the Holiday Inn brand family, notably the 1,230-room Holiday Inn Makkah Al Azizah in Saudi Arabia, which is set to be the largest Holiday Inn in the world when it opens. Three InterContinental hotels (671 rooms) were signed during 2013, including the 140-room InterContinental Sydney Double Bay in Australia.

11 hotels (2,475 rooms) were removed from the pipeline in 2013, compared to 10 hotels (2,850 rooms) in 2012.

 

 

GREATER CHINA

 

12 months ended 31 December

 

2013

2012

%

Greater China results

$m

$m

change

 

 

 

 

Revenue

 

 

 

 

Franchised

3

3

-

 

Managed

92

89

3.4

 

Owned and leased

141

138

2.2

 

 

____

____

_____

Total

 

236

230

2.6

 

____

____

____

Operating profit before exceptional items

 

 

 

 

Franchised

5

4

25.0

 

Managed

51

51

-

 

Owned and leased

47

45

4.4

 

 

____

____

_____

 

103

100

3.0

Regional overheads

(21)

(19)

(10.5)

 

____

____

____

Total

 

82

81

1.2

 

____

____

_____

 

 

Greater China comparable RevPAR movement on previous year

12 months ended

31 December

2013

 

 

Managed

 

 

All brands

0.6%

Owned and leased

 

 

InterContinental

(0.1)%

 

Greater China results

In Greater China, 96% of rooms are operated under the managed business model. The majority of hotels are in the upscale and upper midscale segments. Comprising 208 hotels (68,545 rooms) at 31 December 2013, Greater China represented 10% of the Group's room count and 10% of the Group's operating profit before central overheads and exceptional operating items during the year ended 31 December 2013.

Revenue and operating profit before exceptional items increased by $6m (2.6%) to $236m and by $1m (1.2%) to $82m respectively. On an underlying basis, revenue and operating profit increased by $6m (2.6%) and $2m (2.5%) respectively. Overall the region achieved RevPAR growth of 1.0% representing a significant decrease on the 5.4% growth achieved in 2012.

Franchised revenue was flat at $3m and operating profit increased by $1m (25.0%) to $5m.

 

Managed revenue increased by $3m (3.4%) to $92m and operating profit was flat at $51m. RevPAR increased by 0.6%, whilst the Greater China System size grew by 11.8%, driving a 9.2% increase in total gross revenue derived from rooms business. Total gross revenue derived from non-rooms business increased by 3.0%. Operating profit was partly offset by increased investment to drive future growth.

 

Owned and leased revenue at the InterContinental Hong Kong increased by $3m (2.2%) to $141m, driven by a 4.5% increase in total gross revenue derived from non-rooms business, although this was partly offset by a RevPAR decline of 0.1%. Operating profit increased by $2m (4.4%) to $47m.



 

 

Hotels

Rooms

Greater China hotel and room count

at 31 December

 

2013

Change

over 2012

 

2013

Change

over 2012

 

 

 

 

 

Analysed by brand

 

 

 

 

 

InterContinental

29

7

11,742

2,369

 

Crowne Plaza

65

5

23,234

1,782

 

Holiday Inn*

67

3

21,662

885

 

Holiday Inn Express

42

5

11,295

1,842

 

Hotel Indigo

5

2

612

207

 

Other

-

(1)

-

(141)

 

 

____

____

______

_____

Total

208

21

68,545

6,944

 

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Franchised

4

-

2,184

-

 

Managed

203

21

65,858

6,944

 

Owned and leased

1

-

503

-

 

 

____

____

______

_____

Total

208

21

68,545

6,944

 

 

____

____

______

_____

 

* Includes 4 Holiday Inn Resort properties (1,203 rooms) (2012: 3 Holiday Inn Resort properties (893 rooms)).

 

Greater China hotel and room count

The Greater China hotel and room count in the year increased by 21 hotels (6,944 rooms) to 208 hotels (68,545 rooms). 23 hotels (7,669 rooms) opened during 2013, broadly in line with 2012. InterContinental System size increased by 7 hotels (2,369 rooms) to 29 hotels (11,742 rooms), with openings including the 294-room InterContinental Sanya Haitang Bay Resort, a second for the brand on the island resort destination of Sanya. The Group also celebrated its 200th opening in Greater China in 2013 with the opening of the 141-room InterContinental Shanghai Ruijin. A further two Hotel Indigo properties (208 rooms) were opened, including a first for the brand in Hong Kong.

 

Two hotels (725 rooms) were removed from the Greater China System in 2013.

 

 

Hotels

Rooms

Greater China pipeline

at 31 December

 

2013

Change

over 2012

 

2013

Change

over 2012

 

 

 

 

 

Analysed by brand

 

 

 

 

 

InterContinental

22

-

9,392

374

 

Crowne Plaza

52

-

18,469

(863)

 

Holiday Inn*

41

4

11,944

945

 

Holiday Inn Express

33

4

7,260

1,263

 

Hotel Indigo

5

-

721

152

 

HUALUXE

21

6

6,804

1,900

 

Other

-

-

-

(97)

 

 

____

____

______

_____

Total

174

14

54,590

3,674

 

 

____

____

______

_____

Analysed by ownership type

 

 

 

 

 

Managed

174

14

54,590

3,674

 

 

____

____

______

_____

Total

174

14

54,590

3,674

 

 

____

____

______

_____

 

* Includes 3 Holiday Inn Resort properties (890 rooms) (2012: 3 Holiday Inn Resort properties (850 rooms)).

Greater China pipeline

The Greater China pipeline totalled 174 hotels (54,590 rooms) as at 31 December 2013, compared to 160 hotels (50,916 rooms) as at 31 December 2012. Signings of 53 hotels (15,348 rooms) increased from 46 hotels (13,387 rooms) in 2012. Seven InterContinental hotels (2,129 rooms) were signed, together with 11 Crowne Plaza hotels (3,528 rooms), whilst the total pipeline for the HUALUXE Hotels & Resorts brand increased to 21 hotels (6,804 rooms). 26 hotels (7,343 rooms) were signed in the Holiday Inn brand family, including the 1,002-room Holiday Inn Express Changbaishan, which subsequently opened as the Group's largest Holiday Inn Express in 2013.

 

16 hotels (4,005 rooms) were removed from the pipeline in 2013.

 

 

Central

 

12 months ended 31 December

 

2013

2012

%

Central results

$m

$m

change

 

 

 

 

Revenue

121

114

6.1

Gross central costs

(276)

(276)

-

 

____

____

_____

Net central costs

 

(155)

(162)

4.3

 

_____

_____

_____

 

Central Results

Central revenue, mainly comprising technology fee income, increased by $7m (6.1%) to $121m, driven by increases to both RevPAR and IHG System size over 2013. Gross central costs were flat at $276m in 2013, reflecting continued tight cost control.

 

SYSTEM FUND

 

12 months ended 31 December

 

2013

2012

%

System Fund results

$m

$m

change

 

 

 

 

Assessment fees and contributions received from hotels

1,154

1,106

4.3

Proceeds from sale of IHG Rewards Club points

153

144

6.3

 

____

____

_____

Total

 

1,307

1,250

4.6

 

_____

____

_____

 

System Fund Results

In the year to 31 December 2013, System Fund income increased by 4.6% to $1,307m primarily as a result of growth in hotel room revenues due to increases in RevPAR and IHG System size. The increase in proceeds from the sale of IHG Rewards Club points mainly reflects the continued strong performance of co-brand credit card schemes.

 

In addition to management or franchise fees, hotels within the IHG System pay assessments and contributions 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 global 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.



 

OTHER FINANCIAL INFORMATION

 

Exceptional operating items

Exceptional operating items totalled a net profit of $5m. Exceptional gains included $166m from the sale of the InterContinental London Park Lane on 1 May 2013 and $6m in relation to the sale of a hotel by an associate in The Americas. Exceptional charges included $147m arising from the buy-in of the Group's UK funded pension benefit obligations with the insurer, Rothesay Life, on 15 August 2013, $10m relating to an agreed settlement in respect of a commercial claim and $10m relating to costs incurred in support of the worldwide rebranding of IHG Rewards Club.

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 $19m to $73m reflecting an increase in average net debt levels and the issuance of the 10-year £400m public bond in November 2012 with a coupon of 3.875%.

 

Financing costs included $2m (2012 $2m) of interest costs associated with the 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 2013 also included $19m (2012 $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 29% (2012 27%). Excluding the impact of prior year items the equivalent tax rate would be 32% (2012 30%). This rate is higher than the average UK statutory rate of 23.25% (2012 24.5%) 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 $51m (2012 credit of $142m). In 2013 the charge comprised $6m relating to the exceptional operating items and $64m consequent upon the disposal of the InterContinental London Park Lane, offset by a credit of $19m relating to an internal restructuring. In 2012 this represented, primarily, the recognition of $104m of deferred tax assets whose value had become more certain as a result of a change in law and the resolution of prior period tax matters, together with the associated release of $37m of provisions.

 

Net tax paid in 2013 totalled $97m (2012 $122m) including $5m paid (2012 $3m) in respect of disposals. Tax paid represents an effective rate of 16% (2012 22%) on total profits and is lower than the effective income statement tax rate of 29% 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.

 

Earnings per ordinary share

Basic earnings per ordinary share in 2013 was 140.9¢, compared with 187.1¢ in 2012. Adjusted earnings per ordinary share was 158.3¢, against 139.0¢ in 2012.

 

Dividends

The Board has proposed a final dividend per ordinary share of 47.0¢ (28.1p). With the interim dividend per ordinary share of 23.0¢ (15.1p), the full-year dividend per ordinary share for 2013 will total 70.0¢ (43.2p), an increase of 9% over 2012. On 4 October 2013, a special dividend of 133.0¢ (87.1p) per ordinary share amounting to $355m was paid to shareholders.

 

Share price and market capitalisation

The IHG share price closed at £20.13 on 31 December 2013, up from £17.07 on 31 December 2012. The market capitalisation of the Group at the year-end was £5.4bn.



 

Capital structure and liquidity management

During the year, $624m of cash was generated from operating activities, of which $409m was invested in capital expenditure. After shareholder returns of $816m, including a $355m special dividend and $283m of share buybacks, net debt at 31 December 2013 was $1,153m, an increase over the year of $79m. Net debt included $215m in respect of the finance lease obligations for the InterContinental Boston and $2m in respect of currency swaps related to the £250m sterling bond.

 

In November 2012, the Group issued a 10-year £400m public bond under its Medium Term Notes programme at a coupon of 3.875%. The Group issued its first bond under the programme in December 2009 which was a seven-year £250m public bond at a coupon of 6%, which was immediately swapped into US dollar debt using currency swaps.

 

The Group refinanced its bank debt in November 2011, putting in place a five-year $1.07bn syndicated bank facility which matures in November 2016. This facility was undrawn at the year-end.

 

Additional funding is provided by a finance lease on the InterContinental Boston.

 

 

2013

2012

Net debt* at 31 December

$m

$m

 

 

 

Borrowings:

 

 

 

Sterling

654

638

 

US Dollar

629

626

 

Other

4

5

Cash and cash equivalents

(134)

(195)

 

____

____

Net debt

1,153

1,074

 

____

____

 

 

 

Average debt levels

985

651

 

____

____

 

 

 

* Including the impact of currency derivatives.

 

2013

2012

Facilities at 31 December

$m

$m

 

 

 

Committed

1,074

1,075

Uncommitted

80

96

 

____

____

Total

1,154

1,171

 

____

____

 

 

Interest risk profile of gross debt for major currencies

at 31 December

2013

%

2012

%

 

 

 

At fixed rates

100

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InterContinental Hotels Group PLC

GROUP INCOME STATEMENT

For the year ended 31 December 2013

 

 

Year ended 31 December 2013

Year ended 31 December 2012

(restated*)

 

Before

exceptional

items

Exceptional

items

(note 4)

 

 

Total

Before

exceptional

items

Exceptional

items

(note 4)

 

 

Total

 

$m

$m

$m

$m

$m

$m

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue (note 3)

1,903

-

1,903

1,835

-

1,835

Cost of sales

(784)

-

(784)

(772)

-

(772)

Administrative expenses

(374)

(167)

(541)

(372)

(16)

(388)

Share of profits of associates and joint ventures

2

6

8

3

-

3

Other operating income and expenses

6

166

172

5

(11)

(6)

 

_____

____

____

_____

____

____

 

753

5

758

699

(27)

672

 

 

 

 

 

 

 

Depreciation and amortisation

(85)

-

(85)

(94)

-

(94)

Impairment

-

-

-

-

23

23

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Operating profit (note 3)

668

5

673

605

(4)

601

Financial income

5

-

5

3

-

3

Financial expenses

(78)

-

(78)

(57)

-

(57)

 

_____

____

____

_____

____

____

 

 

 

 

 

 

 

Profit before tax

595

5

600

551

(4)

547

 

 

 

 

 

 

 

Tax (note 5)

(175)

(51)

(226)

(151)

142

(9)

 

_____

____

____

_____

____

____

Profit for the year from continuing operations

 

420

 

(46)

 

374

 

400

 

138

 

538

 

====

====

====

====

====

====

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Equity holders of the parent

418

(46)

372

399

138

537

 

Non-controlling interest

2

-

2

1

-

1

 

 

____

____

____

____

____

____

 

 

420

(46)

374

400

138

538

 

====

====

====

====

====

====

 

 

 

 

 

 

 

Earnings per ordinary share

(note 6)

 

 

 

 

 

 

Continuing and total operations:

 

 

 

 

 

 

 

Basic

 

 

140.9¢

 

 

187.1¢

 

Diluted

 

 

139.3¢

 

 

183.9¢

 

Adjusted

158.3¢

 

 

139.0¢

 

 

 

Adjusted diluted

156.6¢

 

 

136.6¢

 

 

 

====

 

====

====

 

====

 

 

 

 

 

 

 

 

 

*

Restated for the adoption of IAS 19R 'Employee Benefits' (see note 1)



InterContinental Hotels Group PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2013

 

 

 

2013

Year ended

31 December

 

$m

2012

Year ended

31 December

(restated*)

$m

 

 

 

Profit for the year

374

538

 

 

 

Other comprehensive income

 

 

 

 

 

Items that may be subsequently reclassified to profit or loss:

 

 

Gains on valuation of available-for-sale financial assets

28

1

Losses relating to cash flow hedges reclassified to financial expenses

-

1

Exchange (losses)/gains on retranslation of foreign operations, net of related tax credit of $2m (2012 $3m)

(35)

24

Exchange losses reclassified to profit on hotel disposal

46

-

 

____

____

 

39

26

Items that will not be reclassified to profit or loss:

 

 

Re-measurement gains/(losses) on defined benefit plans, net of related tax charge of $20m (2012 credit of $5m)

20

(10)

Tax related to pension contributions

-

18

 

____

____

 

20

8

 

 

 

 

____

____

Total other comprehensive income for the year

59

34

 

____

____

Total comprehensive income for the year

433

572

 

====

====

 

 

 

Attributable to:

 

 

 

Equity holders of the parent

433

571

 

Non-controlling interest

-

1

 

_____

_____

 

433

572

 

=====

=====

 

 

*

Restated for the adoption of IAS 19R 'Employee Benefits' (see note 1)



 

 

InterContinental Hotels Group PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2013

 

 

Year ended 31 December 2013

 

Equity share capital

Other reserves*

Retained earnings

Non-controlling interest

 

Total equity

 

$m

$m

$m

$m

$m

 

 

 

 

 

 

At beginning of the year

179

(2,652)

2,781

9

317

 

 

 

 

 

 

Total comprehensive income for the year

-

41

392

-

433

Issue of ordinary shares

5

-

-

-

5

Repurchase of shares

-

-

(283)

-

(283)

Movement in shares in employee share trusts

 

-

 

11

 

(61)

 

-

 

(50)

Equity-settled share-based cost

-

-

27

-

27

Tax related to share schemes

-

-

11

-

11

Equity dividends paid

-

-

(533)

(1)

(534)

Exchange adjustments

5

(5)

-

-

-

 

_____

_____

____

____

____

At end of the year

189

(2,605)

2,334

8

(74)

 

=====

=====

====

====

====

 

 

Year ended 31 December 2012

 

Equity share capital

Other reserves*

Retained earnings

Non-controlling interest

 

Total equity

 

$m

$m

$m

$m

$m

 

 

 

 

 

 

At beginning of the year

162

(2,650)

3,035

8

555

 

 

 

 

 

 

Total comprehensive income for the year

-

26

545

1

572

Issue of ordinary shares

10

-

-

-

10

Repurchase of shares

(1)

-

(106)

-

(107)

Transfer to capital redemption reserve

-

1

(1)

-

-

Transaction costs relating to shareholder returns

 

-

 

-

 

(2)

 

-

 

(2)

Movement in shares in employee share trusts

 

-

 

(21)

 

(63)

 

-

 

(84)

Equity-settled share-based cost

-

-

27

-

27

Tax related to share schemes

-

-

20

-

20

Equity dividends paid

-

-

(679)

-

(679)

Share of reserve in equity accounted investment

 

-

 

-

 

5

 

-

 

5

Exchange adjustments

8

(8)

-

-

-

 

_____

_____

____

____

____

At end of the year

179

(2,652)

2,781

9

317

 

=====

=====

====

====

====

 

*

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 2013

 

2013

31 December

2012

31 December

 

$m

$m

ASSETS

 

 

Property, plant and equipment

1,169

1,056

Goodwill

80

93

Intangible assets

438

354

Investment in associates and joint ventures

85

84

Retirement benefit assets

7

99

Other financial assets

236

155

Non-current tax receivable

16

24

Deferred tax assets

108

204

 

_____

_____

Total non-current assets

2,139

2,069

 

_____

_____

Inventories

4

4

Trade and other receivables

423

422

Current tax receivable

12

31

Derivative financial instruments

1

2

Other financial assets

12

6

Cash and cash equivalents

134

195

 

_____

_____

Total current assets

586

660

Non-current assets classified as held for sale

228

534

 

______

______

Total assets (note 3)

2,953

3,263

 

=====

=====

LIABILITIES

 

 

Loans and other borrowings

(16)

(16)

Trade and other payables

(748)

(709)

Provisions

(3)

(1)

Current tax payable

(47)

(54)

 

_____

_____

Total current liabilities

(814)

(780)

 

_____

_____

Loans and other borrowings

(1,269)

(1,242)

Derivative financial instruments

(11)

(19)

Retirement benefit obligations

(184)

(187)

Trade and other payables

(574)

(563)

Provisions

-

(1)

Deferred tax liabilities

(175)

(93)

 

_____

_____

Total non-current liabilities

(2,213)

(2,105)

Liabilities classified as held for sale

-

(61)

 

_____

_____

Total liabilities

(3,027)

(2,946)

 

=====

=====

Net (liabilities)/assets

(74)

317

 

=====

=====

EQUITY

 

 

Equity share capital

189

179

Capital redemption reserve

12

11

Shares held by employee share trusts

(38)

(48)

Other reserves

(2,906)

(2,901)

Unrealised gains and losses reserve

100

72

Currency translation reserve

227

214

Retained earnings

2,334

2,781

 

______

______

IHG shareholders' equity

(82)

308

Non-controlling interest

8

9

 

______

______

Total equity

(74)

317

 

=====

=====



InterContinental Hotels Group PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 31 December 2013

 

2013

Year ended

31 December

2012

Year ended

31 December

(restated*)

 

$m

$m




Profit for the year

374

538

Adjustments for:

 

 

 

Net financial expenses

73

54

 

Income tax charge

226

9

 

Depreciation and amortisation

85

94

 

Impairment

-

(23)

 

Other exceptional operating items

(5)

27

 

Equity-settled share-based cost

22

22

 

Dividends from associates and joint ventures

5

1

 

Other items

2

(3)

 

_____

_____

Operating cash flow before movements in working capital

782

719

Net change in loyalty programme liability and System Fund surplus

61

57

Other changes in net working capital

(1)

(24)

Utilisation of provisions

(3)

(12)

Retirement benefit contributions, net of cost

(18)

(95)

Cash flows relating to exceptional operating items

(33)

(6)


_____

_____

Cash flow from operations

788

639

Interest paid

(74)

(50)

Interest received

2

2

Tax paid on operating activities

(92)

(119)


_____

_____

Net cash from operating activities

624

472


_____

_____

Cash flow from investing activities

 

 

Purchase of property, plant and equipment

(159)

(44)

Purchase of intangible assets

(86)

(84)

Investment in other financial assets

(154)

(2)

Investment in associates and joint ventures

(10)

(3)

Disposal of hotel assets, net of costs

460

4

Proceeds from other financial assets

109

4

Distribution from associate on sale of hotel

17

-

Proceeds from other associates and joint ventures

3

-

Tax paid on disposals

(5)

(3)


_____

_____

Net cash from investing activities

175

(128)


_____

_____

Cash flow from financing activities

 

 

Proceeds from the issue of share capital

5

10

Purchase of own shares

(283)

(107)

Purchase of own shares by employee share trusts

(44)

(84)

Dividends paid to shareholders

(533)

(679)

Dividends paid to non-controlling interests

(1)

-

Transaction costs relating to shareholder returns

-

(2)

Issue of long-term bonds

-

632

Decrease in other borrowings

(1)

(99)

 

_____

_____

Net cash from financing activities

(857)

(329)

 

_____

_____

Net movement in cash and cash equivalents in the year

(58)

15

Cash and cash equivalents at beginning of the year

195

182

Exchange rate effects

(3)

(2)


_____

_____

Cash and cash equivalents at end of the year

134

195

 

=====

=====

 

* Restated for the adoption of IAS 19R 'Employee Benefits' (see note 1)

 

 



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 2013 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 (the Group or IHG) Annual Report and Financial Statements for the year ended 31 December 2012.

 

With effect from 1 January 2013, the Group has adopted IAS 19 (Revised) 'Employee Benefits' which introduces a number of changes to accounting for defined benefit plans, including the removal of expected returns on plan assets from the income statement.  Instead, there is a requirement to recognise interest on the net defined benefit asset/liability (after any asset restrictions), calculated using the discount rate used to measure the defined benefit obligation.  This change in accounting policy has required restatements of the Group income statement, Group statement of comprehensive income and Group statement of cash flows for the year ended 31 December 2012, resulting in an additional charge to operating profit of $9m with an equivalent reduction in actuarial losses in other comprehensive income.  The tax impacts of the adjustments are a $2m credit to the income statement with an equivalent charge against the reduced actuarial losses in other comprehensive income.  Basic, diluted, adjusted and adjusted diluted earnings per share are reduced by 2.4, 2.4, 2.5 and 2.4 cents respectively.  There has been no change to previously reported retained earnings or balance sheet amounts.

 

The Group has also adopted IAS 1 (Amendment) 'Presentation of Items of Other Comprehensive Income', which changes the grouping of items presented in the Group's statement of comprehensive income so that items which may be reclassified to profit or loss in the future are presented separately from items that will never be reclassified.  The amendment affects presentation only and has had no impact on the Group's financial position or performance.

 

In addition, with effect from 1 January 2013, the Group has implemented IAS 28 (Amendment) 'Investments in Associates and Joint Ventures', IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements', IFRS 12 'Disclosure of Interests in Other Entities' and IFRS 13 'Fair Value Measurement'.  The adoption of these standards has had no material impact on the Group's financial performance or position and there has been no requirement to restate prior year comparatives. 

 

 

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= £0.64 (2012 $1=£0.63). In the case of the euro, the translation rate is $1 = €0.75 (2012 $1 = €0.78).

 

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=£0.60 (2012 $1 = £0.62). In the case of the euro, the translation rate is $1 = €0.73 (2012 $1 = €0.76).

 

 



 

3.

Segmental information

 

 

 

 

 

 

 

Revenue

 

 

 

 

2013

2012

 

 

$m

$m

 

 

 

 

 

Americas 

916

837

 

Europe  

400

436

 

AMEA

230

218

 

Greater China

236

230

 

Central

121

114

 

 

____

____

 

Total revenue

1,903

1,835

 

 

====

====

 

 

 

 

 

All results relate to continuing operations.

 

 

Profit

2013

$m

2012

(restated*)

$m

 

 

 

 

 

Americas 

550

486

 

Europe  

105

112

 

AMEA

86

88

 

Greater China

82

81

 

Central

(155)

(162)

 

 

____

____

 

Reportable segments' operating profit

668

605

 

Exceptional operating items (note 4)

5

(4)

 

 

____

____

 

Operating profit

673

601

 

 

 

 

 

Net finance costs

(73)

(54)

 

 

____

____

 

Profit before tax

600

547

 

 

====

====

 

 

 

 

 

All results relate to continuing operations.

 

 

* Restated for the adoption of IAS 19R 'Employee Benefits' (see note 1)

 

 

Assets

2013

$m

2012

$m

 

 

 

 

 

Americas

1,079

957

 

Europe

654

928

 

AMEA

253

282

 

Greater China

392

390

 

Central

304

250

 

 

____

____

 

Segment assets

2,682

2,807

 

 

 

 

 

Unallocated assets:

 

 

 

Non-current tax receivable

16

24

 

Deferred tax assets

108

204

 

Current tax receivable

12

31

 

Derivative financial instruments

1

2

 

Cash and cash equivalents

134

195

 

 

____

____

 

Total assets

2,953

3,263

 

 

====

====



 

4.

Exceptional items

 

 

 

2013

$m

2012

$m

 

Continuing operations:

 

 

 

Exceptional operating items

 

 

 

 

Administrative expenses:

 

 

 

 

Litigation (a)

(10)

-

 

 

Loyalty programme rebranding costs (b)

(10)

-

 

 

Pension settlement loss (c)

(147)

-

 

 

Reorganisation costs (d)

-

(16)

 

 

 

____

____

 

 

 

(167)

(16)

 

 

Share of profits of associates and joint ventures:

 

 

 

 

Share of gain on disposal of a hotel (e)

6

-

 

 

 

 

 

 

 

 

 

 

 

 

Other operating income and expenses:

 

 

 

 

Gain/(loss) on disposal of hotels (f)

166

(2)

 

 

Write-off of software (g)

-

(18)

 

 

Demerger liability released (h)

-

9

 

 

 

____

____

 

 

 

166

(11)

 

 

Impairment:

 

 

 

 

Reversals of previously recorded impairment:

 

 

 

 

 

Property, plant and equipment (i)

-

23

 

 

 

____

____

 

 

5

(4)

 

 

====

====

 

Tax

 

 

 

 

Tax on exceptional operating items

(6)

1

 

 

Exceptional tax (j)

(45)

141

 

 

 

____

____

 

 

 

(51)

142

 

 

====

====

 

 

 

These items are treated as exceptional by reason of their size or nature.

 

a)

Relates to an agreed settlement.

 

b)

Relates to costs incurred in support of the worldwide rebranding of IHG Rewards Club that was announced 1 July 2013.

 

c)

Arises from a buy-in of the Group's UK funded defined benefit obligations with the insurer, Rothesay Life, on 15 August 2013.

 

d)

Arose from a reorganisation of the Group's support functions together with a restructuring within the AMEA region.

 

e)

Relates to the sale of a hotel owned by an associate in the Americas region.

 

f)

Relates to the sale of the InterContinental London Park Lane on 1 May 2013 and, in 2012, related to the sale of an interest in a hotel in the Europe region.

 

g)

Resulted from a reassessment of the ongoing value of elements of the technology infrastructure.

 

h)

Resulted from a release of a liability no longer required which arose on the demerger of the Group from Six Continents PLC.

 

i)

Related to the reversal of a previously recorded impairment charge on a North American hotel.

 

j)

In 2013, comprises a deferred tax charge of $63m consequent upon the disposal of the InterContinental London Park Lane hotel, together with charges and credits of $38m and $19m respectively from associated restructurings (including intra-group dividends) and refinancings, offset by the recognition of $37m of previously unrecognised tax credits.  In 2012, represented the recognition of $104m of deferred tax assets, principally relating to pre-existing overseas tax losses, whose value had become more certain as a result of a change in law and the resolution of prior period tax matters, together with the associated release of $37m of provisions.

 

 

 

 

 

 

 

 

 

 

 

 

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 29% (2012 27%) analysed as follows.

 

 

 

 

2013

2013

2013

2012

(restated*)

2012

(restated*)

2012

(restated*)

 

Year ended 31 December

Profit

$m

Tax

$m

Tax

rate

Profit

$m

Tax

$m

Tax

rate

 

 

 

 

 

 

 

 

 

Before exceptional items

595

(175)

29%

551

(151)

27%

 

 

 

 

 

 

 

 

 

Exceptional items

5

(51)

 

(4)

142

 

 

 

____

____

 

____

____

 

 

 

600

(226)

 

547

(9)

 

 

 

====

====

 

====

====

 

 

Analysed as:

 

 

 

 

 

 

 

 

UK tax

 

(1)

 

 

16

 

 

 

Foreign tax

 

(225)

 

 

(25)

 

 

 

 

____

 

 

____

 

 

 

 

(226)

 

 

(9)

 

 

 

 

====

 

 

====

 

 

            * Restated for the adoption of IAS 19R 'Employee Benefits' (see note 1)

 

 

 



 

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 options 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

2013

2012

(restated*)

 

 

 

 

 

Basic earnings per ordinary share

 

 

 

Profit available for equity holders ($m)

372

537

 

Basic weighted average number of ordinary shares (millions)

264

287

 

Basic earnings per ordinary share (cents)

140.9

187.1

 

 

====

====

 

Diluted earnings per ordinary share

 

 

 

Profit available for equity holders ($m)

372

537

 

Diluted weighted average number of ordinary shares (millions)

267

292

 

Diluted earnings per ordinary share (cents)

139.3

183.9

 

 

====

====

 

Adjusted earnings per ordinary share

 

 

 

Profit available for equity holders ($m)

372

537

 

Adjusting items (note 4):

 

 

 

 

Exceptional operating items ($m)

(5)

4

 

 

Tax on exceptional operating items ($m)

6

(1)

 

 

Exceptional tax ($m)

45

(141)

 

 

____

____

 

Adjusted earnings ($m)

418

399

 

Basic weighted average number of ordinary shares (millions)

264

287

 

Adjusted earnings per ordinary share (cents)

158.3

139.0

 

 

====

====

 

Diluted weighted average number of ordinary shares (millions)

267

292

 

Adjusted diluted earnings per ordinary share (cents)

156.6

136.6

 

 

====

====

 

 

 

The diluted weighted average number of ordinary shares is calculated as:

 

 

2013

millions

2012

millions

 

 

Basic weighted average number of ordinary shares

264

287

 

Dilutive potential ordinary shares - employee share options

3

5

 

 

____

____

 

 

267

292

 

 

====

====

 

 

            * Restated for the adoption of IAS 19R 'Employee Benefits' (see note 1)

 

 



 

7.

Dividends and shareholder returns

 

 

2013

cents per share

2012

cents per share

2013

$m

2012

$m

 

Paid during the year:

 

 

 

 

 

 

Final (declared for previous year)

43.0

39.0

115

113

 

 

Interim

23.0

21.0

63

61

 

 

Special

133.0

172.0

355

505

 

 

____

____

____

____

 

 

199.0

232.0

533

679

 

 

====

====

====

====

 

 

 

 

 

 

 

Proposed for approval at the Annual General Meeting

(not recognised as a liability at 31 December)

 

 

Final

47.0

43.0

121

115

 

 

====

====

====

====

 

 

 

 

 

 

 

Under the $500m share buyback programme announced 7 August 2012, 9,773,912 shares were repurchased in the year to 31 December 2013 for a consideration of $283m, increasing the total amount repurchased to $390m.  All of the shares repurchased in 2013 were held as Treasury shares at 31 December 2013, the cost of which has been deducted from retained earnings.  There were no Treasury shares held at 31 December 2012 or earlier.

 

On 6 August 2013, the Group also announced a special dividend of 133.0 cents per share amounting to $355m which was paid to shareholders on 4 October 2013.

 

8.

Net debt

 

 

2013

2012

 

 

$m

$m

 

 

 

 

 

Cash and cash equivalents

134

195

 

Loans and other borrowings - current

(16)

(16)

 

Loans and other borrowings - non-current

(1,269)

(1,242)

 

Derivatives hedging debt values*

(2)

(11)

 

 

____

____

 

Net debt

(1,153)

(1,074)

 

 

====

====

 

Finance lease obligation included above

(215)

(212)

 

 

====

====

 

 

*

Net debt includes the exchange element of the fair value of currency swaps that fix the value of the Group's £250m 6% bonds at $415m.  An equal and opposite exchange adjustment on the retranslation of the £250m 6% bonds is included in non-current loans and other borrowings. 

 

9.

Movement in net debt

 

 

 

2013

2012

 

 

$m

$m

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

(58)

15

 

Add back cash flows in respect of other components of net debt:

 

 

 

 

Issue of long-term bonds

-

(632)

 

 

Decrease in other borrowings

1

99

 

 

____

____

 

Increase in net debt arising from cash flows

(57)

(518)

 

 

 

 

 

Non-cash movements:

 

 

 

 

Finance lease obligation

(3)

(3)

 

 

Exchange and other adjustments

(19)

(15)

 

 

____

____

 

Increase in net debt

(79)

(536)

 

 

 

 

 

Net debt at beginning of the year

(1,074)

(538)

 

 

____

____

 

Net debt at end of the year

(1,153)

(1,074)

 

 

====

====

 

 

10.

Fair values

 

10.

The table below compares carrying amounts and fair values of the Group's financial assets and liabilities at 31 December 2013:

 

 

Carrying value

$m

Fair value

$m

 

 

Financial assets:

 

 

 

 

Equity securities available-for-sale

136

136

 

 

Loans and receivables

112

112

 

 

 

_____

_____

 

 

Other financial assets

248

248

 

 

 

=====

=====

 

 

Financial liabilities:

 

 

 

 

£250m 6% bonds 2016

(412)

(461)

 

 

£400m 3.875% bonds 2022

(654)

(650)

 

 

Finance lease obligations

(215)

(233)

 

 

Derivatives

(11)

(11)

 

 

Other borrowings

(4)

(4)

 

 

 

_____

_____

 

 

 

(1,296)

(1,359)

 

 

 

=====

=====

 

 

10.

Equity securities available-for-sale and derivatives are held in the Group statement of financial position at fair value as set out below.  The fair value of loans and receivables approximates book value based on prevailing market rates.  The fair value of the £250m and £400m bonds is based on their quoted market price. The fair value of finance lease obligations is calculated by discounting future cash flows at prevailing interest rates. The fair value of other borrowings approximates book value as interest rates reset to market rates on a frequent basis.

 

The following table provides the fair value measurement hierarchy of the above assets and liabilities, other than those with carrying amounts which are reasonable approximations of their fair values:

 

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

 

 

 

 

 

Level 1

$m

 

 

Level 2

$m

 

 

Level 3

$m

2013

31 December

Total

$m

 

Assets

 

 

 

 

 

Equity securities available-for-sale:

 

 

 

 

 

Quoted equity shares

9

-

-

9

 

Unquoted equity shares

-

-

127

127

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

£250m 6% bonds 2016

(461)

-

-

(461)

 

£400m 3.875% bonds 2022

(650)

-

-

(650)

 

Finance lease obligations

-

(233)

-

(233)

 

Derivatives

-

(11)

-

(11)

 

 

 

 

 

 

 

There were no transfers between Level 1 and Level 2 fair value measurements during the year and no transfers into and out of Level 3.

 

The Level 2 derivative financial instruments consist of currency swaps which are fair valued using data from observable swap curves, adjusted to take account of the Group's own credit risk. 

 

The Level 3 equity securities relate to investments in unlisted shares which are fair valued either by applying an average price-earnings (P/E) ratio for a competitor group to the earnings generated by the investment, or by reference to share of net assets.  The average P/E ratio used for the year was 23.9 and a non-marketability factor of 30% is applied.  A 10% increase in the average P/E ratio would result in a $5m increase in the fair value of the investments and a 10% decrease in the average P/E ratio would result in a $5m decrease in the fair value of the investments.  A 10% increase in net assets would result in a $5m increase in the fair value of investments and a 10% decrease in net assets would result in a $5m decrease in the fair value of the investments.

 

 

The following table reconciles movements in instruments classified as Level 3 during the year:

 

 

 

 2013

31 December

$m

 

 

 

 

At 1 January 2013

94

 

Additions

8

 

Valuation gains recognised in other comprehensive income

25

 

 

____

 

At 31 December 2013

127

 

 

====

 

 

11.

Commitments and contingencies

 

 

At 31 December 2013, the amount contracted for but not provided for in the financial statements for expenditure on property, plant and equipment and intangible assets was $83m (2012 $81m).  The Group has also committed to invest up to $61m in three investments accounted for under the equity method of which $41m had been spent at 31 December 2013.

 

At 31 December 2013, the Group had no contingent liabilities (2012 $1m).

 

In limited cases, the Group may provide performance guarantees to third-party hotel owners to secure management contracts.  The maximum unprovided exposure under such guarantees is $48m (2012 $50m). 

 

From time to time, the Group is subject to legal proceedings the ultimate outcome of each being always subject to many uncertainties inherent in litigation.  The Group has also given warranties in respect of the disposal of certain of its former subsidiaries.  It is the view of the Directors that, other than to the extent that liabilities have been provided for in these financial statements, it is not possible to quantify any loss to which these proceedings or claims under these warranties may give rise, however, as at the date of reporting, the Group does not believe that the outcome of these matters will have a material effect on the Group's financial position.

 

 

12.

Events after the reporting period

 

 

In February 2014, the Group signed an agreement to sell the InterContinental Mark Hopkins San Francisco for $120m in cash and enter into a long term management contract on the hotel.  The hotel had a net book value of $90m at 31 December 2013.

 

 

13.

Group financial statements

 

 

The preliminary statement of results was approved by the Board on 17 February 2014. The preliminary statement of results does not represent the full Group financial statements of InterContinental Hotels Group PLC and its subsidiaries which will be delivered to the Registrar of Companies in due course. The financial information for the year ended 31 December 2012 has been extracted from the IHG Annual Report and Financial Statements for that year as filed with the Registrar of Companies.

 

 

 

 

Auditor's review

 

 

The auditors, Ernst & Young LLP, have given an unqualified report under Chapter 3 of Part 16 of the Companies Act 2006 in respect of the full Group financial statements.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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