Results - 30.09.03
InterContinental Hotels Group PLC
19 November 2003
19th November 2003
InterContinental Hotels Group PLC
Pro forma Results for the Nine Months to 30 September 2003
Three months to Nine months to
30 Sept 2003 30 Sept % 30 Sept 30 Sept %
* 2002* 2003* 2002*
change change
£m £m £m £m
Hotels
- Turnover 387 385 0.5% 1,095 1,155 (5.2)%
- EBITDA 122 112 8.9% 284 306 (7.2)%
- Operating profit 81 76 6.6% 167 202 (17.3)%
Soft Drinks
- Turnover 182 155 17.4% 517 465 11.2%
- EBITDA 36 33 9.1% 97 90 7.8%
- Operating profit 27 22 22.7% 66 56 17.9%
Group
- Turnover 569 540 5.4% 1,612 1,620 (0.5)%
- EBITDA 153 142 7.7% 366 391 (6.4)%
- Operating profit 103 94 9.6% 217 251 (13.5)%
- Profit before tax 93 82 13.4% 185 215 (14.0)%
Earnings per share 8.1 6.9 17.4% 15.7 18.1 (13.3)%
(pence)
* Pro forma numbers before exceptional items. Soft Drinks results to 27 September 2003 (28
September 2002).
• Group operating profit for the quarter to 30 September 2003 up 9.6%.
• Total Hotels operating profit for the quarter to 30 September 2003 up 6.6%.
- Americas operating profit up $5m to $82m demonstrating the strength of our midscale
franchising business and indicating signs of improvement in some markets, but no consistent
trend.
- EMEA operating profit down £5m to £37m. Continental Europe remains challenging,
particularly in France and Germany. UK Holiday Inn estate continues to show positive trends with
performance consistently ahead of the market.
- Asia Pacific operating profit marginally below last year at $6m with business now
close to pre SARS levels.
- Central overheads and marketing down by £8m.
• Improved distribution in the extended stay market with the acquisition of the Candlewood Suites
brand, subject to CNDL shareholder approval.
• Cost reduction programme on track with annualised run rate of savings of $70m as at September
2003.
• Continuing strong cash and capital control. Net debt at 30 September 2003, £532m.
• Excellent performance for Soft Drinks with record profits for the quarter of £27m - up 22.7%
against the prior year, helped by exceptional summer weather.
Richard North, chief executive, InterContinental Hotels Group PLC said:
"We continue to strengthen this great company for the future. We are driving
revenue, cutting overheads and selling assets we do not need to own.
"Trading around the world is something of a mixed bag. We are seeing the
beginning of a recovery in the UK but conditions in Europe remain difficult.
Asia Pacific has proved enormously resilient with trading now close to pre SARS
levels. Finally, North America appears to be at the turning point but we are
not yet convinced that a sustainable upturn has begun.
"We have achieved a great deal, albeit much remains to be done. Nonetheless we
are well placed to benefit from the recovery when it comes."
For further information, please contact:
Karen Whitworth, Investor Relations 01753 410 177
Dee Cayhill, Corporate Affairs 01753 410 423
Kathryn Holland, Corporate Affairs 01753 410 425
Teleconference for Analysts
A teleconference with Richard North (CEO) and Richard Solomons (CFO) will
commence at 9.00 am (London time) on 19th November. There will be an opportunity
to ask questions. The conference call will conclude at approximately 9.30 am
(London time).
To join us for this conference call please dial the relevant number below by
9.00 am (London time).
International dial-in Tel: +44 (0) 1452 569 339
UK dial-in Tel: 0845 245 5300
US dial-in Tel: 1866 629 0055
A recording of the conference call will be available for 7 days. To access this
please dial the relevant number below and use the access number 676483
International dial in Tel: +44 (0) 1452 550 000
UK dial in Tel: 0845 245 5205
US dial in Tel: 1866 276 1167
Website
The full release and supplementary data will be available on our website from
7.00 am on 19th November. The web address is http://www.ihgplc.com/
septemberresults
INTERCONTINENTAL HOTELS GROUP
Following shareholder and regulatory approval, on 15 April 2003 Six Continents
PLC separated into two new groups, InterContinental Hotels Group PLC (IHG)
comprising the Hotels and Soft Drinks businesses and Mitchells & Butlers plc
(MAB) comprising the Retail and Standard Commercial Property Developments
businesses (the "Separation").
The financial statements following this Operating Review constitute a second set
of Interim Results required by the UK Listing Rules as a result of IHG's change
to a calendar year end. The financial statements include the results of the
Hotels and Soft Drinks businesses for the 12 months to September 2003 together
with the results of MAB up until Separation.
This Operating Review concentrates on the performance of the Hotels and Soft
Drinks businesses for the quarter to 30 September 2003 and the results for the
nine months to 30 September 2003.
GROUP SUMMARY
Three months to Nine months to
30 Sept 2003 30 Sept % change 30 Sept 30 Sept % change
* £m 2002* £m 2003* £m 2002* £m
Turnover 569 540 5.4% 1,612 1,620 (0.5)%
Operating profit:
Hotels 81 76 6.6% 167 202 (17.3)%
Soft Drinks 27 22 22.7% 66 56 17.9%
Other (5) (4) (25.0)% (16) (7) (128.6)%
___ ___ ___ ___
Total operating profit 103 94 9.6% 217 251 (13.5)%
=== === === ===
* Pro forma numbers before operating exceptionals.
HOTELS
Hotels results Three months to Nine months to
30 Sept 30 Sept % 30 Sept 30 Sept %
2002 £m 2003 £m 2002 £m
2003 £m change change
Turnover:
Americas 138 146 (5.5)% 410 442 (7.2)%
EMEA 222 212 4.7% 607 618 (1.8)%
Asia Pacific 27 27 -% 78 95 (17.9)%
____ ____ ____ ____
Total turnover 387 385 0.5% 1,095 1,155 (5.2)%
==== ==== ==== ====
Operating profit:
Americas 51 48 6.3% 134 141 (5.0)%
EMEA 37 42 (11.9)% 67 97 (30.9)%
Asia Pacific 3 4 (25.0)% 7 18 (61.1)%
Other (10) (18) 44.4% (41) (54) 24.1%
____ ____ ____ ____
Total operating profit 81 76 6.6% 167 202 (17.3)%
==== ==== ==== ====
Americas
Three months to Nine months to
Americas results 30 Sept 30 Sept % change 30 Sept 30 Sept % change
2003 $m 2002 $m 2003 $m 2002 $m
Turnover 221 230 (3.9)% 662 657 0.8%
==== ==== ==== ====
Operating profit:
Owned & Leased 5 7 (28.6)% 18 20 (10.0)%
Managed & Upscale
Franchised
10 10 -% 29 30 (3.3)%
Midscale Franchised 67 60 11.7% 169 160 5.6%
____ ____ ____ ____
Total operating profit 82 77 6.5% 216 210 2.9%
==== ==== ==== ====
Total operating profit in the quarter to 30 September 2003 was 6.5% ahead of
last year. Total operating profit at $216m for the nine months to 30 September
2003 was 2.9% ahead of last year demonstrating, in particular, the strength of
our midscale franchise business and reduced overheads.
Americas - RevPAR movement on Three months to Six months to Nine months to
previous year September June September
2003 2003 2003
InterContinental O&L 4.6% 2.2% 2.8%
Holiday Inn Franchise 0.3% (3.7)% (2.3)%
Holiday Inn Express Franchise 3.5% (0.6)% 1.0%
In the quarter to 30 September 2003 we continued to see an improvement in RevPAR
in the InterContinental owned & leased (O&L) estate when compared with the
previous year and over the nine months to 30 September 2003 RevPAR growth was
2.8%. The InterContinental O&L properties continue to outperform their market
reflecting the benefits of the refurbishment programme and the brand
re-positioning investment. Adjusting for the sale of 16 Staybridge Suites
properties to Hospitality Property Trust (HPT) in July, O&L operating profit was
marginally higher than the prior year.
In the quarter to 30 September 2003, operating profit from the managed and
upscale franchise business was flat on 2002 with the contribution from the
properties sold to HPT in July not being material in the period. For the nine
months to 30 September 2003 operating profit was down $1m at $29m, reflecting
continuing difficult economic conditions in Latin America and the impact of SARS
on the Toronto Crowne Plaza property.
The quarter to 30 September 2003 showed some signs of encouraging growth in
RevPAR (in particular with rate driven improvements) but it is too early to
identify any firm trends. The growth in operating profit in the midscale
franchise business of $7m in the quarter was due to a mix of trading and
overhead savings. Operating profit for the nine months to 30 September 2003 at
$169m was 5.6% better than 2002. Express continues to outperform its market
whilst Holiday Inn is performing in line with, or marginally below, its market.
Europe, the Middle East and Africa (EMEA)
Three months to Nine months to
EMEA results 30 Sept 30 Sept % change 30 Sept 30 Sept % change
2003 £m 2002 £m 2003 £m 2002 £m
Turnover 222 212 4.7% 607 618 (1.8)%
==== ==== ==== ====
Operating profit:
Owned & Leased 29 34 (14.7)% 48 75 (36.0)%
Managed & Upscale
Franchised
8 8 -% 19 22 (13.6)%
____ ____ ____ ____
Total operating profit 37 42 (11.9)% 67 97 (30.9)%
==== ==== ==== ====
Total operating profit in the quarter to 30 September 2003 was only 11.9% down
on the prior year.
Overall, EMEA operating profit for the nine months to September was 30.9% down
on last year.
EMEA - RevPAR movement on previous Three months to Six months to Nine months to
year September June September
2003 2003 2003
InterContinental O&L (4.6)% (11.5)% (8.9)%
Crowne Plaza O&L (4.4)% (3.7)% (3.9)%
Holiday Inn UK London 0.9% (8.5)% (5.1)%
Holiday Inn UK Regions 6.5% 1.3% 3.2%
In the quarter to 30 September 2003 RevPAR growth generally improved compared
with the six months to June, but most of the growth was occupancy driven.
Conditions across the region varied significantly over the quarter to 30
September 2003 with Paris, Frankfurt and Rome continuing to be affected by the
reduction in international visitors. In London and the UK Regional estate there
were signs of improvement in the last quarter. The UK Holiday Inn estate
experienced RevPAR growth over last year's levels for four consecutive months
and continued to significantly outperform its relative market. In London the
Holiday Inn estate also continued to outperform its peer group.
The InterContinental Le Grand Hotel Paris was substantially re-opened by the end
of September but the Paris market continued to be depressed. In September the
May Fair InterContinental Hotel was sold.
RevPAR improvements were primarily occupancy driven and fixed costs and
depreciation continued to impact on profit. Results in the O&L estate for the
quarter to 30 September 2003 were, however, improved by a reduction in
overheads.
Managed and franchised operating profit continued to be resilient, operating
profit for the quarter to 30 September 2003 being the same as last year.
Asia Pacific
Three months to Nine months to
Asia Pacific results 30 Sept 30 Sept % change 30 Sept 2003 30 Sept % change
2003 $m 2002 $m $m 2002 $m
Turnover 44 44 -% 126 141 (10.6)%
==== ==== ==== ====
Operating profit 6 7 (14.3)% 11 27 (59.3)%
==== ==== ==== ====
The results for the quarter to 30 September 2003 were only marginally below the
results for 2002.
Overall, Asia Pacific operating profit was $11m compared with $27m for the nine
months to September 2002.
Key markets in this region were severely impacted by the SARS virus in the
second calendar quarter of 2003 but the region is now recovering, with
significantly improved results in the quarter to 30 September 2003. In the six
months to June RevPAR in the Asia Pacific O&L estate was down 9.6% on the prior
year, whilst in the quarter to 30 September 2003 RevPAR grew by 2.5% over the
previous year; a significant turnaround. In September RevPAR at the
InterContinental Hong Kong was only down 5.9% on 2002 levels compared with 46.0%
down for the six months to June 2003.
Other
Three months to Nine months to
30 Sept 30 Sept % 30 Sept 30 Sept %
2003 $m 2002 $m 2003 $m 2002 $m
change change
Net costs 17 30 43.3% 66 80 17.5%
==== ==== ==== ====
The Other segment includes central overheads, marketing costs and goodwill
amortisation less dividends received from FelCor and other income items.
Dividends received from FelCor were $1m compared with $4m in 2002. The
reduction of $14m for the nine months to September 2003 ($17m after adjusting
for income items) reflects the continued drive to control costs in the business.
Costs in the quarter to 30 September 2003, in particular, were reduced by the
phasing of marketing spend and savings arising from the organisation review.
Throughout the Hotels business bonuses in the nine months to 30 September 2003,
as for 2002, were lower, mainly as a result of reduced profitability.
SOFT DRINKS
Three months to Nine months to
Soft Drinks results 30 Sept 30 Sept % 30 Sept 30 Sept %
2003 £m 2002 £m 2003 £m 2002 £m
change change
Turnover 182 155 17.4% 517 465 11.2%
==== ==== ==== ====
Operating profit 27 22 22.7% 66 56 17.9%
==== ==== ==== ====
The Soft Drinks business continues to produce excellent results helped by the
exceptional summer weather. Operating profit for the 12 weeks to 27 September
was £5m above last year.
For the 40 weeks to 27 September 2003, turnover rose 11.2% to £517m as a
consequence of volume increases and a growth in average realised price due to a
higher mix of premium priced products. Overall sales volumes were 7.4% higher,
with significant contributions from Robinsons and Tango.
Costs were well controlled and operating margins grew, resulting in total
operating profit up 17.9% to £66m for the 40 weeks to 27 September 2003.
ORGANISATION REVIEW
The fundamental reorganisation in Hotels is proceeding to plan. As a result of
the reorganisation at least $100m of annual ongoing overhead savings against the
budgeted cost base for the fiscal year to 30 September 2003 will be delivered by
December 2004. By 30 September 2003 the annualised run rate of savings
achieved was $70m ($61m at August 2003) and over 670 positions had been
eliminated (597 at August 2003).
TREASURY
Pro forma operating cash flow for the businesses that now comprise IHG in the
nine months to September 2003 was an inflow of £453m after gross capital
expenditure of £235m and disposal proceeds of £250m. This reflects strong
working capital management and capital control. Capital expenditure in the
period included the continuing investment in the Holiday Inn UK estate, the
refurbishment of the InterContinental Le Grand Hotel Paris and spend on the
construction of Holiday Inn Paris Disney.
In October, IHG launched and priced an offering of €600m of Euro denominated
bonds under its recently completed €1bn Euro Medium Term Note facility. The
bonds, which have a final maturity date of 20 October 2010, carry a coupon of
4.75% payable annually. The proceeds were received on 20 October 2003, on which
date the $887m 364-day tranche of the syndicated loan facility was cancelled.
IHG has also filed an F-3 Registration Statement in the United States which is a
key step in enabling IHG to raise debt of up to $1bn in the US markets, if
required.
PRO FORMA INFORMATION
IHG has changed its year end to 31 December to be in line with the majority of
other quoted hotel groups and to better reflect annual contract negotiation
timings. The first set of audited published results for IHG will therefore be
for the 15 months ending 31 December 2003. These results will include pro forma
results for the 12 months to 31 December 2003.
The pro forma information set out below comprises the results of those
businesses that form IHG following the separation as if IHG had been in
existence since 1 October 2001. The information is provided as guidance only;
it is not audited and, as pro forma information, it does not give a full picture
of the financial position of the Group. The key assumptions used in the
preparation of the information are as follows:
i The pro forma information has been prepared using accounting policies consistent with those used in the
historic Six Continents PLC interim and year end financial statements.
ii Pro forma interest has been calculated to reflect the post separation capital structure of the Group as
if it had been in place at 1 October 2001, using interest rate differentials applicable under the post
separation borrowing agreements and excluding facility fee amortisation. Dividend payments have been
assumed at the expected ongoing level.
iii Pro forma tax is based on an estimated normal rate of tax for IHG of 25% (2002 27%) applied to pro forma
profit before taxation.
iv Adjustments have been made, where appropriate, to exclude any arrangements with the demerged Mitchells &
Butlers Group.
v Pro forma earnings per share is based on pro forma retained profit divided by 734 million shares, being
the issued share capital of InterContinental Hotels Group PLC on separation.
vi The pro forma profit and loss account and operating cash flow excludes all exceptional items as being
non-recurring.
Pro forma Profit and Loss Account
InterContinental Hotels Group Three months to Nine months to Nine months to
September 2003 September 2003 September 2002
£m £m £m
Turnover 569 1,612 1,620
____ ____ ____
Operating profit:
Hotels:
Americas 51 134 141
EMEA 37 67 97
Asia Pacific 3 7 18
Other (10) (41) (54)
____ ____ ____
Total Hotels 81 167 202
Soft Drinks 27 66 56
Other activities (5) (16) (7)
____ ____ ____
Total operating profit 103 217 251
Net interest charge (10) (32) (36)
____ ____ ____
Profit before taxation 93 185 215
Tax charge (23) (46) (60)
Minority equity interests (11) (24) (22)
____ ____ ____
Retained profit for the period 59 115 133
==== ==== ====
Earnings per share (pence) 8.1 15.7 18.1
==== ==== ====
EBITDA 153 366 391
==== ==== ====
Pro forma operating cash flow
Operating profit 103 217
Depreciation/amortisation 50 149
Working capital/other 47 72
Capital expenditure (77) (235)
Disposal proceeds 232 250
____ ____
Operating cash flow 355 453
==== ====
INTERCONTINENTAL HOTELS GROUP PLC
SECOND INTERIM FINANCIAL STATEMENTS
Note: the financial statements that follow are for the 12 month period to 30
September 2003 and include the results of the former Retail division up until
Separation and all the accounting required by the Separation. The preceding
Operating Review provides detailed information on the ongoing business of
InterContinental Hotels Group PLC.
INTERCONTINENTAL HOTELS GROUP PLC
GROUP PROFIT AND LOSS ACCOUNT
For the 12 months ended 30 September 2003
2003 2002
12 months 12 months
Before Before
major major
exceptional exceptional
items Total items Total
£m £m £m £m
Turnover (note 3*) 2,934 2,934 3,615 3,615
Costs and overheads, less other income (2,516) (2,516) (2,997) (3,074)
_____ _____ _____ _____
Operating profit (note 4*) 418 418 618 541
Non-operating exceptional items (note 5*) 3 (161) - 53
_____ _____ _____ _____
Profit on ordinary activities before interest
421 257 618 594
Net interest (note 6) (39) (39) (60) (60)
Premium on early settlement of debt (note 5) - (136) - -
_____ _____ _____ _____
Profit on ordinary activities before taxation
382 82 558 534
Tax on profit on ordinary activities (note 7) (83) (23) (167) (52)
_____ _____ _____ _____
Profit on ordinary activities after taxation 299 59 391 482
Minority equity interests (28) (28) (25) (25)
_____ _____ _____ _____
Profit available for shareholders 271 31 366 457
Dividends on equity shares (86) (86) (305) (305)
_____ _____ _____ _____
Retained profit/(loss) for the period 185 (55) 61 152
==== ==== ==== ====
Earnings per ordinary share (note 8):
Basic - 4.2p - 62.5p
Diluted - 4.2p - 62.3p
Adjusted 37.0p - 50.1p -
==== ==== ==== ====
Dividend per ordinary share - 11.7p - 41.7p
==== ==== ==== ====
* Analysis of turnover, operating profit and non-operating exceptional items between
continuing and discontinued operations is shown in the relevant notes.
INTERCONTINENTAL HOTELS GROUP PLC
STATEMENT OF TOTAL RECOGNISED GROUP GAINS AND LOSSES
For the 12 months ended 30 September 2003
2003 2002
12 months 12 months
£m £m
Profit available for shareholders 31 457
Reversal of previous revaluation gains due to impairment - (36)
Exchange differences on foreign currency denominated net assets*,
borrowings and currency swaps
7 (36)
_____ _____
Other recognised gains and losses 7 (72)
_____ _____
Total recognised gains for the period 38 385
==== =====
INTERCONTINENTAL HOTELS GROUP PLC
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
For the 12 months ended 30 September 2003
2003 2002
12 months 12 months
£m £m
Profit available for shareholders 31 457
Dividends (86) (305)
_____ _____
(55) 152
Other recognised gains and losses 7 (72)
Issue of Six Continents PLC ordinary shares - 3
Issue of InterContinental Hotels Group PLC ordinary shares 10 -
Net assets of Retail business eliminated on separation (2,777) -
Movement in goodwill
Goodwill in Retail business eliminated 50 -
Exchange differences* 53 98
____ ____
Net movement in shareholders' funds (2,712) 181
Opening shareholders' funds 5,366 5,185
____ ____
Closing shareholders' funds 2,654 5,366
==== ====
* Including exchange differences on goodwill purchased prior to 30 September 1998 and
eliminated against Group reserves.
INTERCONTINENTAL HOTELS GROUP PLC
GROUP CASH FLOW STATEMENT
For the 12 months ended 30 September 2003
2003 2002
12 months 12 months
£m £m
Operating activities (note 9) 736 720
_____ _____
Interest paid (120) (186)
Costs associated with new facilities (20) -
Premium on early settlement of debt (136) -
Dividends paid to minority shareholders (22) (13)
Interest received 97 124
_____ _____
Returns on investments and servicing of finance (201) (75)
_____ _____
UK corporation tax received/(paid) 30 (96)
Overseas corporate tax paid (14) (27)
_____ _____
Taxation 16 (123)
_____ _____
Paid: Tangible fixed assets (377) (648)
Fixed asset investments (27) (14)
Received: Tangible fixed assets 261 134
Fixed asset investments 9 15
_____ _____
Capital expenditure and financial investment (134) (513)
_____ _____
Acquisitions - (24)
Disposals - 9
Separation costs (65) -
_____ _____
Acquisitions and disposals (65) (15)
_____ _____
Equity dividends (269) (299)
_____ _____
Net cash flow (note 9) 83 (305)
Management of liquid resources and financing (21) 295
_____ _____
Movement in cash and overdrafts 62 (10)
===== =====
INTERCONTINENTAL HOTELS GROUP PLC
GROUP BALANCE SHEET
30 September 2003
2003 2002
30 Sept 30 Sept
£m £m
Intangible assets 154 173
Tangible assets 4,029 7,641
Investments 245 249
_____ _____
Fixed assets 4,428 8,063
_____ _____
Stocks 40 91
Debtors 472 623
Investments 108 218
Cash at bank and in hand 91 84
_____ _____
Current assets 711 1,016
Creditors - amounts falling due within one year:
Overdrafts (30) (66)
Other borrowings (3) (782)
Other creditors (1,058) (1,425)
_____ _____
Net current liabilities (380) (1,257)
_____ _____
Total assets less current liabilities 4,048 6,806
Creditors - amounts falling due after one year:
Borrowings (698) (631)
Other creditors (144) (133)
Provisions for liabilities and charges:
Deferred taxation (333) (495)
Other provisions (53) (32)
Minority interests (166) (149)
_____ _____
Net assets (note 13) 2,654 5,366
==== =====
Capital and reserves
Equity share capital 737 734
Share premium account 7 -
Revaluation reserve 279 1,020
Merger reserve 1,164 1,164
Profit and loss account 467 2,448
_____ _____
Equity shareholders' funds 2,654 5,366
===== =====
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
The interim financial statements are for the InterContinental Hotels Group PLC Group for the 12 months
ended 30 September 2003. Following shareholder and regulatory approval, on 15 April 2003 Six
Continents PLC separated into two new groups, InterContinental Hotels Group PLC (IHG) comprising the
Hotels and Soft Drinks businesses and Mitchells & Butlers plc (MAB) comprising the Retail and Standard
Commercial Property Developments (SCPD) businesses.
The transfer of Six Continents PLC to InterContinental Hotels Group PLC (the 'Company') has been
accounted for as a group reconstruction in accordance with the principles of merger accounting. The
consolidated financial statements are therefore presented as if the Company had been the parent
company of the Group throughout the periods presented. The results of MAB have been included in
discontinued operations.
As a result of the change of accounting reference date to 31 December, IHG is required to present a
second interim set of results. The interim financial statements, which are unaudited, comply with
relevant accounting standards under UK GAAP and should be read in conjunction with the Six Continents
PLC Annual Report and Financial Statements 2002.
The interim financial statements do not constitute statutory accounts within the meaning of Section
240 of the Companies Act 1985. The financial information for the year ended 30 September 2002 has
been extracted from the Six Continents PLC published financial statements for that year which contain
an unqualified audit report and which have been filed with the Registrar of Companies.
The accounting policies applied by the Group are consistent with those applied in 2002.
The period ended 30 September 2003 is regarded as a distinct financial period for accounting purposes;
income and costs are recognised in the profit and loss account as they arise; tax is charged on the
basis of the expected effective tax rate for the full 15 month period for IHG and the actual tax
charge of MAB for the period up to 12 April 2003.
2. Exchange rates
The results of overseas operations have been translated into sterling at the weighted average rates of
exchange for the period. In the case of the US dollar, the translation rate is £1=$1.60 (2002 £1=
$1.48). In the case of the euro, the translation rate is £1 = € 1.48 (2002 £1 = € 1.60).
Foreign currency denominated assets and liabilities have been translated into sterling at the rates of
exchange on the last day of the period. In the case of the US dollar, the translation rate is £1=
$1.67 (2002 £1=$1.56). In the case of the euro, the translation rate is £1 = € 1.43 (2002 £1 = €
1.59).
3. Turnover 2003 2002
12 months* 12 months*
$m £m $m £m
Hotels**
Americas 883 552 862 584
EMEA 1,302 813 1,209 819
Asia Pacific 181 113 191 129
____ ____ ____ ____
2,366 1,478 2,262 1,532
____ ____
Soft Drinks 663 602
____ ____
InterContinental Hotels Group PLC*** 2,141 2,134
____ ____
Retail
Pubs & Bars 466 866
Restaurants 323 609
____ ____
789 1,475
SCPD 4 6
____ ____
Mitchells & Butlers plc*** 793 1,481
____ ____
2,934 3,615
==== ====
* Other than for the Soft Drinks division which reflects the 52 weeks ended 27 September (2002 28
September) and the Retail division which reflects the 28 weeks ended 12 April (2002 52 weeks ended 28
September).
** The dollar amounts shown are translated at the weighted average rate of exchange (see note 2).
*** InterContinental Hotels Group PLC relates to continuing operations. Mitchells & Butlers plc relates to
discontinued operations.
4. Operating profit 2003 2002
12 months* 12 months*
$m £m $m £m
Hotels**
Americas 271 169 264 178
EMEA 139 87 184 125
Asia Pacific 28 17 36 24
Other (97) (60) (97) (65)
____ ____ ____ ____
341 213 387 262
____ ____
Soft Drinks 78 63
Other activities (10) 4
____ ____
InterContinental Hotels Group PLC*** 281 329
____ ____
Retail
Pubs & Bars 91 190
Restaurants 45 98
____ ____
136 288
SCPD 1 1
____ ____
Mitchells & Butlers plc*** 137 289
____ ____
Operating profit before operating
exceptional items
418 618
Hotels operating exceptional item (note 5) - (77)
____ ____
Operating profit 418 541
==== ====
* Other than for the Soft Drinks division which reflects the 52 weeks ended 27 September (2002 28
September) and the Retail division which reflects the 28 weeks ended 12 April (2002 52 weeks ended 28
September).
** The dollar amounts shown are translated at the weighted average rate of exchange (see note 2).
*** InterContinental Hotels Group PLC relates to continuing operations. Mitchells & Butlers plc relates to
discontinued operations.
5. Exceptional items 2003 2002
12 months 12 months
£m £m
Operating exceptional item:
Continuing operations - Hotels impairment charge* (note a) - (77)
Non-operating exceptional items:
Continuing operations:
Cost of fundamental reorganisation* (note b) (67) -
Separation costs* (note c) (56) (4)
Profit on disposal of fixed assets 5 2
____ ____
(118) (2)
Discontinued operations:***
Separation costs* (note c) (41) -
Loss on disposal of fixed assets (2) (2)
Profit on disposal of Bass Brewers* (note d) - 57
____ ____
(43) 55
____ ____
Total non-operating exceptional items (161) 53
____ ____
Total exceptional items before interest and taxation (161) (24)
Premium on early settlement of debt* (note e) (136) -
Tax credit/(charge) on above items** 60 (9)
Exceptional tax credit* (note f) - 114
____ ____
Total exceptional items after interest and taxation (237) 81
==== ====
a. Tangible fixed assets were written down in 2002 by £113m following an impairment review of the
hotel estate. £77m was charged above as an operating exceptional item and £36m reversed
previous revaluation gains.
b. Relates to a fundamental reorganisation of the Hotels business. The cost includes redundancy
entitlements, property exit costs and other implementation costs.
c. On 15 April 2003 the separation of the Six Continents Group was completed. Costs of the
separation and bid defence total £101m. £4m of costs were incurred in the year to 30 September
2002, the remainder in the 12 months to 30 September 2003.
d. Bass Brewers was disposed of in 2000. The profit in 2002 comprised £9m received in respect of
the finalisation of completion account adjustments, together with the release of disposal
provisions no longer required of £48m.
e. Relates to the premiums paid on the repayment of the Group's £250m 10 3/8 per cent debenture and
EMTN loans.
f. Represents the release of over provisions for tax in respect of prior years.
* Major exceptional items for the purpose of calculating adjusted earnings per ordinary share (see note
8).
** Major exceptional items, except for tax charges of £10m in September 2002, for the purpose of
calculating adjusted earnings per ordinary share (see note 8).
*** Discontinued operations relate to Mitchells & Butlers plc and Bass Brewers, the latter having been sold
in August 2000.
6. Net interest 2003 2002
12 months 12 months
£m £m
Interest receivable 90 116
Interest payable and similar charges (129) (176)
____ ____
(39) (60)
==== ====
7. Tax on profit on ordinary activities
2003 2003 2002
12 months 12 months 12 months
Before major
exceptional
items Total Total
£m £m £m
Current tax:
UK corporation tax (1) (29) (23)
Foreign tax 30 27 64
____ ____ ____
29 (2) 41
Deferred tax 54 25 11
____ ____ ____
83 23 52
==== ==== ====
Tax has been calculated using an estimated effective rate of 17% in respect of IHG together with the
actual tax charge of Mitchells & Butlers plc for the period up to 12 April 2003 resulting in a combined
effective rate of 22% (2002 30%) on profit on ordinary activities before taxation and major exceptional
items. Tax relating to non-operating exceptional items (see note 5) is a credit of £60m, all of which
relates to major items.
In respect of 2002, tax relating to the non-operating exceptional items (see note 5) was a charge of £9m
for the period to 30 September, of which £1m credit related to major items. The major operating
exceptional item (see note 5) attracted no tax charge. The exceptional tax credit of £114m (see note 5)
was included in UK corporation tax.
The expected effective rate for the 15 months to 31 December 2003 for IHG has been reduced by
releases of provisions relating to tax matters which have been settled or in respect of which the
relevant statute of limitations has expired. The effective tax rate in the foreseeable future is
also likely to be impacted by further negotiations with the relevant tax authorities which cannot be
accurately predicted. If any of these issues are settled prior to 31 December 2003 this will
further reduce the effective rate for IHG for 2003.
8. Earnings per share
Basic earnings per ordinary share is calculated by dividing the earnings available for shareholders
of £31m (2002 £457m), by 732m (2002 731m), being the weighted average number of ordinary shares,
excluding investment in own shares, in issue during the period.
Diluted earnings per ordinary share is calculated by adjusting basic earnings per ordinary share to
reflect the notional exercise of the weighted average number of dilutive ordinary share options
outstanding during the period. The resulting weighted average number of ordinary shares is 737m
(2002 734m).
Adjusted earnings per ordinary share is calculated as follows:
2003 2002
12 months 12 months
pence per pence per
ordinary share ordinary share
Basic earnings 4.2 62.5
Major exceptional items and tax thereon (notes 5, 7) 32.8 (12.4)
____ ____
Adjusted earnings 37.0 50.1
==== ====
Adjusted earnings per ordinary share is disclosed in order to show performance undistorted by
abnormal items.
9. Net cash flow 2003 2002
12 months 12 months
£m £m
Operating profit before major exceptional items 418 618
Depreciation and amortisation 253 271
Other non-cash items 2 (4)
____ ____
Earnings before interest, taxation, depreciation and amortisation
and major exceptional items 673 885
Decrease/(increase) in stocks 3 (1)
Increase in debtors (3) (92)
Increase/(decrease) in creditors 98 (37)
Provisions expended (8) (18)
____ ____
Operating activities before expenditure relating to major
exceptional items 763 737
Cost of fundamental reorganisation (27) -
Major operating exceptional expenditure - (17)
____ ____
Operating activities 736 720
Net capital expenditure (note 10) (134) (513)
____ ____
Operating cash flow (note 11) 602 207
Net interest paid (23) (62)
Dividends paid (291) (312)
Tax received/(paid) 16 (123)
____ ____
Normal cash flow 304 (290)
Acquisitions - (24)
Disposals - 9
Premium on early settlement of debt (136) -
Separation costs (65) -
Costs associated with new facilities (20) -
____ ____
Net cash flow 83 (305)
==== ====
10. Net capital expenditure 2003 2002
12 months 12 months
£m £m
Hotels 30 259
Soft Drinks 52 31
Other activities (9) (3)
_____ ____
InterContinental Hotels Group PLC* 73 287
_____ ____
Retail 61 227
SCPD - (1)
____ ____
Mitchells & Butlers plc* 61 226
____ ____
134 513
==== ====
* InterContinental Hotels Group PLC relates to continuing operations. Mitchells & Butlers plc relates to
discontinued operations.
11. Operating cash flow 2003 2002
12 months 12 months
£m £m
Hotels 349 60
Soft Drinks 76 77
Other activities 25 (75)
____ ____
InterContinental Hotels Group PLC* 450 62
____ ____
Retail 148 144
SCPD 4 1
____ ____
Mitchells and Butlers plc* 152 145
____ ____
602 207
==== ====
* InterContinental Hotels Group PLC relates to continuing operations. Mitchells & Butlers plc relates to
discontinued operations.
12. Net debt 2003 2002
12 months 12 months
£m £m
Opening net debt (1,177) (1,001)
Net cash flow (note 9) 83 (305)
Ordinary shares issued 10 3
Debt assumed by Retail business 570 -
Exchange and other adjustments (18) 126
____ _____
Closing net debt (532) (1,177)
==== =====
Comprising:
Cash at bank and in hand 91 84
Overdrafts (30) (66)
Current asset investments 108 218
Other borrowings:
Due within one year (3) (782)
Due after one year (698) (631)
____ ____
(532) (1,177)
==== ====
13. Net assets 2003 2002
30 Sept 30 Sept
£m £m
Hotels 3,895 3,990
Soft Drinks 266 246
Other activities 13 125
____ _____
InterContinental Hotels Group PLC* 4,174 4,361
____ _____
Retail - 3,467
SCPD - 26
____ _____
Mitchells & Butlers plc* - 3,493
____ _____
4,174 7,854
Net debt (532) (1,177)
Other net non-operating liabilities (988) (1,311)
____ _____
2,654 5,366
==== =====
* InterContinental Hotels Group PLC relates to continuing operations. Mitchells & Butlers plc relates to
discontinued operations.
14. Contingent liabilities
At 30 September 2003, the Group had contingent liabilities of £12m (2002 £16m), mainly comprising
guarantees given in the ordinary course of business. IHG has entered into management contract
arrangements in the ordinary course of business that include performance guarantees. Management does
not anticipate any material funding under these arrangements in 2004.
15. Auditors' review
The auditors, Ernst & Young LLP, have reported to the directors on their review of these financial
statements in accordance with the guidance issued by the Auditing Practices Board. Their unqualified
report will be included in the Interim Financial Statements 2003 which will be sent to shareholders.
____________________
This announcement of the interim results for the 12 months ended 30 September 2003 contains certain
forward-looking statements as defined under US legislation (Section 21E of the Securities Exchange Act
of 1934). Such statements include, but are not limited to, statements made in this document. These
forward-looking statements can be identified by the fact that they do not relate only 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, including, but not
limited to: events that impact domestic or international travel; levels of consumer and business
spending in major economies where InterContinental Hotels Group does business; changes in consumer
tastes and preferences; levels of marketing and promotional expenditure by InterContinental Hotels
Group and its competitors; significant fluctuations in exchange, interest and tax rates; the effects of
future business combinations, acquisitions or dispositions; legal and regulatory developments,
including European Union employment legislation and regulation in the leisure retailing industry in
countries in which InterContinental Hotels Group operates; the impact of the European Economic and
Monetary Union; the ability of InterContinental Hotels Group to maintain appropriate levels of
insurance; and changes in the cost and availability of raw materials, key personnel and changes in
supplier dynamics.
Other factors that could affect the business and the financial results are described in Item 3 Key
Information - Risk Factors in the Six Continents Form 20-F for the financial year ended 30 September
2002 filed with the United States Securities and Exchange Commission.
-- ends --
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 12 hours ago Savannah Energy
- 13 hours ago Buccaneer Energy PLC
- 13 hours ago Savannah Energy
- 13 hours ago Carclo
- 13 hours ago Schroder Japan Growth Fund