27. Equity

Equity share capital


	Number of shares millions			Nominal value $m			Share premium $m			Equity share capital $m
Allotted, called up and fully paid
At 1 January 2016 (ordinary shares of 15²⁶⁵/₃₂₉p each)		248			58			111			169
Share capital consolidation		(42	)		—			—			—
Exchange adjustments		—			(10	)		(18	)		(28	)

At 31 December 2016 (ordinary shares of 18³¹⁸/₃₂₉p each)		206			48			93			141
Share capital consolidation		(9	)		—			—			—
Exchange adjustments		—			5			8			13

At 31 December 2017 (ordinary shares of 19¹⁷/₂₁p each)		197			53			101			154
Exchange adjustments		—			(3	)		(5	)		(8	)

At 31 December 2018 (ordinary shares of 19¹⁷/₂₁p each)		197			50			96			146

The authority given to the Company at the AGM held on 4 May 2018 to purchase its own shares was still valid at 31 December 2018. A resolution to renew the authority will be put to shareholders at the AGM on 3 May 2019.

The Company no longer has an authorised share capital.

On 23 February 2016, the Group announced a $1.5bn return of funds to shareholders by way of a special dividend and share consolidation. On 6 May 2016, shareholders approved the share consolidation on the basis of 5 new ordinary shares of 18³¹⁸⁄₃₂₉p per share for every 6 existing ordinary shares of 15²⁶⁵⁄₃₂₉p, which became effective on 9 May 2016. The special dividend was paid to shareholders on 23 May 2016. The dividend and share consolidation had the same economic effect as a share repurchase at fair value, therefore previously reported earnings per share has not been restated.

On 21 February 2017, the Group announced a $400m return of funds to shareholders by way of a special dividend and share consolidation. On 5 May 2017, shareholders approved the share consolidation on the basis of 45 new ordinary shares of 19¹⁷⁄₂₁p per share for every 47 existing ordinary shares of 18³¹⁸⁄₃₂₉p, which became effective on 8 May 2017. The special dividend was paid to shareholders on 22 May 2017. The dividend and share consolidation had the same economic effect as a share repurchase at fair value, therefore previously reported earnings per share has not been restated.

In October 2018, the Board proposed a $500m return of funds to shareholders by way of a special dividend of $2.621 per ordinary share, together with a share consolidation. On 11 January 2019, shareholders approved the share consolidation and payment of the special dividend. The dividend of $510m was paid on 29 January 2019. The dividend and share consolidation had the same economic effect as a share repurchase at fair value, therefore reported earnings per share has not been restated.

At 31 October 2018, the balance classified as equity share capital includes the total net proceeds (both nominal value and share premium) on issue of the Company’s equity share capital, comprising 19¹⁷⁄₂₁p shares. The share premium reserve represents the amount of proceeds received for shares in excess of their nominal value.

The nature and purpose of the other reserves shown in the Group statement of changes in equity on pages 98 to 100 of the Group Financial Statements is as follows:

Capital redemption reserve

This reserve maintains the nominal value of the equity share capital of the Company when shares are repurchased or cancelled.

Shares held by employee share trusts

Comprises $3.6m (2017: $5.4m, 2016: $10.5m) in respect of 0.2m (2017: 0.2m, 2016: 0.3m) InterContinental Hotels Group PLC ordinary shares held by employee share trusts, with a market value at 31 December 2018 of $8.3m (2017: $12.1m, 2016: $15.0m).

Other reserves

Comprises the merger and revaluation reserves previously recognised under UK GAAP, together with the reserve arising as a consequence of the Group’s capital reorganisation in June 2005. Following the change in presentational currency to the US dollar in 2008, this reserve also includes exchange differences arising on retranslation to period-end exchange rates of equity share capital, the capital redemption reserve and shares held by employee share trusts.

Fair value reserve

This reserve records movements in the value of financial assets measured at fair value. This reserve was previously called the unrealised gains and losses reserve. The change in name reflects that gains and losses will no longer be reflected in the income statement following adoption of IFRS 9.

Cash flow hedging reserve

The cash flow hedging reserve is analysed as follows:


	Cash flow hedging reserve
	Value of currency swaps $m			Cost of hedging $m			Total $m
At 1 January 2018		0			0			0
Costs of hedging deferred and recognised in OCI		0			(1	)		(1	)
Change in fair value of currency swaps recognised in OCI		4			0			4
Reclassified from OCI to profit or loss – included in financial expenses		(8	)		0			(8	)
Deferred tax		1			0			1

At 31 December 2018		(3	)		(1	)		(4	)

The value of currency swaps comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition in profit or loss.

The cost of hedging reflects the gain or loss on the portion excluded from the designated hedging instrument that relates to the value of the foreign currency basis spread of currency swaps. It is initally recognised in other comprehensive income (OCI) and accounted for similarly to changes in value of currency swaps.

Amounts reclassified from OCI to financial expenses comprise $1m net interest payable on the currency swaps and an exchange gain of $9m which has been offset with a corresponding loss on the €500m 2.125% bonds.

Currency translation reserve

This reserve records the movement in exchange differences arising from the translation of foreign operations and exchange differences on foreign currency borrowings and derivative instruments that provide a hedge against net investments in foreign operations. On adoption of IFRS, cumulative exchange differences were deemed to be $nil as permitted by IFRS 1.

The fair value of derivative instruments designated as hedges of net investments in foreign operations outstanding at 31 December 2018 was $1m net asset (2017: $nil, 2016: $3m net liability).

Treasury shares

During 2018, 0.8m (2017: 0.9m, 2016: 0.9m) treasury shares were transferred to the employee share trusts. As a result of the 2017 share consolidation, the number of shares held in treasury reduced by 0.4m during 2017 (2016: reduced by 1.7m during 2016 as a result of the 2016 share consolidation). At 31 December 2018, 6.8m shares (2017: 7.6m, 2016: 8.9m) with a nominal value of $1.7m (2017: $2.0m, 2016: $2.1m) were held as treasury shares at cost and deducted from retained earnings.

Non-controlling interest

A non-controlling interest is equity in a subsidiary of the Group not attributable, directly or indirectly, to the Group. Non-controlling interests are not material to the Group.