TIDMIHG
RNS Number : 0973L
InterContinental Hotels Group PLC
17 April 2018
IHG provides prior years' financial statements updated to
reflect previously announced reporting changes.
InterContinental Hotels Group PLC (IHG) [LON:IHG, NYSE:IHG
(ADRs)] today issues financial statements for 2017 & 2016,
updated to reflect a number of reporting changes announced at its
2017 preliminary results on 20 February 2018. These changes are
effective from 1 January 2018 and comprise:
-- The adoption of IFRS 15: Revenue from Contracts with Customers.
-- Other presentational changes including:
- New Regional Structure: IHG's Europe and Asia, Middle East and
Africa regions have been combined to form a new Europe, Middle
East, Asia & Africa (EMEAA) operating segment. The Americas and
Greater China operating segments remain unchanged.
- Reporting of Fee Business results: managed and franchised
ownership types, together with regional costs, have been combined
into one "fee business" line for each region. This better reflects
the way the fee business is now operated following the wider
reorganisation of the business.
- Reporting of Managed Lease hotels: will be included in the
"Owned and Leased" hotel segment. As the full results of these
hotels are consolidated into IHG's income statement, this gives a
clearer view of the reported fee business revenues and profits.
The table below summarises the net effect of these changes for
the full year 2017, and shows that the impact on IHG's underlying
results is immaterial.
Metric Underlying(1) FY 2017 Reported FY 2017 Results
Results
Reported Restated Var. Reported Restated Var.
-------- -------- ------- --------- -------- -------
Revenue $1,633m $1,741m 7% $1,784m $4,075m 128%
-------- -------- ------- --------- -------- -------
Operating Profit $759m $762m 0% $759m $724m (5%)
-------- -------- ------- --------- -------- -------
Adjusted EPS(2) 245.1c 246.6c 1% 244.6c 244.6c -
-------- -------- ------- --------- -------- -------
Fee Margin(3) 50.2% 52.1% 1.9%pts 50.4% 52.3% 1.9%pts
-------- -------- ------- --------- -------- -------
Net Debt to
EBITDA(4) 2.1x 2.2x 0.1x 2.1x 2.2x 0.1x
-------- -------- ------- --------- -------- -------
Free Cash Flow - - - $516m $516m -
-------- -------- ------- --------- -------- -------
(1) "Underlying" excludes owned asset disposals, significant
liquidated damages, System Fund results and hotel cost
reimbursements at constant FY 2016 exchange rates (CER). Now
includes results from managed lease hotels.
(2) Reported adjusted EPS excludes System Fund results (and
related interest and tax) and exceptional items. "Underlying"
adjusted EPS also excludes owned asset disposals and significant
liquidated damages, is based on effective tax rate, and is stated
at CER.
(3) Reported fee margin excludes owned & leased hotels (now
incorporating managed leased hotels), significant liquidated
damages, System Fund results and hotel cost reimbursements.
"Underlying" fee margin is stated at CER.
(4) Reported Net Debt to EBITDA includes the add back of $36m of
System Fund depreciation and amortisation reported within System
Fund Expenses on the Group income statement. Underlying Net Debt to
EBITDA excludes System Fund results (System Fund depreciation and
amortisation is not added back). Both amounts stated at FY 2017
actual exchange rates (AER).
IFRS 15 - Revenue from Contracts with Customers (Appendices
1-5)
The adoption of IFRS 15 impacts the presentation and recognition
of revenues, costs and liabilities. Group free cash flows remain
unchanged. A summary of the changes is provided below.
1. Core IFRS 15 Adjustments
a. Managed and franchised hotel cost reimbursements
Previously not recognised on IHG's income statement, these are
now shown on a gross basis, with revenue and a matching cost.
Operating profit and cash flows are unaffected. Excluded from
"underlying" results.
b. Initial application and re-licensing fees and contract acquisition costs
Application and re-licensing fees were previously recognised as
revenue when billed. These are now spread over the life of the
contract, resulting in an initial reduction to revenue and
operating profit, and the recognition of deferred revenue on the
Group statement of financial position. Cash flows are
unaffected.
Contract acquisition costs typically relate to bonuses paid to
developers upon signing deals, and were previously charged to the
Group income statement as incurred. These are now capitalised and
amortised over the life of the contract, resulting in an initial
increase to operating profit and the capitalisation of contract
costs on the Group statement of financial position. Cash flows are
unaffected.
c. Amortisation of amounts paid to hotel owners to secure
management contracts and franchise agreements ("key money")
Key money payments were previously capitalised as intangible
assets and amortised over the contract life. These are now
reclassified as contract assets and the amortisation charges taken
as a deduction to revenue. This results in a reduction to revenue,
with a matching reduction in amortisation. Operating profit and
cash flows are unaffected.
d. Owned hotel disposals subject to a management contract
Previously when hotels were sold and IHG retained a management
contract, the fair value of the management contract was recognised
as an intangible asset, which was then amortised over the contract
life. These historic intangible assets are now derecognised and the
associated amortisation charge eliminated, resulting in higher
operating profit. Cash flows are unaffected.
e. Other adjustments
Immaterial impact to operating profit. Cash flows are
unaffected.
2. IFRS 15 System Fund Adjustments
IHG operates a System Fund (the Fund) to collect and administer
cash assessments from hotel owners for the specific purpose of use
in marketing, the guest reservation systems and the IHG Rewards
Club loyalty programme. The Fund also receives proceeds from the
sale of IHG Rewards Club points under third-party co-branding
arrangements. The Fund is not managed to make a profit or loss for
IHG, but is run for the benefit of the System with the objective of
driving incremental revenues to our hotels.
Treatment of the Fund:
-- Revenue and Costs and Associated Surplus or Deficit
Previously Fund income and expenses were not recorded in the
Group income statement, with any in-year surplus or deficit carried
in the Group statement of financial position within working
capital.
Under IFRS 15, Fund revenues and costs are now recognised on a
gross basis in the Group income statement with the in-year surplus
or deficit impacting reported profits (consistent with expected
practice across the industry). However, the Group has an agreement
with the IHG Owners Association to spend Fund income for the
benefit of hotels in the IHG System, such that the Group does not
make a profit or loss from operating the Fund over the medium term.
As such, all System Fund revenues and costs, and associated surplus
or deficit, will be excluded from the calculation of IHG's
underlying profit and adjusted EPS.
Under IFRS 15, the Fund surplus of $158m as at 31 December 2017,
which was previously held on the Group statement of financial
position, has been derecognised. This built up predominantly due to
the introduction of the expiry policy for IHG Rewards Club points
in 2015, and the renegotiation of long term partnership agreements
in 2016. IHG's previously disclosed plan to spend down this amount
for the benefit of owners, remains unchanged; this commenced in
2017, resulting in a fund expenditure in excess of fund receipts of
$34m that year. IHG will spend down the remaining surplus balance
in 2018, by means of fund expenditure in excess of fund receipts,
relating to marketing, loyalty and technology initiatives and costs
associated with IHG's efficiency programme. Underlying operating
profit and adjusted EPS will remain unaffected.
Free cash flows remain unaffected as a result of these
adjustments.
-- Fund Revenue Recognition
Previously, gross Fund income (2017: $1.9bn) was recognised on
an accruals basis but was not recorded in the Group income
statement. Under IFRS 15, these revenues are now included in the
Group income statement, with some recognised net of costs and
others deferred, resulting in a lower total revenue amount being
recorded (2017: $1.2bn).
- Revenues recorded on a net basis
Revenues related to IHG Rewards Club and certain travel agency
commissions are recognised net of associated cost of sales. In
aggregate this results in a $0.6bn reduction in revenue in 2017,
but no change in Fund capacity or cash flows.
- Revenues now deferred
Income relating to IHG Rewards Club points earned by members or
sold under co-branding arrangements was previously recognised in
full on an accruals basis when rewards points are earned / sold.
Under IFRS 15, revenue recognition is now deferred until the
associated points are redeemed resulting in a deferred revenue
balance being recorded on the Group statement of financial
position, instead of a loyalty programme liability (2017: $1.1bn vs
$0.8bn respectively). This timing difference results in a $0.1bn
reduction in Fund revenue for 2017. Cash flows are unaffected.
-- Fund Interest Income
IHG records an interest charge on the outstanding cash balance
relating to the IHG Rewards Club programme. In 2017 these interest
payments totalled $7m, and were recognised as interest income for
the Fund and interest expense for IHG. The System Fund also
benefits from the capitalisation of interest related to the
development of GRS, which totalled $6m in 2017. As the Fund is now
included on the Group income statement, these amounts are included
in the reported net Group finance expense for 2017, reducing it by
$13m to $72m. Given all results related to the System Fund are
excluded from adjusted EPS, for the purposes of calculating this
figure, these interest amounts are added back (2017 net Group
finance expense for adjusted EPS is $85m).
Free cash flow is unaffected as a result of these adjustments.
The $7m reduction in interest paid, arising from the elimination of
interest paid from IHG to the System Fund, is offset by an
adjustment to cash flow from operations, whilst the capitalisation
of interest is non-cash.
3. Tax Charges
The restated results for full year 2017 include a reduction of
$28m to the previously reported exceptional tax credit relating to
the re-measurement, following significant US tax reform enacted on
22 December 2017, of the deferred taxes created or eliminated by
IFRS 15. Excluding these amounts, the IFRS 15 adjustments result in
an additional net tax charge of $2m in the 2017 Group income
statement.
Other presentational changes to financial statements (Appendices
6 & 7)
In addition to the adoption of IFRS 15, the restated accounts
reflect several changes to the presentation of the group's
financial results.
-- New Regional Structure (Appendix 6)
Our Europe and Asia, Middle East & Africa (AMEA) regions
have been brought together to form a new region, Europe, Middle
East, Asia & Africa (EMEAA). This new region allows us to
leverage our scale across 72 countries to share best practice and
upweight investment in those markets with highest growth
potential.
-- Reporting of Fee Business Results (Appendix 7)
Revenue and operating profit from management and franchise
agreements and regional overheads combined into one category, "fee
business", to more closely reflect the way that the fee business is
now operated following the wider reorganisation of the
business.
-- Reporting of Managed Lease Hotels (Appendix 7)
These properties (whose revenues and profits are consolidated
into the Group income statement) are now reported with owned and
leased hotels and are no longer excluded from IHG's "underlying
results" increasing both underlying revenue and operating profit
(2017: $162m and $4m at CER; $163m and $4m at AER).
-- Overhead allocations (Appendix 6)
Minor changes have been made to the basis for allocating
overheads to the regional and central operating segments.
-- InterContinental Reservation Fees and Costs (Appendix 6)
Reservation fees and costs associated with the InterContinental
brand have previously been recognised in IHG's income statement.
These fees and costs have now been moved to the Fund to align with
the treatment of IHG's other brands. As this programme is not
managed to make a profit or loss for IHG, there is no operating
profit impact.
Overview of impact
The impact of each of the changes on the FY 2017 results is
summarised in the table below. A full reconciliation of the
adjustments to the Group income statement and Group statement of
financial position for the year ended 31 December 2017, 6 months
ended 30 June 2017 and year ended 31 December 2016 are included in
Appendices 3-5.
Adjustment Revenue Operating Net Assets
Profit / (Liabilities)
($m) ($m) ($m)
Managed and franchised hotel
cost reimbursements 1,103 - -
------- --------- ----------------
Initial application fees & contract
acquisition costs (14) (9) (74)
------- --------- ----------------
Key money amortisation (17) - -
------- --------- ----------------
Owned hotel disposals subject
to a management contract - 8 (192)
------- --------- ----------------
Other adjustments 2 - 1
------- --------- ----------------
Total Core IFRS 15 adjustments 1,074 (1) (265)
------- --------- ----------------
System Fund adjustments 1,217 (34) (185)
------- --------- ----------------
Total IFRS 15 adjustment 2,291 (35) (450)
------- --------- ----------------
Total IFRS 15 adjustment to
underlying(1) (29) (1) (265)
------- --------- ----------------
InterContinental Reservation
fees and costs (25) - -
------- --------- ----------------
Managed lease hotel revenue
and costs(2) 162 4 -
------- --------- ----------------
Total adjustment to underlying(1) 108 3 (265)
------- --------- ----------------
(1) Excludes System Fund results and hotel cost reimbursements
at constant FY 2016 exchange rates (CER).
(2) Stated at constant FY 2016 exchange rates (CER)
The appendices to this announcement set out the detail of these
changes and provide restated results for the year ended 31 December
2017, and 2016 and the six months ended 30 June 2017.
Appendix Restated Group income statements (for the periods
1: ended 31 December 2017, 30 June 2017 and 31 December
2016)
Appendix Restated Group statements of financial position (as
2: at 31 December 2017, 30 June 2017 and 31 December
2016)
Appendix Reconciling adjustments for the year ended 31 December
3: 2017
Appendix Reconciling adjustments for 6 months ended 30 June
4: 2017
Appendix Reconciling adjustments for the year ended 31 December
5: 2016
Appendix Restated regional results (for the periods ended
6: 31 December 2017, 30 June 2017 and 31 December 2016)
Appendix Revised presentation of fee business results by region
7: (for the periods ended 31 December 2017, 30 June
2017 and 31 December 2016)
Excel versions of these Appendices are available on the IHG plc
website at
https://www.ihgplc.com/en/investors/results-and-presentations.
RevPAR, system size and pipeline metrics reflecting the new
regional and fee business structures can also be found in the
supplementary information document at this address.
Presentation for Analysts and Shareholders
At 9:30am on 17 April 2018, Paul Edgecliffe-Johnson, Chief
Financial Officer, will host an event to provide more information
on each of these changes. This will be held at Goldman Sachs,
Rivercourt, 133 Fleet Street, London, EC4A 2BE. The presentation
will be webcast live, and is available via the web address
below:
http://www.investis-live.com/ihg/5a992c4fff54e71700b2fd10/hfdh
The webcast replay will be available on this website later in
the day and will remain there for the foreseeable future.
There will also be a live listen only dial-in facility:
UK: 0800 640 6441
UK (Local): +44 (0) 203 936 2999
US: +1 845 709 8568
All other locations: +44 203 936 2999
Participant Access
Code: 359082
A replay will be available following the event, details are
below:
UK: +44(0) 203 936 3001
US: +1 845 709 8569
All other locations: +44 203 936 3001
Replay pin: 983589
Financial Statements under IFRS 15 - Revenue from Contracts with
Customers
IFRS 15 establishes a five-step model to account for revenue
arising from contracts with customers. Under IFRS 15, revenue is
recognised at an amount that reflects the consideration to which an
entity expects to be entitled in exchange for transferring goods or
services to a customer.
The Group's revenue is primarily comprised of fee-based revenue
from franchise and management contracts, and hotel revenue in owned
and leased properties.
Franchise and base management fees are charged as a percentage
of underlying revenues in the hotels and are treated as 'variable
consideration' under IFRS 15. These fees are recognised as the
underlying hotel revenues occur, provided there is no expectation
of a subsequent reversal of the revenue.
Incentive management fees are generally charged based on the
hotel's profitability or cash flows, and are recognised over time
when it is considered highly probable that the related performance
criteria will be met, provided there is no expectation of a
subsequent reversal of the revenue.
Hotel revenue in owned and leased properties includes rooms
revenue and food and beverage sales, which is recognised when the
rooms are occupied and food and beverages are sold.
There is no significant change to the accounting policy for
recognising the above fee-based or hotel revenues on adoption of
IFRS 15.
The key changes resulting from the adoption of IFRS 15 are
described below and should be read in conjunction with the
Appendices which quantify the impacts on prior period results.
1. Core IHG adjustments
Adjustment (a) - Managed and franchised hotel cost
reimbursements
Under IFRS 15, the provision of employees to managed hotels is
not considered to be a service that is distinct from the general
hotel management service. Reimbursements for the cost of the IHG
employees working in managed hotels will therefore be shown as
revenue with an equal matching cost, and no profit impact. Certain
other costs relating to both managed and franchised hotels are also
contractually reimbursable to IHG and where IHG is deemed to be
acting as principal in the provision of the related services, the
revenue and cost will be shown on a gross basis under IFRS 15.
Under previous accounting policies, no revenue or matching cost
were recognised.
Adjustment (b) - Initial application and re-licensing fees and
contract acquisition costs
Under previous accounting, application and re-licensing fees
were recognised as revenue when billed as the monies received are
not refundable and IHG has no further obligations to satisfy. Under
IFRS 15, there is a requirement to consider whether the payment of
these fees transfers a distinct good or service to the customer
that is separate from the promise to provide franchise services. As
this is not the case, IFRS 15 requires initial application and
re-licensing fees to be recognised as services are provided, over
the life of the related contract. The spreading of these fees
results in an initial reduction to revenue and operating profit,
and the recognition of deferred revenue on the balance sheet,
reflecting the profile of increased amounts received in recent
years.
Contract acquisition costs related to securing management and
franchise contracts were previously charged to the income statement
as incurred. Under IFRS 15, certain costs qualify to be capitalised
as the cost of obtaining a contract and are amortised over the
initial term of the related contract. This change results in an
initial increase to operating profit and the capitalisation of
contract costs on the balance sheet.
Adjustment (c) - Amortisation of amounts paid to hotel owners to
secure management contracts and franchise agreements ('key
money')
Under previous accounting, key money payments were capitalised
as intangible assets and amortised over the life of the related
contracts. Under IFRS 15, these payments are treated as
'consideration payable to a customer' and therefore recorded as a
contract asset and recognised as a deduction to revenue over the
contract term. This change results in a reduction to revenue, no
change to operating profit, and the reclassification of key money
on the balance sheet from intangible assets to contract assets.
Adjustment (d) - Owned hotel disposals subject to a management
contract
Under previous accounting, when hotels were sold and the Group
retained management of the hotel, the consideration recognised
included both the cash received and the fair value of the
management contract which was capitalised as an intangible asset
and subsequently amortised to the income statement. This accounting
was governed by the 'exchange of assets' criteria included in IAS
16 'Property, Plant and Equipment' and IAS 38 'Intangible Assets'.
IFRS 15 specifically includes property sales in its scope and
results in the sales consideration being recorded at the fair value
of the encumbered hotel, which generally will be equivalent to the
cash received. This change results in the derecognition of historic
intangible asset balances and a lower amortisation charge in the
income statement.
Adjustment (e) - Other adjustments
Other adjustments include re-assessments of IHG's role as
principal in other revenue transactions, and the treatment of
payments under performance guarantees as a reduction to the
transaction price within management contracts.
2. System Fund adjustments
The Group operates a System Fund (the Fund) to collect and
administer cash assessments from hotel owners for the specific
purpose of use in marketing, the guest reservation systems and
hotel loyalty programme. The Fund also receives proceeds from the
sale of loyalty points under third-party co-branding arrangements.
The Fund is not managed to a profit or loss for IHG, but is managed
for the benefit of hotels in the System with the objective of
driving revenues for the hotels. Consequently, under previous
accounting these revenues and expenses were not recorded in the
Group income statement.
Under IFRS 15, an entity is regarded as a principal if it
controls a service prior to transfer to the customer. As marketing
and reservations expenses primarily comprise payroll and marketing
expenses under contracts entered into by the Group, management have
determined that the Group controls these services. Fund revenues
and expenses will therefore be recognised on a gross basis in the
Group income statement. Assessment fees from hotel owners are
generally levied as a percentage of hotel revenues and will be
recognised as those hotel revenues occur.
In respect of the loyalty programme, the Group has determined
that the related performance obligation is not satisfied in full
until the member has redeemed the points at a participating hotel.
Accordingly, revenue related to loyalty points earned by members or
sold under co-branding arrangements will be deferred in an amount
that reflects the stand-alone selling price of the future benefit
to the member. As materially all of the points will be redeemed at
IHG managed or franchised hotels owned by third parties, IHG is
deemed to be acting as agent on redemption and will therefore
recognise the related revenue net of the cost of reimbursing the
hotel that is providing the hotel stay.
The deferred revenue balance under IFRS 15 is significantly
higher than the points redemption cost liability that was
recognised under previous accounting resulting in an increase in
the Group's net liabilities.
Management has also determined that in addition to the
performance obligation for the redemption of points, co-branding
arrangements contain other performance obligations including
marketing services and the right to access the loyalty programme.
Revenue attributable to the stand-alone selling price of these
additional services is recognised over the term of the co-branding
arrangement.
Certain travel agency commission revenues within the Fund will
be recognised on a net basis, where it has been determined that IHG
acts as agent under IFRS 15.
Under previous accounting, any Fund short-term timing surplus or
deficit was carried in the Group statement of financial position
within working capital. Under IFRS 15, the in-year Fund surplus or
deficit will be recognised in the Group income statement. Both the
current accounting treatment and the change on applying IFRS 15,
and the equivalent US GAAP standard, are consistent with current
and expected future practice across the hotel industry. The Fund
surplus of $158m at 31 December 2017 has been derecognised
resulting in a reduction in the Group's net liabilities.
The System Fund accounting changes will result in an increase in
recorded revenue and a change to reported profits. However, since
the Group's agreement with the IHG Owners Association is that the
Fund is not managed to a profit or loss for IHG, any in-year profit
or loss resulting from Fund activity will be excluded from the
calculation of underlying operating profit and adjusted earnings
per share as there is an agreement to spend these funds for the
benefit of hotels in the System.
Segmental reporting changes (Appendix 6)
With effect from 1 January 2018, an internal reorganisation
resulted in the formation of a new operating segment, Europe,
Middle East, Asia & Africa (EMEAA), bringing together the
former segments of Europe and Asia, Middle East & Africa
(AMEA). Kenneth Macpherson, previously CEO of Greater China, has
been appointed CEO of the new EMEAA region. By bringing together
two strong, established regions, there will be an increased focus
on growth through increased agility and effectiveness.
Following this reorganisation, the management of the Group's
operations, excluding Central functions, is organised within three
geographical regions:
-- Americas;
-- Europe, Middle East Asia & Africa (EMEAA); and
-- Greater China.
These, together with Central functions, comprise the Group's
four reportable segments. Each of the geographical regions is led
by its own Chief Executive Officer. For internal reporting
purposes, the System Fund is not viewed as being part of the
Group's core operations as IHG is unable to profit from its
activities. As such, its results are not regularly reviewed by the
chief operating decision maker and it does not constitute an
operating segment under IFRS 8.
No operating segments have been aggregated to form these
reportable segments.
Central functions include costs of global functions including
technology, sales and marketing, finance, human resources and
corporate services; central revenue arises principally from
technology fee income.
Management monitors the operating results of the geographical
regions and Central functions separately for the purpose of making
decisions about resource allocation and performance assessment.
Segmental performance is evaluated based on operating profit or
loss and is measured consistently with operating profit or loss in
the Consolidated Financial Statements, excluding exceptional items.
Group financing activities and income taxes are managed on a group
basis and are not allocated to reportable segments.
Comparatives have been restated to show segmental information on
a consistent basis.
Group statement of cash flows under IFRS 15
The adoption of IFRS 15 has not changed the net cash from
operating activities or net cash from investing activities reported
in previous periods. The following reclassifications will be made
between line items as a result of the presentational changes made
on IFRS 15 implementation.
-- Adjustment (c) results in the reclassification of key money
from an intangible asset to a contract asset on the Group statement
of financial position. Key money payments of $57m in 2017 (6 months
to 30 June 2017 $24m, year to 31 December 2016 $45m) will continue
to be presented as cash outflows investing activities, but will be
reclassified from 'purchase of intangible assets' to 'payments for
obtaining long term contracts'.
-- The presentation of the System Fund on the Group income
statement results in the elimination of interest paid from IHG to
the System Fund, both in the Group income statement and the Group
statement of cash flows. This results in a decrease to interest
paid of $7m (6 months to 30 June 2017 $3m, year to 31 December 2016
$3m) with an offsetting adjustment within 'adjustments reconciling
profit for the year to cash flow from operations'.
Group statement of changes in equity under IFRS 15
The changes to the statement of changes in equity arising from
adoption of IFRS 15 are as follows:
-- Opening Total equity at 1 January 2016 decreases from $319m to ($118m);
-- Profit for the year ended 31 December 2016 increases from $417m to $459m;
-- Exchange gains on retranslation of foreign operations, net of
tax for the year ended 31 December 2016 increases from $182m to
$190m;
-- Profit for the 6 months ended 30 June 2017 increases from $219m to $248m;
-- Exchange losses on retranslation of foreign operations, net
of tax for the 6 months ended 30 June 2017 increases from $35m to
$42m;
-- Profit for the year ended 31 December 2017 decreases from $593m to $541m;
-- Exchange losses on retranslation of foreign operations, net
of tax for the year ended 31 December 2017 increases from $77m to
$88m.
Earnings per ordinary share under IFRS 15
Basic earnings per ordinary share is calculated by dividing the
profit for the year available for IHG equity holders by the
weighted average number of ordinary shares, excluding investment in
own shares, in issue during the year.
Diluted earnings per ordinary share is calculated by adjusting
basic earnings per ordinary share to reflect the notional exercise
of the weighted average number of dilutive ordinary share awards
outstanding during the year.
Adjusted earnings per ordinary share is disclosed in order to
show performance undistorted by exceptional items, to give a more
meaningful comparison of the Group's underlying performance.
Additionally, following adoption of IFRS 15, earnings attributable
to the System Fund are excluded from the calculation of adjusted
earnings per ordinary share, as IHG has an agreement with the IHG
Owners Association to spend Fund income for the benefit of hotels
in the IHG System such that the Group does not make a profit or
loss from operating the Fund over the medium term.
The restated calculations of earnings per ordinary share are
presented below:
Continuing and total operations 2017 2017 2016
Year 6 months Year
ended
ended 30 June ended
31 December 31 December
Basic earnings per ordinary
share
Profit available for equity
holders ($m) 540 248 456
Basic weighted average number
of ordinary shares (millions) 193 196 212
Basic earnings per ordinary
share (cents) 279.8 126.5 215.1
------------- ----------- -------------
Diluted earnings per ordinary
share
Profit available for equity
holders ($m) 540 248 456
Basic weighted average number
of ordinary shares (millions) 194 198 214
Diluted earnings per ordinary
share (cents) 278.4 125.3 213.1
------------- ----------- -------------
Adjusted earnings per ordinary
share
Profit available for equity
holders ($m) 540 248 456
Adjusting items:
System Fund revenues and
expenses 34 (25) (35)
Interest attributable to
System Fund (13) (6) (7)
Tax attributable to System
Fund 3 3 1
Exceptional items before
tax ($m) (4) 4 29
Tax on exceptional items
($m) 2 (1) (12)
Exceptional tax ($m) (90) - -
------------- ----------- -------------
Adjusted earnings ($m) 472 223 432
Basic weighted average number
of ordinary shares (millions) 193 196 212
Adjusted earnings per ordinary
share (cents) 244.6 113.8 203.8
------------- ----------- -------------
Adjusted diluted earnings
per ordinary share
Diluted weighted average number
of ordinary shares (millions) 194 198 214
Adjusted diluted earnings
per ordinary share (cents) 243.3 112.6 201.9
------------- ----------- -------------
Appendix 1 - Restated Group income statements
As restated As restated As restated
Year ended 6 months Year ended
31 December ended 30 31 December
2017 June 2017 2016
------------- ------------ -------------
$m $m $m
------------- ------------ -------------
Revenue from fee business 1,222 587 1,182
Revenue from owned and leased
hotels 351 174 338
Other revenues 157 77 147
System Fund revenues 1,242 592 1,199
Reimbursement of costs from
managed and franchised properties 1,103 534 1,046
------------- ------------ -------------
Total revenue 4,075 1,964 3,912
Cost of sales (571) (278) (548)
System Fund expenses (1,276) (567) (1,164)
Costs reimbursed by managed
and franchised properties (1,103) (534) (1,046)
Administrative expenses before
exceptional items (337) (161) (345)
Share of profit from associates 3 - (2)
Other operating income and
expenses 11 7 9
Depreciation and amortisation (78) (36) (75)
------------- ------------ -------------
Operating profit before exceptional
items 724 395 741
Impairment (18) - (16)
Other exceptional items 22 (4) (13)
------------- ------------ -------------
Operating profit 728 391 712
Financial income 4 2 6
Financial expenses (76) (36) (86)
Profit before tax 656 357 632
Tax (115) (109) (173)
Profit after tax 541 248 459
------------- ------------ -------------
Profit attributable to equity
holders 540 248 456
Minority interest 1 - 3
541 248 459
------------- ------------ -------------
Earnings per ordinary share
Basic 279.8c 126.5c 215.1c
Diluted 278.4c 125.3c 213.1c
Adjusted to exclude exceptional
items and System Fund surplus
/ (deficit) 244.6c 113.8c 203.8c
Appendix 2 - Restated Group statements of financial position
As restated As restated As restated
31 Dec 30 June 31 Dec
2017 2017 2016
$m $m $m
------------ ------------ ------------
ASSETS
Property, plant and equipment 425 422 419
Goodwill and other intangible
assets 967 902 858
Investment in associates and
joint ventures 141 157 111
Retirement benefit assets 3 4 -
Trade and other receivables - - 8
Other financial assets 228 264 248
Non-current tax receivable 16 23 23
Deferred tax assets 75 73 69
Contract costs 51 47 45
Contract assets 241 217 185
------------ ------------ ------------
Total non-current assets 2,147 2,109 1,966
Inventories 3 3 3
Contract costs 7 7 8
Contract assets 17 14 13
Trade and other receivables 551 595 469
Current tax receivable 101 49 77
Other financial assets 16 15 20
Cash and cash equivalents 168 166 206
------------ ------------ ------------
Total current assets 863 849 796
Total assets 3,010 2,958 2,762
------------ ------------ ------------
LIABILITIES
Loans and other borrowings (126) (116) (106)
Derivative financial instruments - - (3)
Loyalty programme liability - - -
Trade and other payables (597) (441) (526)
Deferred revenue (490) (479) (462)
Provisions (3) (3) (3)
Current tax payable (64) (53) (50)
------------ ------------ ------------
Total current liabilities (1,280) (1,092) (1,150)
Loans and other borrowings (1,893) (2,106) (1,606)
Retirement benefit obligations (104) (100) (96)
Loyalty programme liability - - -
Trade and other payables (36) (33) (29)
Deferred revenue (867) (888) (852)
Provisions (5) (5) (5)
Non-current tax payable (25) - -
Deferred tax liabilities (101) (196) (170)
------------ ------------ ------------
Total non-current liabilities (3,031) (3,328) (2,758)
Total liabilities (4,311) (4,420) (3,908)
------------ ------------ ------------
Net liabilities (1,301) (1,462) (1,146)
------------ ------------ ------------
EQUITY
Equity share capital 154 148 141
Capital redemption reserve 10 10 9
Shares held by employee share
trusts (5) (5) (11)
Other reserves (2,874) (2,868) (2,860)
Unrealised gains and losses
reserve 79 109 111
Currency translation reserve 377 423 466
Retained earnings 951 715 990
------------ ------------ ------------
IHG shareholders' equity (1,308) (1,468) (1,154)
Non-controlling interest 7 6 8
Total equity (1,301) (1,462) (1,146)
------------ ------------ ------------
Appendix 3 - Year ended 31 December 2017 - reconciling
adjustments
GROUP INCOME As Reclass Core IFRS 15 adjustments Total System Total InterContinental As
STATEMENT previously managed before Fund IFRS Reservations restated
For the year reported leases System adjustments 15
ended 31 Fund
December 2017
----------------------------------
(a) (b) (c) (d) (e)
$m $m $m $m $m $m $m $m $m $m $m $m
---------- ------- ------- ------ ---- ----- ---- ------- ----------- ------- ---------------- --------
Revenue from
fee business 1,452 (163) (14) (17) (11) (42) (42) (25) 1,222
Revenue from
owned and
leased hotels 184 163 4 4 4 351
Other revenues 148 9 9 9 157
System Fund
revenues - - 1,217 1,217 25 1,242
Reimbursement
of costs
from managed
and franchised
properties - 1,103 1,103 1,103 1,103
---------- ------- ------- ------ ---- ----- ---- ------- ----------- ------- ---------------- --------
Total Revenue 1,784 - 1,103 (14) (17) - 2 1,074 1,217 2,291 - 4,075
Cost of sales (608) 5 7 12 12 25 (571)
System Fund
expenses - - (1,251) (1,251) (25) (1,276)
Cost
reimbursements - (1,103) (1,103) (1,103) (1,103)
Administrative
expenses
before
exceptional
items (328) (9) (9) (9) (337)
Share of losses
from
associates and
joint
ventures 3 - - 3
Other operating
income
and expenses 11 - - 11
Depreciation
and
amortisation (103) 17 8 25 25 (78)
---------- ------- ------- ------ ---- ----- ---- ------- ----------- ------- ---------------- --------
Operating
profit before
exceptional
items 759 - - (9) - 8 - (1) (34) (35) - 724
Impairment (18) (18)
Other
exceptional
items 22 22
---------- ------- ------- ------ ---- ----- ---- ------- ----------- ------- ---------------- --------
Operating
profit 763 - - (9) - 8 - (1) (34) (35) - 728
Financial
income 4 4
Financial
expenses (89) - 13 13 (76)
---------- ------- ------- ------ ---- ----- ---- ------- ----------- ------- ---------------- --------
Profit before
tax 678 - - (9) - 8 - (1) (21) (22) - 656
Exceptional Tax
from
US tax reform 108 (15) (14) (29) 1 (28) 80
Tax (incl.
exceptional
tax items that
do not
relate to US
tax reform) (193) 4 (3) 1 (3) (2) (195)
-----------
Profit after
tax 593 - - (20) - (9) - (29) (23) (52) - 541
---------- ------- ------- ------ ---- ----- ---- ------- ----------- ------- ---------------- --------
Profit
attributable
to
equity holders 592 - - (20) - (9) - (29) (23) (52) 540
Minority
interest 1 - - - 1
593 - - (20) - (9) - (29) (23) (52) - 541
---------- ------- ------- ------ ---- ----- ---- ------- ----------- ------- ---------------- --------
Earnings per
share
Basic (c) 306.7 - - (10.4) - (4.6) - (15.0) (11.9) (26.9) - 279.8
Diluted (c) 305.2 - - (10.3) - (4.6) - (14.9) (11.9) (26.8) - 278.4
Key: (a) Hotel cost reimbursements; (b) Application fees and
contract costs; (c) Key money amortisation; (d) Management
contracts; (e) Other Adjustments.
As Core IFRS 15 adjustments Total System Total As
previously before Fund IFRS 15 restated
reported System adjustments
Fund
-----------------------------------
GROUP STATEMENT (a) (b) (c) (d) (e)
OF FINANCIAL
POSITION
As at 31
December 2017
$m $m $m $m $m $m $m $m $m $m
----------- ---- ------ ------ ------ ----- ----------- ------------ --------- -----------
Assets
Goodwill and
other
intangible
assets 1,467 (257) (243) (500) (500) 967
Contract costs - 51 51 51 51
Contract assets - 240 1 241 241 241
Deferred tax
assets 56 19 19 19 75
Other
non-current
assets 813 - - 813
----------- ---- ------ ------ ------ ----- ----------- ------------ --------- -----------
Total
non-current
assets 2,336 - 51 (17) (224) 1 (189) - (189) 2,147
Contract costs - 7 7 7 7
Contract assets - 17 17 17 17
Other current
assets 839 - - 839
----------- ---- ------ ------ ------ ----- ----------- ------------ --------- -----------
Total current
assets 839 - 7 17 - - 24 - 24 863
Total assets 3,175 - 58 - (224) 1 (165) - (165) 3,010
----------- ---- ------ ------ ------ ----- ----------- ------------ --------- -----------
Liabilities
Loyalty
programme
liability (343) - 343 343 -
Trade and other
payables (768) 6 43 49 122 171 (597)
Deferred revenue - (24) (43) (67) (423) (490) (490)
Other current
liabilities (193) - - (193)
----------- ---- ------ ------ ------ ----- ----------- ------------ --------- -----------
Total current
liabilities (1,304) - (18) - - - (18) 42 24 (1,280)
Loyalty
programme
liability (417) - 417 417 -
Trade and other
payables (121) 85 85 85 (36)
Deferred revenue - (139) (85) (224) (643) (867) (867)
Deferred tax
liabilities (157) 25 32 57 (1) 56 (101)
Other
non-current
liabilities (2,027) - - (2,027)
----------- ---- ------ ------ ------ ----- ------------
Total
non-current
liabilities (2,722) - (114) - 32 - (82) (227) (309) (3,031)
----------- ---- ------ ------ ------ ----- ----------- ------------ --------- -----------
Total
liabilities (4,026) - (132) - 32 - (100) (185) (285) (4,311)
----------- ---- ------ ------ ------ ----- ----------- ------------ --------- -----------
Net liabilities (851) - (74) - (192) 1 (265) (185) (450) (1,301)
----------- ---- ------ ------ ------ ----- ----------- ------------ --------- -----------
EQUITY
Equity share
capital 154 - - 154
Capital
redemption
reserve 10 - - 10
Shares held by
employee
share trusts (5) - - (5)
Other reserves (2,874) - - (2,874)
Unrealised gains
and losses
reserve 79 - - 79
Currency
translation
reserve 373 4 4 4 377
Retained
earnings 1,405 - (74) - (196) 1 (269) (185) (454) 951
----------- ---- ------ ------ ------ ----- ----------- ------------ --------- -----------
IHG
shareholders'
equity (858) - (74) - (192) 1 (265) (185) (450) (1,308)
Non-controlling
interest 7 - - 7
Total equity (851) - (74) - (192) 1 (265) (185) (450) (1,301)
----------- ---- ------ ------ ------ ----- ----------- ------------ --------- -----------
Key: (a) Hotel cost reimbursements; (b) Application fees and
contract costs; (c) Key money amortisation; (d) Management
contracts; (e) Other Adjustments.
Appendix 4 - 6 months ended 30 June 2017 - reconciling
adjustments
As Reclass Core IFRS 15 adjustments Total System Total InterContinental As
previously managed before Fund IFRS Reservations restated
reported leases System adjustments 15
Fund
---------------------------
GROUP INCOME (a) (b) (c) (d) (e)
STATEMENT
For the 6
months ended 30
June 2017
$m $m $m $m $m $m $m $m $m $m $m $m
---------- ------- ----- ----- --- --- --- ------ ----------- ----- ---------------- --------
Revenue from
fee business 694 (80) (5) (7) (4) (16) (16) (11) 587
Revenue from
owned and
leased
hotels 91 80 3 3 3 174
Other revenues 72 5 5 5 77
System Fund
revenues - - 581 581 11 592
Reimbursement
of costs from
managed and
franchised
properties - 534 534 534 534
---------- ------- ----- ----- --- --- --- ------ ----------- ----- ---------------- --------
Total Revenue 857 - 534 (5) (7) - 4 526 581 1,107 - 1,964
Cost of sales (291) 1 1 2 2 11 (278)
System Fund
expenses - - (556) (556) (11) (567)
Cost
reimbursements - (534) (534) (534) (534)
Administrative
expenses
before
exceptional
items (156) (5) (5) (5) (161)
Other operating
income and
expenses 7 - - 7
Depreciation
and
amortisation (47) 7 4 11 11 (36)
---------- ------- ----- ----- --- --- --- ------ ----------- ----- ---------------- --------
Operating
profit before
exceptional
items 370 - - (4) - 4 - - 25 25 - 395
Impairment - - - -
Other
exceptional
items (4) - - (4)
---------- ------- ----- ----- --- --- --- ------ ----------- ----- ---------------- --------
Operating
profit 366 - - (4) - 4 - - 25 25 - 391
Financial
income 2 - - 2
Financial
expenses (42) - 6 6 (36)
---------- ------- ----- ----- --- --- --- ------ ----------- ----- ---------------- --------
Profit before
tax 326 - - (4) - 4 - - 31 31 - 357
Tax (107) 2 (1) 1 (3) (2) (109)
-----------
Profit after
tax 219 - - (2) - 3 - 1 28 29 - 248
---------- ------- ----- ----- --- --- --- ------ ----------- ----- ---------------- --------
Profit
attributable
to equity
holders 219 - - (2) - 3 - 1 28 29 248
Minority - - -
interest
219 - - (2) - 3 - 1 28 29 - 248
---------- ------- ----- ----- --- --- --- ------ ----------- ----- ---------------- --------
Earnings per
share
Basic (c) 111.7 - - (1.0) - 1.5 - 0.5 14.3 14.8 - 126.5
Diluted (c) 110.6 - - (1.0) - 1.5 - 0.5 14.2 14.7 - 125.3
Key: (a) Hotel cost reimbursements; (b) Application fees and
contract costs; (c) Key money amortisation; (d) Management
contracts; (e) Other Adjustments.
As previously Core IFRS 15 adjustments Total System Total As restated
reported before Fund IFRS
System adjustments 15
Fund
-----------------------------------
GROUP STATEMENT (a) (b) (c) (d) (e)
OF FINANCIAL
POSITION
As at 30 June
2017
$m $m $m $m $m $m $m $m $m $m
-------------- ---- ------ ------ ------ ----- -------- -------------- ------ ------------
Assets
Goodwill and
other
intangible
assets 1,373 (230) (241) (471) (471) 902
Contract costs - 47 47 47 47
Contract assets - 216 1 217 217 217
Deferred tax
assets 52 21 21 21 73
Other
non-current
assets 870 - - 870
-------------- ---- ------ ------ ------ ----- -------- -------------- ------ ------------
Total
non-current
assets 2,295 - 47 (14) (220) 1 (186) - (186) 2,109
Contract costs - 7 7 7 7
Contract assets - 14 14 14 14
Other current
assets 828 - - 828
-------------- ---- ------ ------ ------ ----- -------- -------------- ------ ------------
Total current
assets 828 - 7 14 - - 21 - 21 849
Total assets 3,123 - 54 - (220) 1 (165) - (165) 2,958
-------------- ---- ------ ------ ------ ----- -------- -------------- ------ ------------
Liabilities
Loyalty
programme
liability (326) - 326 326 -
Trade and other
payables (641) 6 54 60 140 200 (441)
Deferred revenue - (24) (40) (64) (415) (479) (479)
Other current
liabilities (172) - - (172)
-------------- ---- ------ ------ ------ ----- -------- -------------- ------ ------------
Total current
liabilities (1,139) - (18) - - 14 (4) 51 47 (1,092)
Loyalty
programme
liability (417) - 417 417 -
Trade and other
payables (177) 74 74 70 144 (33)
Deferred revenue - (130) (88) (218) (670) (888) (888)
Deferred tax
liabilities (276) 38 44 82 (2) 80 (196)
Other
non-current
liabilities (2,211) - - (2,211)
-------------- ---- ------ ------ ------ ----- --------------
Total
non-current
liabilities (3,081) - (92) - 44 (14) (62) (185) (247) (3,328)
-------------- ---- ------ ------ ------ ----- -------- -------------- ------ ------------
Total
liabilities (4,220) - (110) - 44 - (66) (134) (200) (4,420)
-------------- ---- ------ ------ ------ ----- -------- -------------- ------ ------------
Net liabilities (1,097) - (56) - (176) 1 (231) (134) (365) (1,462)
-------------- ---- ------ ------ ------ ----- -------- -------------- ------ ------------
EQUITY
Equity share
capital 148 - - 148
Capital
redemption
reserve 10 - - 10
Shares held by
employee share
trusts (5) - - (5)
Other reserves (2,868) - - (2,868)
Unrealised gains
and losses
reserve 109 - - 109
Currency
translation
reserve 415 8 8 8 423
Retained
earnings 1,088 (56) (184) 1 (239) (134) (373) 715
-------------- ---- ------ ------ ------ ----- -------- -------------- ------ ------------
IHG
shareholders'
equity (1,103) - (56) - (176) 1 (231) (134) (365) (1,468)
Non-controlling
interest 6 - - 6
Total equity (1,097) - (56) - (176) 1 (231) (134) (365) (1,462)
-------------- ---- ------ ------ ------ ----- -------- -------------- ------ ------------
Key: (a) Hotel cost reimbursements; (b) Application fees and
contract costs; (c) Key money amortisation; (d) Management
contracts; (e) Other Adjustment
Appendix 5 - Year ended 31 December 2016 - reconciling
adjustments
As Reclass Core IFRS 15 adjustments Total System Total InterContinental As
previously managed before Fund IFRS Reservations restated
reported leases System adjustments 15
Fund
-----------------------------------
GROUP INCOME (a) (b) (c) (d) (e)
STATEMENT
For the year
ended
31 December
2016
$m $m $m $m $m $m $m $m $m $m $m $m
----------- -------- -------- ------ ----- ---- ---- -------- ------------ -------- ----------------- ---------
Fee business
revenue 1,401 (162) (14) (13) (7) (34) (34) (23) 1,182
Revenue from
owned,
leased and
managed
lease hotels 173 162 3 3 3 338
Other revenues 141 6 6 6 147
System Fund
Revenues - - 1,176 1,176 23 1,199
Cost
reimbursements - 1,046 1,046 1,046 1,046
----------- -------- -------- ------ ----- ---- ---- -------- ------------ -------- ----------------- ---------
Total Revenue 1,715 - 1,046 (14) (13) - 2 1,021 1,176 2,197 - 3,912
Cost of sales (580) 4 5 9 9 23 (548)
System Fund
expenses - - (1,141) (1,141) (23) (1,164)
Cost
reimbursements - (1,046) (1,046) (1,046) (1,046)
Administrative
expenses
before
exceptional
items (339) (6) (6) (6) (345)
Share of losses
from
associates and
joint
ventures (2) - - (2)
Other operating
income
and expenses 9 - - 9
Depreciation
and
amortisation (96) 13 8 21 21 (75)
----------- -------- -------- ------ ----- ---- ---- -------- ------------ -------- ----------------- ---------
Operating
profit before
exceptional
items 707 - - (10) - 8 1 (1) 35 34 - 741
Impairment (16) - - (16)
Other
exceptional
items (13) - - (13)
----------- -------- -------- ------ ----- ---- ---- -------- ------------ -------- ----------------- ---------
Operating
profit 678 - - (10) - 8 1 (1) 35 34 - 712
Financial
income 6 - - 6
Financial
expenses (93) - 7 7 (86)
----------- -------- -------- ------ ----- ---- ---- -------- ------------ -------- ----------------- ---------
Profit before
tax 591 - - (10) - 8 1 (1) 42 41 - 632
Tax (174) 4 (2) 2 (1) 1 (173)
------------
Profit after
tax 417 - - (6) - 6 1 1 41 42 - 459
----------- -------- -------- ------ ----- ---- ---- -------- ------------ -------- ----------------- ---------
Profit
attributable
to equity
holders 414 - - (6) - 6 1 1 41 42 - 456
Minority
interest 3 - - 3
417 - - (6) - 6 1 1 41 42 - 459
----------- -------- -------- ------ ----- ---- ---- -------- ------------ -------- ----------------- ---------
Earnings per
share
Basic (c) 195.3 - - (2.8) - 2.8 0.5 0.5 19.3 19.8 - 215.1
Diluted (c) 193.5 - - (2.8) - 2.8 0.5 0.5 19.1 19.6 - 213.1
Key: (a) Hotel cost reimbursements; (b) Application fees and
contract costs; (c) Key money amortisation; (d) Management
contracts; (e) Other Adjustments.
GROUP STATEMENT OF As previously Core IFRS 15 adjustments Total before System Fund Total As
FINANCIAL reported System Fund adjustments IFRS 15 restated
POSITION
As at 31 December
2016
--------------------------------
(a) (b) (c) (d) (e)
$m $m $m $m $m $m $m $m $m $m
------------- ---- ------ ----- ----- ---- ------------ ------------ -------- ---------
Assets
Goodwill and other
intangible
assets 1,292 (197) (237) (434) (434) 858
Contract costs 45 45 45 45
Contract assets 184 1 185 185 185
Deferred tax assets 48 21 21 21 69
Other non-current
assets 809 - - 809
------------- ---- ------ ----- ----- ---- ------------ ------------ -------- ---------
Total non-current
assets 2,149 - 45 (13) (216) 1 (183) - (183) 1,966
Contract costs 8 8 8 8
Contract assets 13 13 13 13
Other current assets 778 - (3) (3) 775
------------- ---- ------ ----- ----- ---- ------------ ------------ -------- ---------
Total current assets 778 - 8 13 - - 21 (3) 18 796
Total assets 2,927 - 53 - (216) 1 (162) (3) (165) 2,762
------------- ---- ------ ----- ----- ---- ------------ ------------ -------- ---------
Liabilities
Loyalty programme
liability (291) - 291 291 -
Trade and other
payables (681) 5 49 54 101 155 (526)
Deferred revenue (22) (38) (60) (402) (462) (462)
Other current
liabilities (162) - - - (162)
------------- ---- ------ ----- ----- ---- ------------ ------------ -------- ---------
Total current
liabilities (1,134) - (17) - - 11 (6) (10) (16) (1,150)
Loyalty programme
liability (394) - 394 394 -
Trade and other
payables (200) 78 78 93 171 (29)
Deferred revenue (126) (89) (215) (637) (852) (852)
Deferred tax
liabilities (251) 36 44 80 1 81 (170)
Other non-current
liabilities (1,707) - - - (1,707)
------------- ---- ------ ----- ----- ---- ------------
Total non-current
liabilities (2,552) - (90) - 44 (11) (57) (149) (206) (2,758)
------------- ---- ------ ----- ----- ---- ------------ ------------ -------- ---------
Total liabilities (3,686) - (107) - 44 - (63) (159) (222) (3,908)
------------- ---- ------ ----- ----- ---- ------------ ------------ -------- ---------
Net liabilities (759) - (54) - (172) 1 (225) (162) (387) (1,146)
------------- ---- ------ ----- ----- ---- ------------ ------------ -------- ---------
EQUITY
Equity share capital 141 - - 141
Capital redemption
reserve 9 - - 9
Shares held by
employee
share trusts (11) - - (11)
Other reserves (2,860) - - (2,860)
Unrealised gains and
losses reserve 111 - - 111
Currency translation
reserve 451 15 15 15 466
Retained earnings 1,392 (54) (187) 1 (240) (162) (402) 990
------------- ---- ------ ----- ----- ---- ------------ ------------ -------- ---------
IHG shareholders'
equity (767) - (54) - (172) 1 (225) (162) (387) (1,154)
Non-controlling
interest 8 - - 8
Total equity (759) - (54) - (172) 1 (225) (162) (387) (1,146)
------------- ---- ------ ----- ----- ---- ------------ ------------ -------- ---------
Key: (a) Hotel cost reimbursements; (b) Application fees and
contract costs; (c) Key money amortisation; (d) Management
contracts; (e) Other Adjustments.
Appendix 6 - Restated regional results
Year ended 31 December 2017
---------------------------------------------------------------------------------------
As previously New IFRS Overhead InterContinental As restated
reported regional 15 allocations Reservations
segments
REVENUE $m $m $m $m $m $m
--------------- ----------- ------ -------------- ------------------ -------------
Americas 1,025 (18) (8) 999
Europe 241 (241)
AMEA 244 (244)
EMEAA - 485 (16) (12) 457
Greater China 126 (4) (5) 117
Central 148 9 157
--------------- ----------- ------ -------------- ------------------ -------------
Revenue from reportable
segments 1,784 - (29) - (25) 1,730
System Fund - 1,217 25 1,242
Reimbursed costs - 1,103 1,103
--------------- ----------- ------ -------------- ------------------ -------------
Total revenue 1,784 - 2,291 - - 4,075
--------------- ----------- ------ -------------- ------------------ -------------
OPERATING PROFIT
Americas 644 (6) (1) 637
Europe 86 (86)
AMEA 87 (87)
EMEAA - 173 4 (6) 171
Greater China 52 1 (1) 52
Central (110) 8 (102)
--------------- ----------- ------ -------------- ------------------ -------------
Operating profit
before exceptional
items from reportable
segments 759 - (1) - - 758
System Fund - (34) (34)
--------------- ----------- ------ -------------- ------------------ -------------
Operating profit
before exceptional
items 759 - (35) - - 724
Exceptional items 4 4
Operating profit 763 - (35) - - 728
--------------- ----------- ------ -------------- ------------------ -------------
Appendix 6 - Restated regional results (continued)
6 months ended 30 June 2017
---------------------------------------------------------------------------------------
As previously New IFRS Overhead InterContinental As restated
reported regional 15 allocations Reservations
segments
REVENUE $m $m $m $m $m $m
--------------- ----------- ------ -------------- ------------------ -------------
Americas 499 (5) (3) 491
Europe 113 (113)
AMEA 115 (115)
EMEAA - 228 (7) (6) 215
Greater China 58 (1) (2) 55
Central 72 5 77
--------------- ----------- ------ -------------- ------------------ -------------
Revenue from reportable
segments 857 - (8) - (11) 838
System Fund - 581 11 592
Reimbursed costs - 534 534
--------------- ----------- ------ -------------- ------------------ -------------
Total revenue 857 - 1,107 - - 1,964
--------------- ----------- ------ -------------- ------------------ -------------
OPERATING PROFIT
Americas 321 (3) 318
Europe 38 (38)
AMEA 41 (41)
EMEAA 79 2 (3) 78
Greater China 23 1 24
Central (53) 3 (50)
--------------- ----------- ------ -------------- ------------------ -------------
Operating profit
before exceptional
items from reportable
segments 370 - - - - 370
System Fund - 25 25
--------------- ----------- ------ -------------- ------------------ -------------
Operating profit
before exceptional
items 370 - 25 - - 395
Exceptional items (4) (4)
Operating profit 366 - 25 - - 391
--------------- ----------- ------ -------------- ------------------ -------------
Appendix 6 - Restated regional results (continued)
Year ended 31 December 2016
---------------------------------------------------------------------------------------
As previously New IFRS Overhead InterContinental As restated
reported regional 15 allocations Reservations
segments
REVENUE $m $m $m $m $m $m
--------------- ----------- ------ -------------- ------------------ -------------
Americas 993 (17) (7) 969
Europe 227 (227)
AMEA 237 (237)
EMEAA - 464 (13) (12) 439
Greater China 117 (1) (4) 112
Central 141 6 147
--------------- ----------- ------ -------------- ------------------ -------------
Revenue from reportable
segments 1,715 - (25) - (23) 1,667
System Fund - 1,176 23 1,199
Reimbursed costs - 1,046 1,046
--------------- ----------- ------ -------------- ------------------ -------------
Total revenue 1,715 - 2,197 - - 3,912
--------------- ----------- ------ -------------- ------------------ -------------
OPERATING PROFIT
Americas 633 (8) 1 626
Europe 75 (75)
AMEA 82 (82)
EMEAA - 157 5 (5) 157
Greater China 45 2 (1) 46
Central (128) 5 (123)
--------------- ----------- ------ -------------- ------------------ -------------
Operating profit
before exceptional
items from reportable
segments 707 - (1) - - 706
System Fund - 35 35
--------------- ----------- ------ -------------- ------------------ -------------
Operating profit
before exceptional
items 707 - 34 - - 741
Exceptional items (29) (29)
Operating profit 678 - 34 - - 712
--------------- ----------- ------ -------------- ------------------ -------------
Appendix 7 - Revised presentation of fee business results by
region - Americas
Year ended 31 December 2017 6 months ended 30 June 2017 Year ended 31 December 2016
-------------------------------------------- -------------------------------------------- ----------------------------------------------
As prev. Reclass Reclass IFRS As As prev. Reclass Reclass IFRS As As prev. Reclass Reclass IFRS As
reported mgd fee 15 & restated reported mgd fee 15 & restated reported mgd fee 15 & restated
leases business other leases business other leases business other
adj adj adj
$m $m $m $m $m $m $m $m $m $m $m $m $m $m $m
-------- ------- -------- ----- -------- -------- ------- -------- ----- -------- -------- ------- -------- ----- --------
REVENUE
Franchised 703 (703) - 343 (343) - 685 (685) -
Managed 172 (34) (138) - 82 (18) (64) - 172 (34) (138) -
Fee business - 841 (30) 811 - 407 (11) 396 - 823 (27) 796
Owned and
leased 150 34 4 188 74 18 3 95 136 34 3 173
-------- ------- -------- ----- -------- -------- ------- -------- ----- -------- -------- ------- -------- ----- --------
Total
Revenue 1,025 - - (26) 999 499 - - (8) 491 993 - - (24) 969
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS
Franchised 606 (606) - 298 (298) - 600 (600) -
Managed 65 (65) - 33 (1) (32) - 64 (64) -
Regional
overheads (56) 56 - (25) 25 - (55) 55 -
Fee business - 615 (7) 608 - 305 (3) 302 - 609 (7) 602
Owned and
leased 29 29 15 1 16 24 24
-------- ------- -------- ----- -------- -------- ------- -------- ----- -------- -------- ------- -------- ----- --------
Operating
Profit
before
exceptional
items 644 - - (7) 637 321 - - (3) 318 633 - - (7) 626
Appendix 7 - Revised presentation of fee business results by
region - EMEAA
Year ended 31 December 2017 6 months ended 30 June 2017 Year ended 31 December 2016
---------------------------------- --------------------------------------------- ----------------------------------
As prev. Reclass Reclass IFRS As As prev. Reclass Reclass IFRS As As prev. Reclass Reclass IFRS As
reported mgd fee 15 & restated reported mgd fee 15 & restated reported mgd fee 15 & restated
leases buisness other leases business other leases business other
adj adj adj
$m $m $m $m $m $m $m $m $m $m $m $m $m $m $m
-------- ------- -------- ----- -------- -------- ------- -------- ----- -------- -------- ------- -------- ----- --------
REVENUE
Franchised 126 (126) - 58 (58) - 118 (118) -
Managed 325 (129) (196) - 153 (62) (91) - 309 (128) (181) -
Fee business - 322 (28) 294 - 149 (13) 136 - 299 (25) 274
Owned and
leased 34 129 163 17 62 79 37 128 165
-------- ------- -------- ----- -------- -------- ------- -------- ----- -------- -------- ------- -------- ----- --------
Total
Revenue 485 - - (28) 457 228 - - (13) 215 464 - - (25) 439
OPERATING PROFIT BEFORE EXCEPTIONAL
ITEMS
Franchised 99 (99) - 44 (44) - 90 (90) -
Managed 117 (4) (113) - 55 (3) (52) - 111 (7) (104) -
Regional
overheads (45) 45 - (21) 21 - (46) 46 -
Fee business - 167 (2) 165 - 75 (1) 74 - 148 148
Owned and
leased 2 4 6 1 3 4 2 7 9
-------- ------- -------- ----- -------- -------- ------- -------- ----- -------- -------- ------- -------- ----- --------
Operating
Profit
before
exceptional
items 173 - - (2) 171 79 - - (1) 78 157 - - - 157
Appendix 7 - Revised presentation of fee business results by
region - Greater China
Year ended 31 December 2017 6 months ended 30 June 2017 Year ended 31 December 2016
-------------------------------------------- -------------------------------------------- ----------------------------------------------
As prev. Reclass Reclass IFRS As As prev. Reclass Reclass IFRS As As prev. Reclass Reclass IFRS As
reported mgd fee 15 & restated reported mgd fee 15 & restated reported mgd fee 15 & restated
leases business other leases business other leases business other
adj adj adj
$m $m $m $m $m $m $m $m $m $m $m $m $m $m $m
-------- ------- -------- ----- -------- -------- ------- -------- ----- -------- -------- ------- -------- ----- --------
REVENUE
Franchised 4 (4) - 2 (2) - 3 (3) -
Managed 122 (122) - 56 (56) - 114 (114) -
Fee business - 126 (9) 117 - 58 (3) 55 - 117 (5) 112
-------- ------- -------- ----- -------- -------- ------- -------- ----- -------- -------- ------- -------- ----- --------
Total
Revenue 126 - - (9) 117 58 - - (3) 55 117 - - (5) 112
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS
Franchised 2 (2) - 1 (1) - 3 (3) -
Managed 73 (73) - 32 (32) - 64 (64) -
Regional
overheads (23) 23 - (10) 10 - (22) 22 -
Fee business - 52 52 - 23 1 24 - 45 1 46
-------- ------- -------- ----- -------- -------- ------- -------- ----- -------- -------- ------- -------- ----- --------
Operating
Profit
before
exceptional
items 52 - - - 52 23 - - 1 24 45 - - 1 46
Appendix 7 - Revised presentation of fee business results by
region - Group
Year ended 31 December 2017 6 months ended 30 June 2017 Year ended 31 December 2016
-------------------------------------------- -------------------------------------------- ----------------------------------------------
GROUP As prev. Reclass Reclass IFRS As As prev. Reclass Reclass IFRS As As prev. Reclass Reclass IFRS As
reported mgd fee 15 & restated reported mgd fee 15 & restated reported mgd fee 15 & restated
leases business other leases business other leases business other
adj adj adj
$m $m $m $m $m $m $m $m $m $m $m $m $m $m $m
REVENUE
Franchised 833 (833) - 403 (403) - 806 (806) -
Managed 619 (163) (456) - 291 (80) (211) - 595 (162) (433) -
Fee business - 1,289 (67) 1,222 - 614 (27) 587 - 1,239 (57) 1,182
Owned and
leased 184 163 4 351 91 80 3 174 173 162 3 338
Other revenues 148 9 157 72 5 77 141 6 147
System Fund
Revenues - 1,242 1,242 - 592 592 - 1,199 1,199
Reimbursement
of costs - 1,103 1,103 - 534 534 - 1,046 1,046
Total Revenue 1,784 - - 2,291 4,075 857 - - 1,107 1,964 1,715 - - 2,197 3,912
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS
Franchised 707 (707) - 343 (343) - 693 (693) -
Managed 255 (4) (251) - 120 (4) (116) - 239 (7) (232) -
Regional
overheads (124) 124 - (56) 56 - (123) 123 -
Fee business - 834 (9) 825 - 403 (3) 400 - 802 (6) 796
Owned and
leased 31 4 35 16 4 20 26 7 33
Central
operating
loss (110) 8 (102) (53) 3 (50) (128) 5 (123)
System Fund - (34) (34) - 25 25 - 35 35
Operating
Profit before
exceptional
items 759 - - (35) 724 370 - - 25 395 707 - - 34 741
This information is provided by RNS
The company news service from the London Stock Exchange
END
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