2. Segmental information

With effect from 1 January 2018, an internal reorganisation resulted in the formation of a new operating segment, Europe, Middle East, Asia and Africa (EMEAA), bringing together the former segments of Europe and Asia, Middle East and Africa (AMEA). 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;

•

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 who reports to the Group Chief Executive Officer. 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. 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 (CODM) and it does not constitute an operating segment under IFRS 8. Similarly, reimbursements of costs are not reported to the CODM and so are not included within the reportable segments.

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 System Fund and 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 for IFRS 15 and presentational changes (see pages 109 to 114) to show segmental information on a consistent basis.

Revenue


	2018 $m		2017 Restated $m		2016 Restated $m
Americas		1,051		999		969
EMEAA		569		457		439
Greater China		143		117		112
Central		170		157		147

Revenue from reportable segments		1,933		1,730		1,667
System Fund revenues		1,233		1,242		1,199
Reimbursement of costs		1,171		1,103		1,046

Total revenue		4,337		4,075		3,912

Profit


	2018 $m			2017 Restated $m			2016 Restated $m
Americas		662			637			626
EMEAA		202			171			157
Greater China		69			52			46
Central		(117	)		(102	)		(123	)

Operating profit from reportable segments		816			758			706
System Fund		(146	)		(34	)		35
Exceptional items (note 6)		(104	)		4			(29	)

Operating profit		566			728			712

Net finance costs		(81	)		(72	)		(80	)

Profit before tax		485			656			632
Tax		(133	)		(115	)		(173	)

Profit for the year		352			541			459

All items above relate to continuing operations.

Assets


	2018 $m		2017 Restated $m
Americas		1,568		1,500
EMEAA		666		504
Greater China		110		105
Central		579		541

Segment assets		2,923		2,650
Unallocated assets:
Derivative financial instruments		8		—
Tax receivable		58		117
Deferred tax assets		60		75
Cash and cash equivalents		704		168

Total assets		3,753		3,010

Liabilities


	2018 $m			2017 Restated $m
Americas		(676	)		(620	)
EMEAA		(241	)		(232	)
Greater China		(61	)		(64	)
Central		0			—

Segment liabilities		(978	)		(916	)
Unallocated liabilities:
Loyalty and co-brand deferred revenue and other payables		(1,291	)		(1,186	)
Loans and other borrowings		(2,249	)		(2,019	)
Tax payable		(50	)		(89	)
Deferred tax liabilities		(131	)		(101	)
Deferred and contingent purchase consideration		(131	)		—

Total liabilities		(4,830	)		(4,311	)

Other segmental information


Year ended 31 December 2018	Americas $m		EMEAA $m			Greater China $m		Central $m		Group $m
Capital expenditure (see below)		74		33			2		134		243
Non-cash items:
Depreciation and amortisation^a		27		8			3		42		80
Share-based payments cost		8		4			3		12		27
Share of losses/(gains) of associates and joint ventures		6		(5	)		0		0		1


Year ended 31 December 2017 (Restated)	Americas $m		EMEAA $m			Greater China $m		Central $m		Group $m
Capital expenditure (see below)		120		26			2		188		336
Non-cash items:
Depreciation and amortisation^a		23		7			1		47		78
Share-based payments cost		6		4			3		8		21
Share of losses/(gains) of associates and joint ventures		1		(4	)		—		—		(3	)
Impairment charges		18		—			—		—		18


Year ended 31 December 2016 (Restated)	Americas $m		EMEAA $m			Greater China $m		Central $m		Group $m
Capital expenditure		67		22			1		148		238
Non-cash items:
Depreciation and amortisation^a		21		7			1		46		75
Share-based payments cost		6		4			3		4		17
Share of losses/(gains) of associates and joint ventures		7		(5	)		—		—		2
Impairment charges		16		—			—		—		16

Included in the $80m (2017: $78m, 2016: $75m) of depreciation and amortisation is $61m (2017: $53m, 2016: $54m) relating to administrative expenses and $19m (2017: $25m, 2016: $21m) relating to cost of sales. A further $45m of depreciation and amortisation was recorded within System Fund expenses (2017: $36m, 2016: $31m).

Reconciliation of capital expenditure


Year ended 31 December 2018	Americas $m			EMEAA $m			Greater China $m		Central $m			Group $m
Capital expenditure per management reporting		74			33			2		134			243
Contract acquisition costs		(32	)		(26	)		0		0			(58	)
Landlord contributions to property, plant and equipment		0			0			0		8			8
Timing differences and other adjustments		1			0			0		0			1

Additions per the Financial Statements		43			7			2		142			194

Comprising additions to:
Property, plant and equipment		13			2			2		30			47
Intangible assets		0			0			0		112			112
Investment in associates and joint ventures		3			0			0		0			3
Other financial assets		27			5			0		0			32

		43			7			2		142			194


Year ended 31 December 2017 (Restated)	Americas $m			EMEAA $m			Greater China $m		Central $m			Group $m
Capital expenditure per management reporting		120			26			2		188			336
Contract acquisition costs		(36	)		(21	)		—		—			(57	)
Landlord contributions to property, plant and equipment		—			—			—		14			14
Timing differences and other adjustments		(12	)		—			—		(1	)		(13	)

Additions per the Financial Statements		72			5			2		201			280

Comprising additions to:
Property, plant and equipment		10			—			2		32			44
Intangible assets		3			—			—		169			172
Investment in associates and joint ventures		47			—			—		—			47
Other financial assets		12			5			—		—			17

		72			5			2		201			280

Geographical information


	Year ended 31 December 2018 $m		Year ended 31 December 2017 Restated $m		Year ended 31 December 2016 Restated $m
Revenue
United Kingdom		151		74		72
United States		1,950		1,845		1,750
China		222		201		192
Rest of World		781		713		699

		3,104		2,833		2,713
System Fund (note 32)		1,233		1,242		1,199

		4,337		4,075		3,912

For the purposes of the above table, hotel revenue is determined according to the location of the hotel and other revenue is attributed to the country of origin. In addition to the United Kingdom, revenue relating to an individual country is separately disclosed when it represents 10% or more of total revenue. System Fund revenues are not included in the geographical analysis as the Group does not monitor the Fund’s revenue by location of the hotel, or in the case of the loyalty programme, according to the location where members consume their rewards.


	31 December 2018 $m		31 December 2017 Restated $m
Non-current assets
United Kingdom		148		52
United States		1,510		1,476
Rest of World		361		297

		2,019		1,825

For the purposes of the above table, non-current assets comprise property, plant and equipment, goodwill and other intangible assets, investments in associates and joint ventures, non-current trade and other receivables, non-current contract costs and non-current contract assets. In addition to the United Kingdom, non-current assets relating to an individual country are separately disclosed when they represent 10% or more of total non-current assets, as defined above.