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Broadwater Park Denham Buckinghamshire UB9 5HR United Kingdom | |
| August 4, 2022 | |
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Switchboard +44 (0) 1895 512 000 www.ihg.com | |
VIA EDGAR
United States Securities and Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
100 F Street, N.E.
Washington, D.C. 20549
Attn: Mark Rakip and Kristina Marrone
| Re: |
InterContinental Hotels Group PLC Form 20-F for Fiscal Year Ended December 31, 2021 Filed March 3, 2022 File No. 001-10409 |
Dear Mr Rakip,
Thank you for your letter dated August 2, 2022 setting forth your response to our letter of July 21.
Group Cash Flow Summary, page 58
1. We note your response to comments 1 and 3. Please reconfigure the reconciliation in Appendix 2 to begin with the most directly comparable measure calculated in accordance with IFRS, which you indicate is Cash flow from operations, to avoid placing undue prominence on the non-IFRS measure. Refer to Item 10(e)(1)(i)(A) of Regulation S-K and Question 102.10 of the Division's Non-GAAP Financial Measures Compliance & Disclosure Interpretations.
Response:
As discussed with you today, in order to give greater prominence to the GAAP measure (cash flow from operations), we propose to first present the reconciliation of net cash from operations to Adjusted EBITDA before presenting the summary cash flow information, which comprises a bridge from Adjusted EBITDA to Net Debt.
The proposed revisions are included at Appendix 1.
I trust this addresses your comments and look forward to hearing back from you.
Yours sincerely,
/s/ Paul Edgecliffe-Johnson
Paul Edgecliffe-Johnson
Chief Financial Officer & Group Head of Strategy
| CC: | Giles Hannam, Pricewaterhouse Coopers LLP |
Sarah Kokot, Ernst & Young LLP
Appendix 1 – proposed revisions to cash flow summary (p58)
| Reconciliation of Adjusted EBITDA | ||
| 12 months | 12 months | |
| 2021 | 2020 | |
| $m | $m | |
| Cash flow from operations | 848 | 308 |
| Cash flows relating to exceptional items | 12 | 87 |
| Other non-cash adjustments to operating profit/loss | (71) | (100) |
| System Fund result | 11 | 102 |
| System Fund depreciation and amortisation | (94) | (62) |
| Other non-cash adjustments to System Fund result | (6) | (97) |
| Working capital and other adjustments | (110) | 27 |
| Capital expenditure: contract acquisition costs (key money) | 42 | 64 |
| Adjusted EBITDA | 632 | 329 |
| Group cash flow summary | ||
| 12 months | 12 months | |
| 2021 | 2020 | |
| $m | $m | |
| Adjusted EBITDA | 632 | 329 |
| Working capital and other adjustments | 110 | (27) |
| Other non-cash adjustments to operating profit/loss | 71 | 100 |
| System Fund result | (11) | (102) |
| Non-cash adjustments to System Fund result | 100 | 159 |
| Capital expenditure: contract acquisition costs (key money) | (42) | (64) |
| Capital expenditure: maintenance | (33) | (43) |
| Cash flows relating to exceptional items | (12) | (87) |
| Net interest paid | (126) | (130) |
| Tax paid | (86) | (41) |
| Principal element of lease payments | (32) | (65) |
| Purchase of shares | - | - |
| Adjusted free cash flow[1] | 571 | 29 |
| Capital expenditure: Gross recyclable investments | (5) | (6) |
| Capital expenditure: Gross System Fund investments | (19) | (35) |
| Deferred consideration paid | (13) | - |
| Disposals and repayments, including other financial assets | 58 | 18 |
| Distributions from associates and joint ventures | - | 5 |
| Dividends and shareholder returns | - | 3 |
| Other items / proceeds from currency swaps | - | - |
| Net cash flow before other net debt movements | 592 | 14 |
| Add back principal element of lease repayments within free cash flow | 32 | 65 |
| Exchange and other non-cash adjustments | 24 | 57 |
| Decrease in net debt | 648 | 136 |
| Net debt at beginning of the year | (2,529) | (2,665) |
| Net debt at end of the year[1] | (1,881) | (2,529) |
1 Definitions for Non-GAAP measures can be found on pages 73 to 77. Reconciliations of these measures to the most directly comparable line items within the Group Financial Statements can be found on pages 218 to 223.