|
|
|
99.1
|
Half-year
Report dated 11 August 2020
|
|
|
|
|
|
|
|
Reported
|
|
Underlying5
|
|
||
|
2020
|
2019
|
% Change
|
|
% Change
|
|
|
|
REPORTABLE SEGMENTS1
|
|
|
|
|
|
|
|
Revenue2
|
$488m
|
$1,012m
|
(52)%
|
|
(51)%
|
|
|
Revenue from fee business
|
$375m
|
$730m
|
(49)%
|
|
(48)%
|
|
|
Operating profit2
|
$74m
|
$410m
|
(82)%
|
|
(83)%
|
|
|
Fee margin3
|
26.1%
|
54.1%
|
(28.0)%pts
|
|
|
|
|
Adjusted EPS4
|
14.3¢
|
148.6¢
|
(90)%
|
|
KEY METRICS
|
|
|
|
|
|
|
|
|
|
|
GROUP RESULTS
|
|
|
|
|
● $6.6bn total gross
revenue (down (52)%; (51)% at CER)
|
|
|
Total revenue
|
$1,248m
|
$2,280m
|
(45)%
|
|
||
|
Operating (loss)/profit
|
$(233)m
|
$442m
|
(153)%
|
|
● (51.7)% global H1
RevPAR
|
|
|
Basic EPS
|
(115.4)¢
|
167.2¢
|
(169)%
|
|
||
|
Total dividend per share
|
0¢
|
39.9¢
|
(100)%
|
|
● (74.7)% global Q2
RevPAR
|
|
|
Net debt
|
$2,515m
|
$2,847m
|
(12)%
|
|
||
|
Keith Barr, Chief Executive Officer, IHG, said:
|
||
|
“Throughout
the crisis we have continued to act responsibly, doing all we can
to support our hotel colleagues and owners, and create a clean,
safe stay experience that we know guests can trust. The teamwork,
dedication and care that our colleagues and owners have shown to
adapt our approach is central to meeting the evolving needs and
expectations of guests, as well as the communities in which we
operate. I would like to sincerely thank everyone for ensuring that
our purpose of providing True Hospitality shines through, even in
the toughest of times.
The
impact of Covid-19 on our business has been substantial. Global
RevPAR declined by 52% in the first half and was down 75% in the
second quarter, when occupancy at comparable hotels fell to 25%.
Despite this challenging environment, we delivered an operating
profit of $74m. Small but steady improvements in occupancy and
RevPAR through the second quarter continued into July, with an
expected RevPAR decline of 58%, and occupancy rising to around
45%.
The
support we have offered owners, such as fee relief and increased
payment flexibility, was well received. Together with other
measures we’ve taken to preserve cash, we have maintained
substantial liquidity of around $2bn. Our ongoing actions to reduce
costs include plans to make around half of the $150m of savings we
will achieve this year sustainable into 2021, alongside continued
investment in our growth initiatives. However, with limited
visibility of the pace and scale of market recovery, we are not
proposing an interim dividend.
As has
been the case in previous downturns, domestic mainstream travel is
proving to be the most resilient. Our weighting in this segment,
led by our industry-leading Holiday Inn Brand Family, positions us
well as demand returns in our key markets. In the US, our
mainstream estate of almost 3,500 hotels is seeing lower levels of
RevPAR decline than the industry, and is operating at occupancy
levels of over 50%.
Reflecting
our long-term growth prospects, and the strength of our brands and
owner relationships, we opened more than 90 hotels in the half and
strengthened our pipeline with an average of one new signing a day,
including almost 100 for our Holiday Inn Brand Family. We have also
taken voco, our upscale conversion brand, outside of EMEAA, with
initial signings in the US and Greater China.
The
impact of this crisis on our industry cannot be underestimated, but
we are seeing some very early signs of improvement as restrictions
ease and traveller confidence returns. Whilst the near-term outlook
remains uncertain and the time period for market recovery is
unknown, we are well positioned with preferred brands in the
largest markets and segments, a leading loyalty platform and one of
the most resilient business models in the industry. This gives us
confidence in our ability to meet the needs of our guests and
owners, and to emerge strongly when markets
recover.”
|
||
|
|
||
|
IHG has
undertaken a rapid and comprehensive response in the immediacy of
the Covid-19 crisis. We have taken decisive actions to protect the
business and our stakeholders through the worst period of demand in
the industry’s history, balanced with ensuring we are
positioning IHG to outperform through the recovery, whilst
remaining true to our purpose and values. Our response has also
benefited from experience and learnings across the breadth of our
geographies.
Supporting our stakeholders as a responsible business
Colleagues
● Provided updates to
operating procedures, new equipment and training programmes to
protect our frontline hotel colleagues and enable them in turn to
deliver clean and safe hotels for all our guests.
● Collaborated
cross-industry to help colleagues find employment whilst hotels
were temporarily closed.
● Launched new
internal communications and Staying In Touch forums.
● Supported
colleagues with tools and resources to aid flexible and remote
working.
● Extended our
Employee Assistance Programme to cover mental health and wellbeing,
and financial advice.
● Provided a range of
additional advice and assistance for those colleagues who have been
unfortunately impacted by the need to be furloughed or work reduced
hours, or by consultation and reorganisation
processes.
Communities
● Worked with
governments and organisations around the world, including
#FirstRespondersFirst in the US, to provide accommodation to
frontline workers, military personnel and vulnerable members of
society, with around 430 of our hotels being repurposed at various
times during the crisis for these and other essential
activities.
● Supported our
longstanding True Hospitality for Good charitable partners,
including the British Red Cross through its Disaster Relief
Alliance membership, CARE International to provide PPE in
developing markets, and the China Red Cross.
● Extended our True
Hospitality for Good programme to help support foodbanks and food
provision charities in more than 70 countries.
● Enabled IHG Rewards
Club members to donate loyalty points to be converted into cash
donations to our charity partners, including the International
Federation of Red Cross and Red Crescent Societies
(IFRC).
Guests
● New Covid-19 health
and safety operating procedures launched globally in our hotels to
create a safer environment for all travellers as well as our
frontline hotel colleagues as they deliver True Hospitality each
and every day.
● Waived cancellation
fees from the onset of the crisis and provided flexible rebooking
options.
● Protected the
membership status for our IHG Rewards Club loyalty programme
members.
● Enhanced and
extended our Book Now, Pay Later policies, to further increase
guest confidence.
● Invited 1,500
corporate customers globally to Webex briefings to update them on
our Covid-19 response.
● Launched our Meet
with Confidence offer to provide corporate bookers the greater
flexibility they need, together with our enhanced approach to
health and safety.
● Guest Satisfaction
Index has been net positive through the half, outperforming
competitors, with sequential improvement each month.
Owners
● Offered advice and
support to help our owners keep their hotels open, including how to
flex operations and reduce costs, or how to temporarily close and
re-open most efficiently and effectively.
● Coordinated
Covid-related demand, such as government repurposing of hotels,
with enhancements made to demand driver mapping, rate loading and
centralised booking to manage urgent and bespoke
needs.
● Rapidly devised new
standard operating procedures including IHG’s Way of Clean to
enable safe operation.
● Moved quickly to
collaborate with governments and secure support for the hospitality
industry on our owners’ behalf, and advised on how to access
the various government support schemes subsequently made
available.
● Our work with
governments and collaboration with industry associations is ongoing
to advocate for ways to safely encourage a resumption in travel
domestically and internationally, and to secure further tax breaks,
reliefs, reforms and other travel and hospitality-related
incentives.
● Delayed the
requirement of owners to undertake renovations, and relaxed brand
standards to conserve owner funds.
● Provided fee relief
and increased payment flexibility, supporting owners’ ability
to continue making payments.
● Offered temporary
discounts on our technology fees, as well as significantly reducing
payments due into the System Fund to match reductions in marketing
and reservations activity undertaken on behalf of
owners.
● Our procurement
teams, having supported owners initially with sourcing PPE and
other emergency supplies, continue to support supplier negotiations
to leverage IHG’s scale.
● We continue to
assist our owners to develop more efficient operating models, in
particular to provide ongoing support to new cleanliness and safety
standards, whilst reducing costs in other areas.
Protected our financial position
Cost actions and cash preservation
● Immediate measures
taken to reduce costs to protect profitability through reducing
salary and incentives, including substantial decreases for Board
and Executive committee members, and challenging all areas of
discretionary spend.
● More
than $50m of Fee Business cost reductions achieved in the half; on
track to achieve ~$150m in the full year.
● Similar actions
taken across the System Fund, in response to expected lower
assessment fee receipts, particularly through reducing marketing
spend.
● Cost containment
action also taken across our owned, leased and managed lease
hotels, contributing to the $130m of overall cost reduction in the
half for this estate.
● Gross capital
expenditure reduced to ~$85m in the half (H1 2019: $101m); continue
to expect ~$150m for 2020, a saving of ~$100m versus
2019.
● Proactive
management of working capital, including measures resulting in
continued payments being received from our owners, contributing to
an overall reduced level of working capital outflow in the
half.
● The Board withdrew
its recommendation of a final dividend in respect of 2019 of
85.9¢, preserving ~$150m of cash; an interim dividend in
respect of 2020 will also not be paid, with the Board continuing to
defer consideration of further dividends until visibility of the
pace and scale of market recovery has improved.
● These cost and cash
preservation actions resulted in broadly neutral free cash flow in
Q2, and limited the first half free cash outflow to $66m (H1 2019:
inflow of $141m).
● Cost and cash
control measures remain in place. Looking ahead to 2021, plans are
in place to make around half of the cost savings sustainable
through ongoing control of discretionary spend and a re-balancing
of resources to meet expected demand, alongside continued
investment in growth initiatives.
Liquidity
● Rapid action taken
to strengthen the liquidity position, building on our conservative
balance sheet approach and the measures taken to reduce costs and
preserve cash.
● Secured covenant
waivers to 31 December 2021 for our $1.35bn syndicated and
bilateral revolving credit facilities (RCF), which are currently
undrawn; the maturity of these was also extended by 18 months to
September 2023.
● The waivers
introduce a minimum liquidity covenant of $400m, tested at half
year and full year.
● Increased total
available liquidity through the issue of £600m (~$740m) of
commercial paper under the UK Government’s Covid Corporate
Financing Facility (CCFF).
● Total available
liquidity of $2.0bn at 30 June 2020, similarly maintained at the
end of July, provides substantial headroom.
Positioning to outperform during the recovery
Cleanliness, health and safety
● Rapidly moving to
prepare for the return of guests, and reflecting the longer-term
shift in guest need for reassurance of cleanliness, we launched
globally the IHG Clean Promise, using new science-led protocols and
redefined service procedures, in partnership with industry-leading
experts.
● Our IHG Way of
Clean programme has been enhanced to include new training and
equipment, increased guest communication and verification
procedures to ensure our standards are adhered to.
● Since the launch of
the IHG Clean Promise in May, we have seen an over 30% uplift in
the number of positive third-party social review comments on
cleanliness from guests.
Technology and loyalty developments
● Leveraging our
prior investment in the cloud-based Concerto GRS platform which has
been implemented across the entire global estate, we have been able
to deploy remotely and rapidly further technological developments
to support a safe and secure guest experience and reduce
unnecessary contact.
● Mobile check-in
& check-out has begun to be rolled-out across the entire
estate, with over 2,000 hotels configured to date.
● Other
mobile-enabled improvements include pilots for in-room dining
orders and real-time Pay-With-Points.
● Real-time scorecard
metrics, such as analysis of Guest Love measures, RevPAR, financial
and operational performance, are now presented live on our Owner
Engagement Portals, which will continually evolve to provide our
global owner community with specific recommendations for
action.
● Optimised our
Revenue Management for Hire (RMH) services using machine learning
technology, which offers enhanced capabilities to help owners
protect pricing and returns during periods of volatile
demand.
● IHG Rewards Club
participation accounts for around half of guest stays, with
enhancements to our loyalty marketing also supporting our most
loyal members who showed higher resilience of demand through the
second quarter.
● Dynamic
pricing for Reward Nights is rolling out globally, with rates now
set daily, enabling more than 80% of hotels globally to reduce
their points pricing to deliver around 25% more value for guests
outside of peak times and leading to increased penetration since
launch.
|
||
|
Delivering system growth and leveraging the scale of our
brands
|
||
|
IHG in
recent years has focused on optimising our portfolio of brands for
owners and guests. Our distinct and preferred brands serve what are
typically the highest growth segments in the largest markets. In
the current environment, where occupancy is recovering slowly and
visibility is low, we anticipate that large global players with
strong brands, such as IHG, will be positioned to outperform the
rest of the market.
Our
business is weighted to the Mainstream segment, representing more
than 70% of our open rooms. The Upper Midscale segment within
Mainstream, which accounts for ~65% of our rooms in the US, has
historically recovered faster than other segments in previous
economic downturns. Our business is also weighted towards non-urban
markets that are less reliant on international inbound travel (~95%
of our US business is domestic driven) and less reliant on large
group meetings and events. These weightings, and our asset-light
model, should provide resilience relative to the wider
industry.
The
large branded operators have also typically gained share during
downturns, due to scale efficiencies and the ability to continue
investing in their brands, technology and loyalty programmes. This
also includes the potential for increased conversion activity, as
well as sustaining a level of development activity, reflecting
lenders’ recognition of the strength and value of our brands
and system. In addition, we anticipate that the current environment
for travellers, with the increased importance of trust in areas
such as booking flexibility and cleanliness standards, should
favour the leading brands such as IHG.
Whilst
Covid-19 has had an understandable impact on development activity
in the period and a level of impact may well also continue for some
time to come, the longer term trends and IHG’s strong
positioning in the market have supported continued opening and
signing activity through the first half of the year:
● With 11,882 rooms
(91 hotels) opened across the Group in the period, and a continued
focus on a high-quality estate leading to planned removals of
12,081 rooms (76 hotels) including 2.1k relating to a previously
flagged portfolio of hotels in Germany, net system size growth was
broadly flat over the six-month period, and up 3.2%
year-on-year.
● Ground breaks
continued in every month in each region, and currently around 40%
of our global pipeline is under construction which is a similar
proportion to a year earlier.
● Signings during the
half totalled 26,236 rooms (181 hotels), with 20-40 hotels signed
in each month, leading to a closing pipeline of 287,525 rooms
(1,932 hotels).
● Of the openings in
the period, ~20% were conversions with the balance being new
builds. Of the signings, ~25% are conversions.
Mainstream – 5,022 hotels, 639k rooms; ~73% of IHG
system
-
Holiday Inn: grew by 12 to 1,246 hotels,
with a record performance for first half hotel signings in Greater
China.
-
Holiday Inn Express: 2,888 hotels, with
44 openings and 74 signings in the half; the strength of our
franchise model in China is also leading to an encouraging number
of conversion opportunities.
-
Staybridge Suites & Candlewood
Suites: with 12 signings and 18 openings, our extended stay
portfolio grew to 726 hotels and saw relative strength and
resilience of demand with ~50% occupancy in Q2.
-
avid hotels: since launch in 2017, there
have been 222 signings and 14 openings; there were 15 signings and
7 openings in the first half of this year, including the first avid
in Mexico, built in just 10 months. The lower cost to build, lean
staffing model and attractive operating economics are expected to
increasingly appeal to owners in a more constrained economic
environment, and equally to guests who look for the basics done
exceptionally well at a fair price.
-
Atwell Suites: our new all-suites upper
midscale brand is also growing at pace with 19 signings to date
since first offered in September 2019, seven of which were in the
first half.
Upscale – 587 hotels, 144k rooms; ~16% of IHG
system
-
Crowne Plaza: four openings in the half,
including two properties in Greater China, taking the total estate
to 428.
-
Hotel Indigo: after a record level of
signings in 2019, good momentum for the brand has continued, now
reaching 121 properties with another 102 in the pipeline to open in
the next 3-5 years. Openings included a conversion property in
Italy and the brand’s first presence in Japan and
Cyprus.
-
voco: has grown to 12 hotels in two
years, with the brand’s pipeline of a further 28 hotels
taking it to 17 countries in EMEAA. We have now signed the first
voco hotels in the Greater China and Americas regions. The voco
brand remains ideally positioned for conversion opportunities that
may increasingly emerge in a post-Covid environment.
-
HUALUXE: has increased to 11 hotels,
with developments in the period including the rebranding to HUALUXE
Shanghai Twelve at Hengshan, the opening of the historic HUALUXE
Xi’an Tanghua and the signing conversion of Shanghai
Changfeng Park.
-
EVEN: the first EVEN Hotel outside of
the Americas opened in Greater China at Nanjing Yangtze River,
marking the 15th to market of our wellness-focused offering, with
almost 30 in the pipeline globally.
Luxury – 309 hotels, 100k rooms; ~11% of IHG
system
-
Six Senses Hotels Resorts Spas: two new
signings in Italy and Japan, increasing the global pipeline to
27.
-
Regent Hotels & Resorts: four
signings since acquisition taking the pipeline to five properties.
Recent opening and conversion of the Regent Shanghai Pudong
completed in just 45 days, showcasing new brand hallmarks that
position Regent in the top tier of luxury. Renovation is underway
to rebrand the InterContinental Hong Kong back to
Regent.
-
InterContinental Hotels & Resorts:
reinforced its position as the largest global luxury hotel brand
with eight signings. There are now 210 hotels in 64 countries, and
a pipeline of 70 properties. The InterContinental Rome conversion
signing marks the return of the brand to Italy, with two other key
conversion signings being the prestigious Imperial Mae Ping Hotel
in Chiang Mai and one of the most famous hotels in the Pacific,
Fiji’s Grand Pacific Hotel in Suva.
-
Kimpton Hotels & Restaurants:
increased Kimpton representation by nine, taking the estate to 72,
with a global pipeline of 34. The signing of Kimpton Shanghai New
Bund is a key step to developing the brand in Greater China.
Kimpton Miami Palomar South Beach opened in the period, while other
major openings anticipated in the second half of the year include
Bangkok and Tokyo.
|
||
|
Continuing our commitments to responsible business
|
|
|
|
As part
of our long-standing commitment to doing business responsibly, we
remain focused on ensuring our business recovers in a way that
protects the environment and supports communities. This approach is
also shaping our long-term Responsible Business strategy and
commitments which we will publish in early 2021. Recent actions
include:
● Initiated work to
reduce our greenhouse gas emissions in line with our Science Based
Target; and to implement the recommendations of the Taskforce on
Climate-related Financial Disclosures (TCFD).
● Joined the
‘Footprint Responsible Business Recovery Forum’, a
community of UK operators, brands and suppliers, to lead on
responsible recovery through peer learning and
collaboration.
● Joined the Council
for Sustainable Business COP26 Business Leaders Meeting with our
FTSE 100 peers, which encourages the business community to build a
more green and resilient economy.
● Signed a joint
letter with other business leaders, encouraging the UK government
to align its Covid-19 response to the 2030 UN Sustainable
Development Goals (SDGs), to drive responsible, sustainable change
that tackles future global risks.
● Strengthened
our focus on inclusion with the launch of commitments for Black
colleagues and communities. Includes doubling the representation of
ethnically diverse colleagues in Americas-based corporate
leadership roles over next four years; roll-out of mandatory
unconscious bias training in the US; developing an inclusion index
to track perception of culture and behaviours; and supporting
education, employability and empowerment in the community through
enhanced partnerships.
|
|
|
|
Regional performance
|
|
|
|
Americas
Comparable
RevPAR decreased 47.6% (Q2: down 71.2%), driven by occupancy
reducing to 41% (Q2: 28%). US RevPAR was down 46.8% for the half,
down 69.3% in Q2, with our performance ahead of the industry in the
second quarter. The decline in the US second quarter saw the
franchised estate, which benefits from a weighting towards domestic
demand-driven mainstream hotels, with a lower reliance on large
group business and higher distribution in non-urban markets,
decline by 66%. This compares to an 86% decline for the US managed
estate, which is weighted to luxury and upscale hotels in urban
markets. On a segment basis, the RevPAR decline in Q2 was most
acute in luxury (down 93%) and upscale (down 83%), whereas the
decline in mainstream, which represents 84% of our rooms in the US,
declined by 64%.
Reported
revenue1
of $262m was down 50% against the comparable period (decreased 49%
at CER and underlying2) and reported
operating profit1 of $153m decreased
56% (down 55% at CER and underlying2).
Underlying
fee business revenue declined by 46% to $226m, whilst underlying
fee business operating profit declined by 49% to $163m. The adverse
mix impact from a higher proportion of temporary closures in the US
managed estate than in the franchised estate, which also led to $5m
lower recognition of incentive management fees, was partially
offset by progress made towards reducing fee business costs, as
well as the benefit of a $4m litigation settlement at one hotel,
and the recognition of a $4m payroll tax credit, with a further
~$7m expected to be recognised in H2 2020.
Reported
owned, leased and managed lease revenue was down 65% to $36m, with
a reported operating loss of $10m compared to $21m profit in the
comparable period. The mitigation of renovation-related losses by
business interruption insurance at one hotel was more than offset
by extended periods of closure and low occupancy across the entire
estate, reflecting the greater dependency on international
travellers to urban and resort locations.
For
July, the comparable RevPAR decline in the Americas region is
expected to be ~54%, representing an ~8%pt improvement on the 62%
decline for June. Occupancy levels in comparable open hotels
improved to ~45%. Given further re-opening progress during the
month, the number of hotels that remained closed at the end of July
reduced to 133, or ~3% of the Americas estate.
EMEAA
Comparable
RevPAR decreased 58.9% (Q2: down 87.6%), driven by occupancy
reducing to 34% (Q2: 14%). In the UK, RevPAR was down 59% for the
half, with the second quarter decline of 90% particularly impacted
by government-mandated hotel closures.
Continental
Europe RevPAR was down 67%, with the closures and travel
restrictions particularly impacting the second quarter, which was
down 96%. Elsewhere, the Middle East was down 46% in the first
half, with Australia and Japan down 48% and 64%
respectively.
Reported
revenue1
of $134m decreased 60% (down 60% at CER) and the reported operating
loss1 was
$16m, a reduction of $104m on the comparable period. Results
include a previously disclosed $1m (H1 2019: $4m) benefit from an
individually significant liquidated damages payment.
On an
underlying2 basis, revenue
decreased 59% to $131m and the operating loss was $20m compared to
$81m profit in the comparable period. Underlying fee business
revenue was down 63% to $56m, with an operating loss of $4m
compared to a $87m profit in the comparable period. The adverse
impact from hotel closures and subdued demand across the estate
resulted in lower recognition of incentive management fees (down
$35m versus the comparable period), which were partially offset by
cost reduction measures.
Reported
owned, leased and managed lease revenue was down 57% to $77m,
whilst the operating loss reported in H1 2019 of $5m increased to a
loss of $13m. This portfolio consists of 12 properties in the UK
and a further six elsewhere in the region, most of which are only
expected to gradually reopen through the third quarter, and once
open we expect to experience low occupancies and lower than usual
non-room revenues. The operating loss for the period includes the
significant cost reduction measures undertaken across the estate,
together with rent reductions received; there was also the benefit
of a $3m gain from the sale of the lease on Holiday Inn Melbourne
Airport for proceeds of $2m.
For
July, the comparable RevPAR decline in the EMEAA region is expected
to be ~74%, representing an ~11%pt improvement on the 85% decline
for June. Occupancy levels in comparable open hotels improved to
over 30%. Given further re-opening progress during the month, the
number of hotels that remained closed at the end of July reduced to
180, or ~16% of the EMEAA estate.
Greater China
Comparable
RevPAR decreased 61.7% (Q2: down 59.2%), in-line with the industry
in the second quarter, with occupancy in comparable hotels of 27%
(Q2: 32%). In Mainland China, RevPAR was down 59%. Tier 1 cities
were down 67% (Q2: down 66%), impacted by their weighting toward
international and group events and meetings demand. Tier 2-4 cities
which are weighted more towards domestic and mainstream demand
performed relatively better with a decline of 55% (Q2: down
50%).
RevPAR
in Hong Kong SAR was down 86% for the half, and down 90% in Q2,
impacted by the reliance on inbound travel and the uncertainty
posed by the political disputes, whilst Macau SAR RevPAR was down
72% for the half.
Reported
revenue1
of $18m decreased by 73% (decreased 72% at CER) and the reported
operating loss was $5m compared to $36m profit in the comparable
period.
On an
underlying2 basis, revenue
decreased by 72% to $18m, with an operating loss of $5m compared to
an operating profit of $35m in the comparable period. The adverse
impact from the current trading environment, including lower
recognition of incentive management fees (down $23m versus the
comparable period), were in part offset by cost reductions across
the region.
For
July, the comparable RevPAR decline in the Greater China region is
expected to be ~36%, representing a ~13%pt improvement on the 49%
decline for June. Occupancy levels in comparable open hotels
improved to over 50%. Given further re-opening progress during the
month, the number of hotels that remained closed at the end of July
reduced to just four, or less than 1% of the Greater China
estate.
|
|
|
|
Cash generation and capital allocation
|
|
|
|
Cash flow
IHG has
taken actions to preserve cash as part of protecting our financial
position, such that:
● Free cash
flow3 was an outflow
of $66m, down $207m year-on-year, driven by the adverse impact from
hotel closures and subdued demand on trading, partially offset by
lower levels of working capital outflow. Free cash flow was broadly
neutral in Q2.
● Net capital
expenditure3 of $39m (H1 2019:
$73m) with $85m gross (H1 2019: $101m). This comprised: $58m
maintenance capex and key money; $2m gross recyclable investments;
and $25m System Fund capital investments; offset by $18m net
disposal proceeds and distributions from associates and joint
ventures (up $13m against the comparable period) and $28m System
Fund depreciation and amortisation. On track to reduce capex by
~$100m in FY 2020.
● Exceptional cash
costs of $30m during the half.
● Net debt of
$2,515m, down $150m on the 2019 close, predominantly due to
exchange rate movements and the derecognition of lease liabilities
from the balance sheet.
Liquidity and financing
IHG has
taken steps to strengthen liquidity as part of maintaining a
conservative balance sheet and leverage approach,
including:
● Amended our
existing $1.35bn syndicated and bilateral revolving credit
facilities (RCF) to include a waiver of existing covenants until 31
December 20216. The interest cover
and leverage ratio covenants have been replaced by a $400m minimum
liquidity covenant (defined as unrestricted cash and undrawn
facilities with a remaining term of 6 months) which was tested at
30 June 2020, and will be tested again at 31 December 2020 and 30
June 2021.
● Extended the
maturity of the RCF for 18 months to September 20237.
● Issued £600m
(~$740m) of commercial paper under the UK Government’s Covid
Corporate Financing Facility (CCFF), maturing on 16 March
2021.
These
steps, together with our cost actions and cash preservation, have
maintained our total available liquidity at 30 June 2020 at $2.0bn,
comprising $611m of net cash balances8 and the undrawn RCF
of $1,350m. At the end of July, total available liquidity was
broadly unchanged at $2.0bn. In the Group’s opinion, the
available facilities are sufficient for the Group’s present
liquidity requirements. However, the Group continues to assess its
liquidity position, financing options and covenant position, and
will take further actions as necessary.
IHG has
a staggered bond maturity profile, with the first maturity not due
for repayment until November 20229.
Shareholder returns
On 20
March 2020, IHG’s Board withdrew its recommendation of a
final dividend in respect of 2019 of 85.9¢ per share, a
payment of which would have resulted in a cash outflow of ~$150m in
the first half of 2020.
An
interim dividend in respect of 2020 will not be paid. The Board
will continue to defer consideration of further dividends until
visibility of the pace and scale of market recovery has
improved.
|
|
|
|
Other financial measures
|
|
|
|
Fee margin
● H1 2020 fee
margin10
of 26.1%, a reduction from 54.1% in the comparable period, impacted
by the adverse trading conditions which were partially offset by
cost reduction measures.
● Net central
operating loss of $58m before exceptional items was flat
year-on-year (increased $1m CER); a $14m decrease in central
revenues, driven by temporary technology fee discounts, was offset
by lower central overheads from our previously announced measures
to reduce our Fee Business costs.
System Fund
System
Fund revenues and costs are recognised on a gross basis with the
in-year surplus or deficit recorded in the Group income statement,
but excluded from results from reportable segments, underlying
results and adjusted EPS, as the Fund is operated for the benefit
of the hotels in the IHG System such that the Group does not make a
gain or loss from operating the Fund over the longer
term.
In H1
2020 we recorded a System Fund income statement deficit of $52m,
largely due to lower assessment fees reflecting the level of
reduction in hotel revenues and fee reliefs given, partly offset by
actions targeted to lower costs such as through a reduction in
marketing spend. System Fund expenses included $22m of expected
credit losses, of which $16m are considered to be attributable to
Covid-19.
Interest
Net
financial expenses were $58m. Adjusted3 interest expense of
$62m, which adds back interest relating to the System Fund, was $4m
lower than in H1 2019 mainly due to lower interest rates in 2020 on
interest payable to the System Fund.
Tax
Effective
rate5 for
H1 2020 was (127)% (H1 2019: 21%), reflecting the recognition of a
tax credit of $19m on one-off items, predominantly in connection
with adjustments to deferred taxes following an internal group
restructuring, UK law change and prior year items. Excluding these
one-off items, the effective tax rate would be 45% due to the
distortive impact of unrelieved foreign taxes and other non-tax
deductible expenses against the low profit base. When considering
H2 expected movements, approximately 45% is our best current
estimate for the full year 2020 effective tax rate, although
forecasting in this area remains challenging given the
uncertainties in the near-term outlook.
Exceptional items
Exceptional
items predominantly comprise impairment charges, with Covid-19
considered as a trigger for impairment testing for substantially
all non-current assets. Cash flow projections used for impairment
testing were based on the latest financial forecasts for 2020 and
assume that RevPAR recovers to 2019 levels over a five-year period
from 2021.
Operating
exceptionals total a net charge of $255m, driven by the following
items:
● impairment of
financial assets, comprising trade deposits and loans ($41m) which
are now not expected to be recoverable, together with a related
impairment of contract assets ($37m), and trade and other
receivables ($22m) to reflect the expected increase in credit
losses;
● non-cash impairment
of other non-current assets, including property, plant and
equipment of owned and leased hotels ($85m), the recoverable
amounts of acquired management agreements ($47m) and the net impact
on our investment in associates ($21m); these impairments reflect
forecasts for individual hotels, with no impairments to goodwill or
the value of indefinite-life brands;
● a $22m gain arising
from the net effect of the derecognition of right-of-use assets
($49m) and lease liabilities ($71m), resulting from a change in
accounting estimate in relation to the UK leased portfolio and two
German leases whereby the leases will now be accounted for as fully
variable, together with an associated provision for onerous
contractual expenditure ($10m).
In
addition, a $21m exceptional fair value gain on contingent purchase
consideration has been recognised, arising from a reduction in
expected future rents payable on the UK leased
portfolio.
Foreign exchange
The
impact of the movement in average USD exchange rates for H1 2020
against a number of currencies (particularly Sterling, Euro and
Renminbi) netted to a $4m negative impact on reported
profit4.
If the 30 June 2020 spot rate had existed throughout H2 2019, H2
2019 reported profit would have been $3m lower.
A full
breakdown of constant currency vs. actual currency RevPAR by region
is set out in Appendix 2.
|
|
|
|
|
|
|
|
|
|
|
|
1 Comprises the Group’s fee business and owned, leased
and managed lease hotels from reportable segments. This excludes
exceptional items, System Fund results and hotel cost
reimbursements.
2 Results from reportable segments excluding significant
liquidated damages and current year acquisitions and disposals at
constant H1 2020 exchange rates (CER). Definitions for Non-GAAP
revenue and operating profit measures can be found on pages 55-59
of the IHG Annual Report and Form 20-F 2019. The ‘Use of
Non-GAAP measures’ section later in the Interim Management
Report contains reconciliations of these measures to the most
directly comparable line items within the Group Financial
Statements.
3 Definitions for Non-GAAP measures including free cash
flow, net capital expenditure and adjusted interest can be found on
pages 55-59 of the IHG Annual Report and Form 20-F 2019. The
‘Use of Non-GAAP measures’ section later in the Interim
Management Report contains reconciliations of these measures to the
most directly comparable line items within the Group Financial
Statements.
4 Based on monthly average exchange rates each
year.
5 Excludes exceptional items and System Fund
results.
6 The RCF has customary covenants in respect of interest
cover and leverage ratio, tested at half year and full year on a
trailing twelve-month basis. Three tests of these covenants were
waived, with the next test occurring on 31 December 2021. The
interest cover covenant requires a ratio of EBITDA to net interest
payable above 3.5:1 and the leverage ratio requires Net Debt:EBITDA
of below 3.5:1 on a “frozen GAAP” basis pre-IFRS
16.
7 The term of the $1.35bn syndicated and bilateral revolving
credit facilities (RCF) has been extended to September 2023. The
interest margin payable on borrowings under the facility is linked
to IHG’s Net Debt:EBITDA ratio. The margin can now vary
between LIBOR + 0.90% and LIBOR + 2.75%.
8 Cash and cash equivalents, net of overdrafts and
restricted cash.
9 The Group currently has $1,870m of sterling and euro bonds
outstanding. The first bond matures in November 2022 (£400m)
and subsequent bonds mature in August 2025 (£300m), August
2026 (£350m) and May 2027(€500m). The Group currently
has a senior unsecured long-term credit rating of BBB- from
Standard and Poor’s. In the event this rating was downgraded
below BBB- there would be an additional step up coupon of 125bps
payable on the bonds which would result in an additional interest
cost of approximately $24m per year.
10 Excludes owned, leased and managed lease hotels,
significant liquidated damages and the results of the Group’s
captive insurance company.
|
|
|
|
Appendix 1: RevPAR Movement Summary
|
|
||||||||||||||||||||
|
|
Half Year 2020
|
Q2 2020
|
Monthly RevPAR
|
||||||||||||||||||
|
RevPAR
|
Rate
|
Occ.
|
RevPAR
|
Rate
|
Occ.
|
April
|
May
|
June
|
|||||||||||||
|
Group
|
(51.7)%
|
(12.1)%
|
(30.6)%pts
|
(74.7)%
|
(27.5)%
|
(47.0)%pts
|
(81.9)%
|
(75.6)%
|
(67.4)%
|
||||||||||||
|
Americas
|
(47.6)%
|
(12.5)%
|
(27.6)%pts
|
(71.2)%
|
(25.9)%
|
(44.7)%pts
|
(80.1)%
|
(72.5)%
|
(62.0)%
|
||||||||||||
|
EMEAA
|
(58.9)%
|
(13.1)%
|
(37.6)%pts
|
(87.6)%
|
(31.8)%
|
(61.0)%pts
|
(89.3)%
|
(88.5)%
|
(85.3)%
|
||||||||||||
|
G.
China
|
(61.7)%
|
(17.1)%
|
(31.3)%pts
|
(59.2)%
|
(20.6)%
|
(30.5)%pts
|
(71.2)%
|
(57.1)%
|
(48.6)%
|
||||||||||||
|
Appendix 2: Comparable RevPAR movement at constant exchange rates
(CER) vs. actual exchange rates (AER)
|
|
||||||||||||||||||||
|
|
Half Year 2020
|
Q2 2020
|
|||||||||||||||||||
|
CER
|
AER
|
Difference
|
CER
|
AER
|
Difference
|
||||||||||||||||
|
Group
|
(51.7)%
|
(52.1)%
|
(0.4)%pts
|
(74.7)%
|
(74.9)%
|
(0.2)%pts
|
|||||||||||||||
|
Americas
|
(47.6)%
|
(47.8)%
|
(0.2)%pts
|
(71.2)%
|
(71.3)%
|
(0.1)%pts
|
|||||||||||||||
|
EMEAA
|
(58.9)%
|
(59.5)%
|
(0.6)%pts
|
(87.6)%
|
(87.9)%
|
(0.3)%pts
|
|||||||||||||||
|
G.
China
|
(61.7)%
|
(62.8)%
|
(1.1)%pts
|
(59.2)%
|
(60.6)%
|
(1.3)%pts
|
|||||||||||||||
|
Appendix 3: Half Year System & Pipeline Summary
(rooms)
|
|
||||||||||||||||||||
|
|
System
|
Pipeline
|
|||||||||||||||||||
|
Openings
|
Removals
|
Net
|
Total
|
YoY%
|
Signings
|
Total
|
|||||||||||||||
|
Group
|
11,882
|
(12,081)
|
(199)
|
883,364
|
3.2%
|
26,236
|
287,525
|
||||||||||||||
|
Americas
|
4,990
|
(6,139)
|
(1,149)
|
523,498
|
1.7%
|
9,148
|
115,940
|
||||||||||||||
|
EMEAA
|
2,530
|
(4,708)
|
(2,178)
|
221,192
|
2.9%
|
4,372
|
79,998
|
||||||||||||||
|
G.
China
|
4,362
|
(1,234)
|
3,128
|
138,674
|
9.9%
|
12,716
|
91,587
|
||||||||||||||
|
Appendix 4: Half Year financial headlines
|
|
||||||||||||||||||||
|
|
GROUP
|
REPORTABLE SEGMENTS
|
|
||||||||||||||||||
|
|
Total
|
Americas
|
EMEAA
|
G. China
|
Central
|
|
|||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
|
|||||||||||
|
Revenue ($m)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Revenue from reportable segments
|
488
|
1,012
|
262
|
520
|
134
|
338
|
18
|
66
|
74
|
88
|
|
||||||||||
|
System
Fund
|
385
|
675
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
||||||||||
|
Hotel
Cost Reimbursements
|
375
|
593
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
||||||||||
|
Group Revenue
|
1,248
|
2,280
|
262
|
520
|
134
|
338
|
18
|
66
|
74
|
88
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Operating Profit ($m)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fee
Business excluding central overheads
|
155
|
452
|
163
|
323
|
(3)
|
93
|
(5)
|
36
|
-
|
-
|
|
||||||||||
|
Owned,
leased & managed lease
|
(23)
|
16
|
(10)
|
21
|
(13)
|
(5)
|
-
|
-
|
-
|
-
|
|
||||||||||
|
Central
|
(58)
|
(58)
|
-
|
-
|
-
|
-
|
-
|
-
|
(58)
|
(58)
|
|
||||||||||
|
Operating (loss)/profit from reportable segments
|
74
|
410
|
153
|
344
|
(16)
|
88
|
(5)
|
36
|
(58)
|
(58)
|
|
||||||||||
|
System
Fund result
|
(52)
|
47
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
||||||||||
|
Operating (loss)/profit before exceptionals
|
22
|
457
|
153
|
344
|
(16)
|
88
|
(5)
|
36
|
(58)
|
(58)
|
|
||||||||||
|
Operating
exceptional items
|
(255)
|
(15)
|
(148)
|
(2)
|
(99)
|
(2)
|
(7)
|
-
|
(1)
|
(11)
|
|
||||||||||
|
Operating (loss)/profit after exceptionals
|
(233)
|
442
|
5
|
342
|
(115)
|
86
|
(12)
|
36
|
(59)
|
(69)
|
|
||||||||||
|
|
Total***
|
Americas
|
EMEAA
|
G. China
|
||||
|
Reported
|
Actual*
|
CER**
|
Actual*
|
CER**
|
Actual*
|
CER**
|
Actual*
|
CER**
|
|
Growth
/ (decline)
|
(82)%
|
(82)%
|
(56)%
|
(55)%
|
(118)%
|
(119)%
|
(114)%
|
(114)%
|
|
|
Total***
|
Americas
|
EMEAA
|
G. China
|
|
Growth
/ (decline)
|
(83)%
|
(55)%
|
(125)%
|
(114)%
|
|
Exchange rates:
|
USD:GBP
|
USD:EUR
|
* US
dollar actual currency
|
|
H1 2020
|
0.79
|
0.91
|
**
Translated at constant H1 2020 exchange rates
|
|
H1 2019
|
0.77
|
0.89
|
***
After central overheads
|
|
|
|
|
**** At
CER and excluding: significant liquidated damages, current year
disposals, System Fund results and hotel cost
reimbursements
|
|
Appendix 7: Definitions
|
|
CER: constant exchange rates with H1 2020 exchange rates
applied to H1 2019.
Comparable RevPAR: revenue per available room for hotels
that have traded for all of 2019 and 2020, reported at CER.
Comparable RevPAR includes the adverse impact of hotels temporarily
closed as a result of Covid-19.
Fee revenue: group revenue from reportable segments
excluding owned, leased and managed lease hotels, and significant
liquidated damages.
Fee margin: adjusted to exclude owned, leased and managed
lease hotels, significant liquidated damages, and the results of
the Group’s captive insurance company.
Guest Satisfaction Index (GSI): is an IHG metric that uses
third party aggregated social review data to benchmark IHG guest
satisfaction performance against that of our
competitors.
Reportable segments: group results excluding System Fund
results, hotel cost reimbursements and exceptional
items.
Significant liquidated damages: $1m in H1 2020 ($1m in EMEAA
fee business); $4m in H1 2019 ($4m in EMEAA fee
business).
Total gross revenue: total rooms revenue from franchised
hotels and total hotel revenue from managed, owned, leased and
managed lease hotels. Other than owned, leased and managed lease
hotels, it is not revenue attributable to IHG, as it is derived
mainly from hotels owned by third parties.
Total RevPAR: Revenue per available room including hotels
that have opened or exited in either 2019 or 2020, reported at
CER.
Adjusted Interest: adds back interest relating to the System
Fund.
|
|
For further information, please contact:
|
||
|
Investor
Relations (Stuart Ford, Matthew Kay, Rakesh Patel):
|
+44
(0)1895 512 176
|
+44
(0)7527 419 431
|
|
Media
Relations (Yasmin Diamond; Mark Debenham):
|
+44
(0)1895 512 097
|
+44
(0)7527 424 046
|
|
|
|
|
|
Presentation for Analysts and
Shareholders:
A conference call and webcast presented by Keith Barr, Chief
Executive Officer and Paul Edgecliffe-Johnson, Chief Financial
Officer will commence at 9.30am (London time) on 11 August 2020 on
the web address:
https://www.investis-live.com/ihg/5f17013527577e10000ac663/jefs
For those wishing to ask questions, please use the dial-in details
below which will have a Q&A facility:
UK Local:
0203 936 2999
UK:
0800 640 6441
US:
+1 646 664 1960
+1 855 9796 654
International
dial-in:
+44 20 3936 2999
Passcode:
84 25 69
The archived webcast of the presentation is expected to be on this website later on the day of the results and will remain on it for the foreseeable future: www.ihgplc.com/en/investors/results-and-presentations A replay will also be available following the event using the following details:
UK:
0203 936 3001
US:
+1 845 709 8569
International
dial-in:
+44 (0) 203 936 3001
Passcode:
72 23 89
|
||
|
Website:
The full release and supplementary data will be available on our
website from 7:00am (London time) on 11 August. The web address
is www.ihgplc.com/en/investors/results-and-presentations.
|
||
|
Notes to Editors:
IHG®
(InterContinental Hotels Group)
[LON:IHG, NYSE:IHG (ADRs)] is a global organisation with a broad
portfolio of hotel brands, including Six Senses Hotels Resorts Spas, Regent
Hotels & Resorts, InterContinental®
Hotels & Resorts,
Kimpton®
Hotels & Restaurants,
Hotel Indigo®,
EVEN®
Hotels, HUALUXE®
Hotels and Resorts,
Crowne Plaza®
Hotels & Resorts,
voco™, Holiday Inn®
Hotels &
Resorts ,
Holiday Inn Express®,
Holiday Inn Club
Vacations®,
avid™ hotels,
Staybridge Suites®,
Atwell Suites™, and
Candlewood Suites®.
IHG franchises, leases, manages or owns more than 5,900 hotels and
approximately 883,000 guest rooms in more than 100 countries, with
over 1,900 hotels in its development pipeline. IHG also
manages IHG®
Rewards Club, our global
loyalty programme, which has more than 100 million enrolled
members.
InterContinental Hotels Group PLC is the Group’s
holding company and is incorporated in Great Britain and registered
in England and Wales. Approximately 400,000 people work across IHG’s hotels and
corporate offices globally.
Visit www.ihg.com for hotel information and reservations and
www.ihgrewardsclub.com
for more on IHG Rewards Club. For our
latest news, visit: https://www.ihgplc.com/en/news-and-media
and follow us on social media
at: https://twitter.com/ihgcorporate,
www.facebook.com/ihgcorporate
and www.linkedin.com/company/intercontinental-hotels-group.
|
||
|
Cautionary note regarding forward-looking statements:
This
announcement contains certain forward-looking statements as defined
under United States law (Section 21E of the Securities Exchange Act
of 1934) and otherwise. 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. These statements are based on
assumptions and assessments made by InterContinental Hotels Group
PLC’s management in light of their experience and their
perception of historical trends, current conditions, expected
future developments and other factors they believe to be
appropriate. 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. The main factors
that could affect the business and the financial results are
described in the ‘Risk Factors’ section in the current
InterContinental Hotels Group PLC’s Annual report and Form
20-F filed with the United States Securities and Exchange
Commission.
|
|
|
6
months ended 30 June
|
|||
|
Group results
|
|
|
|
|
|
|
2020
|
2019
|
%
|
|
|
|
$m
|
$m
|
change
|
|
|
Revenuea
|
|
|
|
|
|
Americas
|
262
|
520
|
(49.6)
|
|
|
EMEAA
|
134
|
338
|
(60.4)
|
|
|
Greater
China
|
18
|
66
|
(72.7)
|
|
|
Central
|
74
|
88
|
(15.9)
|
|
|
|
____
|
____
|
____
|
|
|
Revenue
from reportable segments
|
488
|
1,012
|
(51.8)
|
|
|
|
|
|
|
|
|
System
Fund revenues
|
385
|
675
|
(43.0)
|
|
|
Reimbursement
of costs
|
375
|
593
|
(36.8)
|
|
|
|
____
|
____
|
____
|
|
|
Total
revenue
|
1,248
|
2,280
|
(45.3)
|
|
|
|
____
|
____
|
____
|
|
|
Operating profita
|
|
|
|
|
|
Americas
|
153
|
344
|
(55.5)
|
|
|
EMEAA
|
(16)
|
88
|
(118.2)
|
|
|
Greater
China
|
(5)
|
36
|
(113.9)
|
|
|
Central
|
(58)
|
(58)
|
-
|
|
|
|
____
|
____
|
____
|
|
|
Operating
profit from reportable segments
|
74
|
410
|
(82.0)
|
|
|
System
Fund result
|
(52)
|
47
|
(210.6)
|
|
|
|
____
|
____
|
____
|
|
|
Operating
profit before exceptional items
|
22
|
457
|
(95.2)
|
|
|
Operating
exceptional items
|
(255)
|
(15)
|
1,600.0
|
|
|
|
____
|
____
|
____
|
|
|
Operating
(loss)/profit
|
(233)
|
442
|
(152.7)
|
|
|
Net
financial expenses
|
(58)
|
(57)
|
1.8
|
|
|
Fair
value gains/(losses) on contingent purchase
consideration
|
16
|
(10)
|
(260.0)
|
|
|
|
____
|
____
|
____
|
|
|
(Loss)/profit
before tax
|
(275)
|
375
|
(173.3)
|
|
|
|
____
|
____
|
____
|
|
|
(Loss)/earnings
per ordinary share
|
|
|
|
|
|
|
Basic
|
(115.4)¢
|
167.2¢
|
(169.0)
|
|
|
Adjustedb
|
14.3¢
|
148.6¢
|
(90.4)
|
|
|
|
|
|
|
|
Average
US dollar to sterling exchange rate
|
$1: £0.79
|
$1:
£0.77
|
|
|
|
|
|
|
|
|
|
|
Hotels
|
|
Rooms
|
|||
|
|
||||||
|
Global hotel and room count
|
|
Change over
|
|
|
Change over
|
|
|
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
30 June
|
31 December
|
|
30 June
|
31 December
|
|
|
Analysed by brand
|
|
|
|
|
|
|
|
|
Six Senses
|
15
|
(3)
|
|
1,083
|
(365)
|
|
Regent
|
7
|
1
|
|
2,190
|
187
|
|
|
|
InterContinental
|
210
|
(2)
|
|
70,812
|
(169)
|
|
|
Kimpton
|
72
|
6
|
|
13,303
|
257
|
|
|
HUALUXE
|
11
|
2
|
|
3,263
|
553
|
|
|
Crowne Plaza
|
428
|
(3)
|
|
119,672
|
(910)
|
|
Hotel Indigo
|
121
|
3
|
|
14,781
|
207
|
|
|
|
EVEN Hotels
|
15
|
2
|
|
2,208
|
259
|
|
|
voco
|
12
|
-
|
|
4,293
|
-
|
|
|
Holiday Inn1
|
1,274
|
(10)
|
|
237,361
|
(2,533)
|
|
|
Holiday Inn Express
|
2,888
|
13
|
|
300,846
|
1,612
|
|
avid hotels
|
14
|
7
|
|
1,259
|
624
|
|
|
|
Staybridge Suites
|
311
|
11
|
|
33,992
|
1,359
|
|
|
Candlewood Suites
|
415
|
5
|
|
38,710
|
378
|
|
|
Other
|
125
|
(17)
|
|
39,591
|
(1,658)
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
5,918
|
15
|
|
883,364
|
(199)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Analysed by ownership type
|
|
|
|
|
|
|
|
|
Franchised
|
4,887
|
17
|
|
614,478
|
(496)
|
|
|
Managed
|
1,006
|
(1)
|
|
262,762
|
509
|
|
|
Owned, leased and managed lease
|
25
|
(1)
|
|
6,124
|
(212)
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
5,918
|
15
|
|
883,364
|
(199)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
|
Hotels
|
|
Rooms
|
|||
|
|
||||||
|
Global Pipeline
|
|
Change over
|
|
|
Change over
|
|
|
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
30 June
|
31 December
|
|
30 June
|
31 December
|
|
|
Analysed by brand
|
|
|
|
|
|
|
|
|
Six Senses
|
27
|
2
|
|
1,922
|
152
|
|
Regent
|
5
|
-
|
|
1,141
|
197
|
|
|
|
InterContinental
|
70
|
5
|
|
18,425
|
1,407
|
|
|
Kimpton
|
34
|
1
|
|
6,839
|
636
|
|
|
HUALUXE
|
23
|
1
|
|
6,487
|
307
|
|
|
Crowne Plaza
|
91
|
3
|
|
25,091
|
585
|
|
Hotel Indigo
|
102
|
1
|
|
15,449
|
301
|
|
|
|
EVEN Hotels
|
29
|
3
|
|
4,681
|
339
|
|
|
voco1
|
21
|
4
|
|
6,752
|
532
|
|
|
Holiday Inn2
|
278
|
3
|
|
53,758
|
849
|
|
|
Holiday Inn Express
|
755
|
1
|
|
95,941
|
67
|
|
avid hotels
|
208
|
1
|
|
19,097
|
29
|
|
|
|
Staybridge Suites
|
168
|
(14)
|
|
19,050
|
(1,684)
|
|
|
Candlewood Suites
|
83
|
(8)
|
|
7,471
|
(715)
|
|
|
Atwell Suites
|
17
|
7
|
|
1,667
|
667
|
|
|
Other
|
21
|
4
|
|
3,754
|
813
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
1,932
|
14
|
|
287,525
|
4,482
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Analysed by ownership type
|
|
|
|
|
|
|
|
|
Franchised
|
1,420
|
9
|
|
169,874
|
3,233
|
|
|
Managed
|
511
|
5
|
|
117,496
|
1,249
|
|
Owned, leased and managed lease
|
1
|
-
|
|
155
|
-
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
1,932
|
14
|
|
287,525
|
4,482
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
AMERICAS
|
6 months ended 30 June
|
||||
|
Americas Results
|
|
|
|
||
|
|
2020
|
2019
|
%
|
||
|
|
$m
|
$m
|
change
|
||
|
Revenue from
the reportable segmenta
|
|
|
|
||
|
|
Fee
business
|
226
|
418
|
(45.9)
|
|
|
|
Owned,
leased and managed lease
|
36
|
102
|
(64.7)
|
|
|
|
____
|
____
|
____
|
||
|
Total
|
|
262
|
520
|
(49.6)
|
|
|
|
____
|
____
|
____
|
||
|
Operating profit from the reportable segmenta
|
|
|
|
||
|
|
Fee
business
|
163
|
323
|
(49.5)
|
|
|
|
Owned,
leased and managed lease
|
(10)
|
21
|
(147.6)
|
|
|
|
____
|
____
|
____
|
||
|
|
|
153
|
344
|
(55.5)
|
|
|
Operating
exceptional items
|
|
(148)
|
(2)
|
7300.0
|
|
|
|
____
|
____
|
____
|
||
|
Operating
profit
|
5
|
342
|
(98.5)
|
||
|
|
____
|
____
|
____
|
||
|
|
|
|
|
||
|
|
|
||
|
Americas Comparable
RevPARb
movement on previous
year
|
6 months ended
30 June 2020
|
||
|
Fee business
|
|
|
|
|
|
InterContinental
|
|
(60)%
|
|
|
Kimpton
|
|
(63)%
|
|
|
Crowne Plaza
|
|
(56)%
|
|
|
Hotel Indigo
|
|
(56)%
|
|
|
EVEN Hotels
|
|
(62)%
|
|
|
Holiday Inn
|
|
(51)%
|
|
|
Holiday Inn Express
|
|
(44)%
|
|
|
Staybridge Suites
|
|
(38)%
|
|
|
Candlewood Suites
|
|
(28)%
|
|
|
All brands
|
|
(48)%
|
|
|
|
|
|
|
Owned, leased and managed lease
|
|
|
|
|
|
EVEN Hotels
|
|
(55)%
|
|
|
Holiday Inn
|
|
(51)%
|
|
|
All brands
|
|
(52)%
|
|
|
Hotels
|
|
Rooms
|
|||
|
|
||||||
|
Americas hotel and room count
|
|
Change over
|
|
|
Change over
|
|
|
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
30 June
|
31 December
|
|
30 June
|
31 December
|
|
|
Analysed by brand
|
|
|
|
|
|
|
|
|
InterContinental
|
50
|
(1)
|
|
17,769
|
(127)
|
|
|
Kimpton
|
65
|
4
|
|
11,858
|
(139)
|
|
|
Crowne Plaza
|
147
|
(2)
|
|
39,350
|
(525)
|
|
Hotel Indigo
|
64
|
-
|
|
8,274
|
7
|
|
|
|
EVEN Hotels
|
14
|
1
|
|
2,036
|
87
|
|
|
Holiday Inn1
|
774
|
(9)
|
|
133,458
|
(1,828)
|
|
|
Holiday Inn Express
|
2,379
|
11
|
|
216,154
|
1,161
|
|
avid hotels
|
14
|
7
|
|
1,259
|
624
|
|
|
|
Staybridge Suites
|
294
|
11
|
|
31,416
|
1,172
|
|
|
Candlewood Suites
|
415
|
5
|
|
38,710
|
378
|
|
|
Other
|
101
|
(17)
|
|
23,214
|
(1,959)
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
4,317
|
10
|
|
523,498
|
(1,149)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Analysed by ownership type
|
|
|
|
|
|
|
|
|
Franchised
|
4,025
|
17
|
|
465,249
|
(16)
|
|
|
Managed
|
285
|
(7)
|
|
56,032
|
(1,128)
|
|
Owned, leased and managed lease
|
7
|
-
|
|
2,217
|
(5)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
4,317
|
10
|
|
523,498
|
(1,149)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
|
Hotels
|
|
Rooms
|
|||
|
|
||||||
|
Americas Pipeline
|
|
Change over
|
|
|
Change over
|
|
|
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
30 June
|
31 December
|
|
30 June
|
31 December
|
|
|
Analysed by brand
|
|
|
|
|
|
|
|
|
Six Senses
|
5
|
-
|
|
422
|
-
|
|
|
InterContinental
|
8
|
1
|
|
1,895
|
346
|
|
|
Kimpton
|
21
|
-
|
|
3,593
|
134
|
|
|
Crowne Plaza
|
6
|
1
|
|
1,250
|
157
|
|
Hotel Indigo
|
36
|
(1)
|
|
4,923
|
(249)
|
|
|
|
EVEN Hotels
|
17
|
2
|
|
2,096
|
230
|
|
|
voco
|
1
|
1
|
|
50
|
50
|
|
|
Holiday Inn1
|
97
|
(1)
|
|
12,585
|
79
|
|
|
Holiday Inn Express
|
441
|
(7)
|
|
42,615
|
(488)
|
|
avid hotels
|
207
|
1
|
|
18,882
|
29
|
|
|
|
Staybridge Suites
|
149
|
(13)
|
|
15,512
|
(1,362)
|
|
|
Candlewood Suites
|
83
|
(8)
|
|
7,471
|
(715)
|
|
|
Atwell Suites
|
17
|
7
|
|
1,667
|
667
|
|
|
Other
|
18
|
2
|
|
2,979
|
200
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
1,106
|
(15)
|
|
115,940
|
(922)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Analysed by ownership type
|
|
|
|
|
|
|
|
|
Franchised
|
1,061
|
(16)
|
|
108,799
|
(1,187)
|
|
|
Managed
|
45
|
1
|
|
7,141
|
265
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
1,106
|
(15)
|
|
115,940
|
(922)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
|
|
||||
|
|
6 months
ended 30 June
|
||||
|
EMEAA results
|
|
|
|
||
|
|
2020
|
2019
|
%
|
||
|
|
$m
|
$m
|
change
|
||
|
Revenue from the reportable segmenta
|
|
|
|
||
|
|
Fee
business
|
57
|
158
|
(63.9)
|
|
|
|
Owned,
leased and managed lease
|
77
|
180
|
(57.2)
|
|
|
|
____
|
____
|
____
|
||
|
Total
|
|
134
|
338
|
(60.4)
|
|
|
|
____
|
____
|
____
|
||
|
Operating (loss)/profit from the reportable segmenta
|
|
|
|
||
|
|
Fee
business
|
(3)
|
93
|
(103.2)
|
|
|
|
Owned,
leased and managed lease
|
(13)
|
(5)
|
160.0
|
|
|
|
____
|
____
|
____
|
||
|
|
|
(16)
|
88
|
(118.2)
|
|
|
Operating
exceptional items
|
|
(99)
|
(2)
|
4,850.0
|
|
|
|
|
____
|
____
|
____
|
|
|
Operating
(loss)/profit
|
(115)
|
86
|
(233.7)
|
||
|
|
____
|
____
|
____
|
||
|
|
|
|
|
|
|
|
||
|
EMEAA comparable
RevPARb
movement on previous
year
|
6 months ended
30 June 2020
|
||
|
Fee business
|
|
||
|
|
InterContinental
|
|
(59)%
|
|
|
Crowne Plaza
|
|
(59)%
|
|
|
Hotel Indigo
|
|
(65)%
|
|
|
Holiday Inn
|
|
(58)%
|
|
|
Holiday Inn Express
|
|
(60)%
|
|
|
Staybridge Suites
|
|
(46)%
|
|
|
All brands
|
|
(59)%
|
|
|
|
|
|
|
Owned, leased and managed leases
|
|
|
|
|
|
InterContinental
|
|
(59)%
|
|
|
All brands
|
(64)%
|
|
|
|
Hotels
|
|
Rooms
|
|||
|
|
||||||
|
EMEAA hotel and room count
|
|
Change over
|
|
|
Change over
|
|
|
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
30 June
|
31 December
|
|
30 June
|
31 December
|
|
|
Analysed by brand
|
|
|
|
|
|
|
|
|
Six Senses
|
14
|
(3)
|
|
961
|
(365)
|
|
Regent
|
3
|
-
|
|
771
|
-
|
|
|
|
InterContinental
|
111
|
(2)
|
|
33,030
|
(485)
|
|
|
Kimpton
|
6
|
2
|
|
1,316
|
396
|
|
|
Crowne Plaza
|
184
|
(2)
|
|
45,851
|
(560)
|
|
Hotel Indigo
|
44
|
3
|
|
4,639
|
200
|
|
|
|
voco
|
12
|
-
|
|
4,293
|
-
|
|
|
Holiday Inn1
|
393
|
(1)
|
|
73,552
|
120
|
|
|
Holiday Inn Express
|
315
|
(9)
|
|
45,053
|
(1,401)
|
|
|
Staybridge Suites
|
17
|
-
|
|
2,576
|
187
|
|
|
Other
|
14
|
(1)
|
|
9,150
|
(270)
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
1,113
|
(13)
|
|
221,192
|
(2,178)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Analysed by ownership type
|
|
|
|
|
|
|
|
|
Franchised
|
762
|
(11)
|
|
124,258
|
(2,197)
|
|
|
Managed
|
333
|
(1)
|
|
93,027
|
226
|
|
Owned, leased and managed lease
|
18
|
(1)
|
|
3,907
|
(207)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
1,113
|
(13)
|
|
221,192
|
(2,178)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
|
Hotels
|
|
Rooms
|
|||
|
|
||||||
|
EMEAA Pipeline
|
|
Change over
|
|
|
Change over
|
|
|
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
30 June
|
31 December
|
|
30 June
|
31 December
|
|
|
Analysed by brand
|
|
|
|
|
|
|
|
|
Six Senses
|
19
|
2
|
|
1,331
|
152
|
|
Regent
|
4
|
-
|
|
861
|
197
|
|
|
|
InterContinental
|
33
|
2
|
|
8,166
|
659
|
|
|
Kimpton
|
7
|
-
|
|
1,592
|
345
|
|
|
Crowne Plaza
|
34
|
(1)
|
|
9,102
|
(313)
|
|
Hotel Indigo
|
38
|
(2)
|
|
5,596
|
(56)
|
|
|
|
voco1
|
18
|
1
|
|
6,257
|
37
|
|
|
Holiday Inn2
|
114
|
(5)
|
|
24,929
|
(1,007)
|
|
|
Holiday Inn Express
|
105
|
(7)
|
|
17,636
|
(1,413)
|
|
avid hotels
|
1
|
-
|
|
215
|
-
|
|
|
|
Staybridge Suites
|
19
|
(1)
|
|
3,538
|
(322)
|
|
|
Other
|
3
|
2
|
|
775
|
613
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
395
|
(9)
|
|
79,998
|
(1,108)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Analysed by ownership type
|
|
|
|
|
|
|
|
|
Franchised
|
159
|
(6)
|
|
26,624
|
(707)
|
|
|
Managed
|
235
|
(3)
|
|
53,219
|
(401)
|
|
Owned, leased and managed lease
|
1
|
-
|
|
155
|
-
|
|
|
|
|
____
|
____
|
|
______
|
____
|
|
Total
|
395
|
(9)
|
|
79,998
|
(1,108)
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
|
6 months ended 30
June
|
||||
|
|
|
|
|
||
|
Greater China results
|
2020
|
2019
|
%
|
||
|
|
$m
|
$m
|
Change
|
||
|
|
|
|
|
||
|
Revenue from the reportable segmenta
|
|
|
|
||
|
|
Fee
business
|
18
|
66
|
(72.7)
|
|
|
|
|
____
|
____
|
____
|
|
|
Total
|
|
18
|
66
|
(72.7)
|
|
|
|
____
|
____
|
____
|
||
|
Operating (loss)/profit from the reportable segmenta
|
|
|
|
||
|
|
Fee
business
|
(5)
|
36
|
(113.9)
|
|
|
|
____
|
____
|
____
|
||
|
|
|
(5)
|
36
|
(113.9)
|
|
|
Operating
exceptional items
|
|
(7)
|
-
|
-
|
|
|
|
|
____
|
____
|
____
|
|
|
Operating
(loss)/profit
|
|
(12)
|
36
|
(133.3)
|
|
|
|
|
____
|
____
|
____
|
|
|
|
|
||
|
|
|
|
|
|
Greater China comparable
RevPARb
movement on previous
year
|
6 months ended
30 June 2020
|
||
|
Fee business
|
|
|
|
|
|
InterContinental
|
|
(61)%
|
|
|
HUALUXE
|
|
(45)%
|
|
|
Crowne Plaza
|
|
(61)%
|
|
|
Hotel Indigo
|
|
(65)%
|
|
|
Holiday Inn
|
|
(65)%
|
|
|
Holiday Inn Express
|
|
(60)%
|
|
|
All brands
|
|
(62)%
|
|
|
Hotels
|
|
Rooms
|
|||
|
|
||||||
|
Greater China hotel and room count
|
|
Change over
|
|
|
Change over
|
|
|
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
30 June
|
31 December
|
|
30 June
|
31 December
|
|
|
Analysed by brand
|
|
|
|
|
|
|
|
|
Six Senses
|
1
|
-
|
|
122
|
-
|
|
Regent
|
4
|
1
|
|
1,419
|
187
|
|
|
|
InterContinental
|
49
|
1
|
|
20,013
|
443
|
|
|
Kimpton
|
1
|
-
|
|
129
|
-
|
|
|
HUALUXE
|
11
|
2
|
|
3,263
|
553
|
|
|
Crowne Plaza
|
97
|
1
|
|
34,471
|
175
|
|
Hotel Indigo
|
13
|
-
|
|
1,868
|
-
|
|
|
|
EVEN Hotels
|
1
|
1
|
|
172
|
172
|
|
|
Holiday Inn1
|
107
|
-
|
|
30,351
|
(825)
|
|
|
Holiday Inn Express
|
194
|
11
|
|
39,639
|
1,852
|
|
|
Other
|
10
|
1
|
|
7,227
|
571
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
488
|
18
|
|
138,674
|
3,128
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Analysed by ownership type
|
|
|
|
|
|
|
|
|
Franchised
|
100
|
11
|
|
24,971
|
1,717
|
|
|
Managed
|
388
|
7
|
|
113,703
|
1,411
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
488
|
18
|
|
138,674
|
3,128
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
|
Hotels
|
|
Rooms
|
|||
|
|
||||||
|
Greater China Pipeline
|
|
Change over
|
|
|
Change over
|
|
|
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
30
June
|
31 December
|
|
30 June
|
31 December
|
|
|
Analysed by brand
|
|
|
|
|
|
|
|
|
Six Senses
|
3
|
-
|
|
169
|
-
|
|
Regent
|
1
|
-
|
|
280
|
-
|
|
|
|
InterContinental
|
29
|
2
|
|
8,364
|
402
|
|
|
Kimpton
|
6
|
1
|
|
1,654
|
157
|
|
|
HUALUXE
|
23
|
1
|
|
6,487
|
307
|
|
|
Crowne Plaza
|
51
|
3
|
|
14,739
|
741
|
|
Hotel Indigo
|
28
|
4
|
|
4,930
|
606
|
|
|
|
EVEN Hotels
|
12
|
1
|
|
2,585
|
109
|
|
|
voco
|
2
|
2
|
|
445
|
445
|
|
|
Holiday Inn1
|
67
|
9
|
|
16,244
|
1,777
|
|
|
Holiday Inn Express
|
209
|
15
|
|
35,690
|
1,968
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
431
|
38
|
|
91,587
|
6,512
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Analysed by ownership type
|
|
|
|
|
|
|
|
|
Franchised
|
200
|
31
|
|
34,451
|
5,127
|
|
|
Managed
|
231
|
7
|
|
57,136
|
1,385
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
Total
|
431
|
38
|
|
91,587
|
6,512
|
|
|
|
|
____
|
____
|
|
______
|
_____
|
|
|
6 months ended 30 June
|
|||
|
|
|
|
|
|
|
|
2020
|
2019
|
%
|
|
|
Central results
|
$m
|
$m
|
change
|
|
|
|
|
|
|
|
|
Revenue
|
74
|
88
|
(15.9)
|
|
|
Gross
costs
|
(132)
|
(146)
|
(9.6)
|
|
|
|
____
|
____
|
____
|
|
|
|
|
(58)
|
(58)
|
-
|
|
Operating
exceptional items
|
|
(1)
|
(11)
|
(90.9)
|
|
|
____
|
____
|
____
|
|
|
Operating
loss
|
(59)
|
(69)
|
(14.5)
|
|
|
|
____
|
____
|
____
|
|
|
Reportable segments
|
6 months ended 30 June
|
|
6 months ended 30 June
|
||||
|
|
Revenue
|
|
Operating profit
|
||||
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
2020
|
2019
|
%
|
|
2020
|
2019
|
%
|
|
|
$m
|
$m
|
change
|
|
$m
|
$m
|
change
|
|
|
|
|
|
|
|
|
|
|
Per Group income statement
|
1,248
|
2,280
|
(45.3)
|
|
(233)
|
442
|
(152.7)
|
|
System Fund
|
(385)
|
(675)
|
(43.0)
|
|
52
|
(47)
|
(210.6)
|
|
Reimbursement of costs
|
(375)
|
(593)
|
(36.8)
|
|
-
|
-
|
-
|
|
Operating exceptional items
|
-
|
-
|
-
|
|
255
|
15
|
1,600.0
|
|
|
_____
|
_____
|
_____
|
|
_____
|
_____
|
_____
|
|
Reportable segments
|
488
|
1,012
|
(51.8)
|
|
74
|
410
|
(82.0)
|
|
|
_____
|
_____
|
_____
|
|
_____
|
_____
|
_____
|
|
Reportable segments analysed as:
|
|
|
|
|
|
|
|
|
Fee business
|
375
|
730
|
(48.6)
|
|
97
|
394
|
(75.4)
|
|
Owned, leased and managed lease
|
113
|
282
|
(59.9)
|
|
(23)
|
16
|
(243.8)
|
|
|
_____
|
_____
|
_____
|
|
_____
|
_____
|
_____
|
|
|
488
|
1,012
|
(51.8)
|
|
74
|
410
|
(82.0)
|
|
Underlying revenue and underlying operating profit
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
|
6
months ended 30 June
|
|
6
months ended 30 June
|
|
|
|||||||||||
|
|
Revenue
|
|
Operating profit
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
|
2020
|
2019c
|
%
|
|
2020
|
2019c
|
%
|
|
|
|
||||||
|
|
$m
|
$m
|
change
|
|
$m
|
$m
|
change
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Reportable segments (see above)
|
488
|
1,012
|
(51.8)
|
|
74
|
410
|
(82.0)
|
|
|
|
||||||
|
Significant liquidated damagesa
|
(1)
|
(4)
|
(75.0)
|
|
(1)
|
(4)
|
(75.0)
|
|
|
|
||||||
|
Owned asset disposalb
|
(2)
|
(6)
|
(66.7)
|
|
(3)
|
(1)
|
200.0
|
|
|
|
||||||
|
Currency impact
|
-
|
(12)
|
-
|
|
-
|
(4)
|
-
|
|
|
|
||||||
|
|
____
|
_____
|
_____
|
|
_____
|
_____
|
_____
|
|
|
|
||||||
|
Underlying revenue and underlying
operating profit
|
485
|
990
|
(51.0)
|
|
70
|
401
|
(82.5)
|
|
|
|
||||||
|
Underlying fee revenue
|
6 months ended 30 June
|
||
|
|
Revenue
|
||
|
|
|
||
|
|
|
|
|
|
|
2020
|
2019
|
%
|
|
|
$m
|
$m
|
change
|
|
|
|
|
|
|
Reportable segments fee business
(see above)
|
375
|
730
|
(48.6)
|
|
Significant liquidated damages
|
(1)
|
(4)
|
(75.0)
|
|
Currency impact
|
-
|
(8)
|
-
|
|
|
_____
|
_____
|
_____
|
|
Underlying fee revenue
|
374
|
718
|
(47.9)
|
|
Americas
|
6 months ended 30 June
|
|
6 months ended 30 June
|
||||
|
|
Revenue
|
|
Operating profitd
|
||||
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
2020
|
2019
|
%
|
|
2020
|
2019
|
%
|
|
|
$m
|
$m
|
change
|
|
$m
|
$m
|
change
|
|
|
|
|
|
|
|
|
|
|
Per Group financial statements, note 4
|
262
|
520
|
(49.6)
|
|
153
|
344
|
(55.5)
|
|
|
|
|
|
|
|
|
|
|
Reportable segments analysed as:
|
|
|
|
|
|
|
|
|
Fee business
|
226
|
418
|
(45.9)
|
|
163
|
323
|
(49.5)
|
|
Owned, leased and managed lease
|
36
|
102
|
(64.7)
|
|
(10)
|
21
|
(147.6)
|
|
|
_____
|
_____
|
_____
|
|
_____
|
_____
|
_____
|
|
|
262
|
520
|
(49.6)
|
|
153
|
344
|
(55.5)
|
|
|
|
|
|
|
|
|
|
|
Reportable segments (see above)
|
262
|
520
|
(49.6)
|
|
153
|
344
|
(55.5)
|
|
Currency impact
|
-
|
(2)
|
-
|
|
-
|
(2)
|
-
|
|
|
_____
|
_____
|
_____
|
|
_____
|
_____
|
_____
|
|
Underlying revenue and underlying
operating profit
|
262
|
518
|
(49.4)
|
|
153
|
342
|
(55.3)
|
|
|
|
|
|
|
|
|
|
|
Owned, leased and managed lease
included in the above
|
(36)
|
(102)
|
(64.7)
|
|
10
|
(21)
|
(147.6)
|
|
|
_____
|
_____
|
_____
|
|
_____
|
_____
|
_____
|
|
Underlying revenue and underlying operating profit related to the
fee business
|
226
|
416
|
(45.7)
|
|
163
|
321
|
(49.2)
|
|
EMEAA
|
|
|
|
|
|
|
|
|
|
6 months ended 30 June
|
|
6 months ended 30 June
|
||||
|
|
Revenue
|
|
Operating
(loss)/profitd
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
2019c
|
%
|
|
2020
|
2019c
|
%
|
|
|
$m
|
$m
|
change
|
|
$m
|
$m
|
change
|
|
|
|
|
|
|
|
|
|
|
Per Group financial statements, note 4
|
134
|
338
|
(60.4)
|
|
(16)
|
88
|
(118.2)
|
|
|
|
|
|
|
|
|
|
|
Reportable segments analysed as:
|
|
|
|
|
|
|
|
|
Fee business
|
57
|
158
|
(63.9)
|
|
(3)
|
93
|
(103.2)
|
|
Owned, leased and managed lease
|
77
|
180
|
(57.2)
|
|
(13)
|
(5)
|
160.0
|
|
|
_____
|
_____
|
_____
|
|
_____
|
_____
|
_____
|
|
|
134
|
338
|
(60.4)
|
|
(16)
|
88
|
(118.2)
|
|
|
|
|
|
|
|
|
|
|
Reportable segments (see above)
|
134
|
338
|
(60.4)
|
|
(16)
|
88
|
(118.2)
|
|
Significant liquidated damagesa
|
(1)
|
(4)
|
(75.0)
|
|
(1)
|
(4)
|
(75.0)
|
|
Owned asset disposalb
|
(2)
|
(6)
|
(66.7)
|
|
(3)
|
(1)
|
200.0
|
|
Currency impact
|
-
|
(7)
|
-
|
|
-
|
(2)
|
-
|
|
|
_____
|
_____
|
_____
|
|
_____
|
_____
|
_____
|
|
Underlying revenue and underlying
operating (loss)/profit
|
131
|
321
|
(59.2)
|
|
(20)
|
81
|
(124.7)
|
|
|
|
|
|
|
|
|
|
|
Owned, leased and managed lease
included in the above
|
(75)
|
(170)
|
(55.9)
|
|
16
|
6
|
166.7
|
|
|
_____
|
_____
|
_____
|
|
_____
|
_____
|
_____
|
|
Underlying revenue and underlying operating (loss)/profit related
to the fee business
|
56
|
151
|
(62.9)
|
|
(4)
|
87
|
(104.6)
|
|
Greater China
|
|
|
|
|
|
|
|
|
|
6 months ended 30 June
|
|
6 months ended 30 June
|
||||
|
|
Revenue
|
|
Operating
(loss)/profitd
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
2019
|
%
|
|
2020
|
2019
|
%
|
|
|
$m
|
$m
|
change
|
|
$m
|
$m
|
change
|
|
|
|
|
|
|
|
|
|
|
Per Group financial statements, note 4
|
18
|
66
|
(72.7)
|
|
(5)
|
36
|
(113.9)
|
|
|
|
|
|
|
|
|
|
|
Reportable segments analysed as:
|
|
|
|
|
|
|
|
|
|
_____
|
_____
|
_____
|
|
____
|
_____
|
_____
|
|
Fee business
|
18
|
66
|
(72.7)
|
|
(5)
|
36
|
(113.9)
|
|
|
|
|
|
|
|
|
|
|
Reportable segments (see above)
|
18
|
66
|
(72.7)
|
|
(5)
|
36
|
(113.9)
|
|
Currency impact
|
-
|
(2)
|
-
|
|
-
|
(1)
|
-
|
|
|
_____
|
_____
|
_____
|
|
____
|
_____
|
_____
|
|
Underlying revenue and underlying
operating (loss)/profit
|
18
|
64
|
(71.9)
|
|
(5)
|
35
|
(114.3)
|
|
6 months ended 30 June
|
|
|
2020
|
2019
Restatedb
|
|
|
$m
|
$m
|
|
|
|
|
|
Revenue
|
|
|
|
Reportable segments analysed as fee business (see
above)
|
375
|
730
|
|
Significant liquidated damagesa
|
(1)
|
(4)
|
|
Captive insurance company
|
(10)
|
(7)
|
|
|
_____
|
_____
|
|
|
364
|
719
|
|
|
|
|
|
Operating profit
|
|
|
|
Reportable segments analysed as fee business (see
above)
|
97
|
394
|
|
Significant liquidated damages
|
(1)
|
(4)
|
|
Captive insurance company
|
(1)
|
(1)
|
|
|
_____
|
_____
|
|
|
95
|
389
|
|
|
|
|
|
Fee margin
|
26.1%
|
54.1%
|
|
|
6 months ended 30 June
|
|
|
|
|
|
|
|
2020
|
2019
Restatedb
|
|
|
$m
|
$m
|
|
|
|
|
|
Net cash from investing activities
|
(41)
|
(378)
|
|
Adjusted
for:
|
|
|
|
Contract
acquisition costs, net of $nil repayments
|
(26)
|
(17)
|
|
System Fund depreciation and
amortisationa
|
28
|
23
|
|
Acquisition of businesses, net of cash
acquired
|
-
|
295
|
|
Payment
of contingent purchase consideration
|
-
|
4
|
|
|
_____
|
_____
|
|
Net
capital expenditure
|
(39)
|
(73)
|
|
Add
back:
|
|
|
|
Disposal
receipts
|
(13)
|
(5)
|
|
Distributions from associates and joint ventures
|
(5)
|
-
|
|
System Fund depreciation and
amortisationa
|
(28)
|
(23)
|
|
|
_____
|
_____
|
|
Gross
capital expenditure
|
(85)
|
(101)
|
|
|
_____
|
_____
|
|
Analysed
as:
|
|
|
|
Capital
expenditure: maintenance
(including
contract acquisition costs of $26m (2019: $17m))
|
(58)
|
(45)
|
|
Capital
expenditure: recyclable investments
|
(2)
|
(14)
|
|
Capital
expenditure: System Fund investments
|
(25)
|
(42)
|
|
|
_____
|
_____
|
|
Gross
capital expenditure
|
(85)
|
(101)
|
|
|
_____
|
_____
|
|
|
6 months ended 30 June
|
|
|
|
|
|
|
|
2020
|
2019
Restateda
|
|
|
$m
|
$m
|
|
|
|
|
|
Net cash from operating activities
|
(14)
|
194
|
|
Less:
|
|
|
|
Principal element of lease payments
|
(20)
|
(22)
|
|
Purchase of shares by employee share trusts
|
-
|
(3)
|
|
Capital expenditure: maintenance (excluding contract acquisition
costs)
|
(32)
|
(28)
|
|
|
_____
|
_____
|
|
Free cash flow
|
(66)
|
141
|
|
|
_____
|
_____
|
|
|
6 months ended 30 June
|
|
|
|
|
|
|
|
2020
|
2019
Restateda
|
|
|
$m
|
$m
|
|
Net financial expenses
|
|
|
|
|
|
|
|
Financial
income
|
3
|
3
|
|
Financial
expenses
|
(61)
|
(60)
|
|
|
_____
|
_____
|
|
|
(58)
|
(57)
|
|
|
|
|
|
Adjusted
for:
|
|
|
|
Interest payable on
balances with the System Fund
|
(4)
|
(7)
|
|
Capitalised
interest relating to System Fund assets
|
-
|
(2)
|
|
|
_____
|
_____
|
|
|
(4)
|
(9)
|
|
|
|
|
|
|
_____
|
_____
|
|
Adjusted interest
|
(62)
|
(66)
|
|
|
_____
|
_____
|
|
Keith Barr
|
Paul Edgecliffe-Johnson
|
|
|
|
|
Chief Executive Officer
|
Chief Financial Officer
|
|
|
|
|
11 August 2020
|
11 August 2020
|
|
|
2020
6
months ended
30
June
$m
|
2019
6
months ended 30 June* $m
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
Revenue
from fee business
|
375
|
730
|
|
|
Revenue
from owned, leased and managed lease hotels
|
113
|
282
|
|
|
System
Fund revenues
|
385
|
675
|
|
|
Reimbursement
of costs
|
375
|
593
|
|
|
|
_____
|
_____
|
|
|
Total revenue (notes 4 and 5)
|
1,248
|
2,280
|
|
|
|
|
|
|
|
Cost of
sales and administrative expenses
|
(347)
|
(559)
|
|
|
System
Fund expenses
|
(437)
|
(628)
|
|
|
Reimbursed
costs
|
(375)
|
(593)
|
|
|
Share
of losses of associates and joint ventures
|
(6)
|
-
|
|
|
Other
operating income
|
12
|
5
|
|
|
Depreciation
and amortisation
|
(55)
|
(56)
|
|
|
Impairment
loss on financial assets
|
(78)
|
(7)
|
|
|
Other
impairment charges (note 7)
|
(195)
|
-
|
|
|
|
_____
|
_____
|
|
|
Operating (loss)/profit (note 4)
|
(233)
|
442
|
|
|
|
|
|
|
|
Operating
(loss)/profit analysed as:
|
|
|
|
|
Operating profit
before System Fund and exceptional items
|
74
|
410
|
|
|
System
Fund
|
(52)
|
47
|
|
|
Operating
exceptional items (note 7)
|
(255)
|
(15)
|
|
|
|
_____
|
_____
|
|
|
|
(233)
|
442
|
|
|
|
|
|
|
|
Financial
income
|
3
|
3
|
|
|
Financial
expenses
|
(61)
|
(60)
|
|
|
Fair
value gains/(losses) on contingent purchase
consideration
|
16
|
(10)
|
|
|
|
_____
|
_____
|
|
|
(Loss)/profit before tax
|
(275)
|
375
|
|
|
|
|
|
|
|
Tax
(note 10)
|
65
|
(69)
|
|
|
|
_____
|
_____
|
|
|
(Loss)/profit for the period from continuing
operations
|
(210)
|
306
|
|
|
|
_____
|
_____
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
Equity
holders of the parent
|
(210)
|
306
|
|
|
Non-controlling
interest
|
-
|
-
|
|
|
|
_____
|
_____
|
|
|
|
(210)
|
306
|
|
|
_____
|
_____
|
|
|
(Loss)/earnings per ordinary share (note 11)
|
|
|
|
|
Continuing
and total operations:
|
|
|
|
|
|
Basic
|
(115.4)¢
|
167.2¢
|
|
|
Diluted
|
(115.4)¢
|
166.3¢
|
|
|
Adjusted**
|
14.3¢
|
148.6¢
|
|
|
Adjusted
diluted**
|
14.3¢
|
147.8¢
|
|
|
|
|
|
|
*
Amended for presentational changes (see note 1).
**
Adjusted earnings per ordinary share for 2019 has been restated for
consistency with the 2019 Annual Report and Form 20-F and excludes
the change in fair value of contingent purchase
consideration.
|
|||
|
|
2020
6 months ended
30 June
$m
|
2019
6 months ended
30 June
$m
|
|
|
|
|
|
|
|
(Loss)/profit for the period
|
(210)
|
306
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
Items
that may be subsequently reclassified to profit or
loss:
|
|
|
|
|
|
Gains
on cash flow hedges, including related tax credit of $2m (2019 net
of related tax charge of $2m)
|
28
|
4
|
|
|
Costs
of hedging
|
(1)
|
(2)
|
|
|
Hedging
(gains)/losses reclassified to financial expenses
|
(36)
|
4
|
|
|
Exchange
gains on retranslation of foreign operations, including related tax
credit of $1m (2019 $1m)
|
110
|
25
|
|
|
_____
|
_____
|
|
|
|
101
|
31
|
|
|
Items
that will not be reclassified to profit or loss:
|
|
|
|
|
|
(Losses)/gains
on equity instruments classified as fair value through other
comprehensive income, net of related tax credit of $4m (2019
$nil)
|
(39)
|
6
|
|
|
Re-measurement
losses on defined benefit plans, net of related tax credit of $2m
(2019 $2m)
|
(5)
|
(6)
|
|
|
Tax
related to pension contributions
|
2
|
-
|
|
|
|
_____
|
_____
|
|
|
|
(42)
|
-
|
|
|
_____
|
_____
|
|
|
Total other comprehensive income for the period
|
59
|
31
|
|
|
|
_____
|
_____
|
|
|
Total comprehensive (loss)/income for the period
|
(151)
|
337
|
|
|
|
_____
|
_____
|
|
|
Attributable
to:
|
|
|
|
|
|
Equity
holders of the parent
|
(151)
|
337
|
|
|
Non-controlling
interest
|
-
|
-
|
|
|
_____
|
_____
|
|
|
|
(151)
|
337
|
|
|
|
_____
|
_____
|
|
|
|
6 months ended 30 June 2020
|
|||||
|
|
Equity share capital
|
Other reserves*
|
Retained earnings
|
Non-controlling interest
|
Total equity
|
|
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
|
|
|
|
|
|
|
|
|
|
At
beginning of the period
|
151
|
(2,433)
|
809
|
8
|
(1,465)
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive loss for the period
|
-
|
62
|
(213)
|
-
|
(151)
|
|
|
Transfer
of treasury shares to employee share trusts
|
-
|
(14)
|
14
|
-
|
-
|
|
|
Release
of own shares by employee share trusts
|
-
|
18
|
(18)
|
-
|
-
|
|
|
Equity-settled
share-based cost, net of $3m reclassification of cash-settled
awards
|
-
|
-
|
12
|
-
|
12
|
|
|
Exchange
adjustments
|
(11)
|
11
|
-
|
-
|
-
|
|
|
|
_____
|
_____
|
_____
|
_____
|
_____
|
|
|
At end of the period
|
140
|
(2,356)
|
604
|
8
|
(1,604)
|
|
|
|
_____
|
_____
|
_____
|
_____
|
_____
|
|
|
|
6 months ended 30 June 2019
|
|||||
|
|
Equity share capital
|
Other reserves*
|
Retained earnings
|
Non-controlling interest
|
Total equity
|
|
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
|
|
|
|
|
|
|
|
|
|
At
beginning of the period
|
146
|
(2,396)
|
1,111
|
8
|
(1,131)
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period
|
-
|
37
|
300
|
-
|
337
|
|
|
Transfer
of treasury shares to employee share trusts
|
-
|
(19)
|
19
|
-
|
-
|
|
|
Purchase
of own shares by employee share trusts
|
-
|
(3)
|
-
|
-
|
(3)
|
|
|
Release
of own shares by employee share trusts
|
-
|
23
|
(23)
|
-
|
-
|
|
|
Equity-settled
share-based cost
|
-
|
-
|
20
|
-
|
20
|
|
|
Tax
related to share schemes
|
-
|
-
|
3
|
-
|
3
|
|
|
Equity
dividends paid
|
-
|
-
|
(649)
|
-
|
(649)
|
|
|
Transaction
costs relating to shareholder returns
|
-
|
-
|
(1)
|
-
|
(1)
|
|
|
Exchange
adjustments
|
(1)
|
1
|
-
|
-
|
-
|
|
|
|
_____
|
_____
|
_____
|
_____
|
_____
|
|
|
At end of the period
|
145
|
(2,357)
|
780
|
8
|
(1,424)
|
|
|
|
_____
|
_____
|
_____
|
_____
|
_____
|
|
|
*
|
Other
reserves comprise the capital redemption reserve, shares held by
employee share trusts, other reserves, fair value reserve, cash
flow hedging reserve and currency translation reserve.
|
|
All
items above are shown net of tax.
|
|
|
|
2020
30 June
|
2019
31 December
Restated*
|
|
|
$m
|
$m
|
|
ASSETS
|
|
|
|
Goodwill
and other intangible assets
|
1,321
|
1,376
|
|
Property,
plant and equipment
|
219
|
309
|
|
Right-of-use
assets
|
412
|
490
|
|
Investment
in associates
|
75
|
110
|
|
Other
financial assets
|
174
|
284
|
|
Derivative
financial instruments
|
18
|
-
|
|
Deferred
compensation plan investments
|
213
|
218
|
|
Non-current
tax receivable
|
18
|
28
|
|
Deferred
tax assets
|
94
|
66
|
|
Contract
costs
|
68
|
67
|
|
Contract
assets
|
286
|
311
|
|
|
______
|
______
|
|
Total non-current assets
|
2,898
|
3,259
|
|
|
______
|
______
|
|
Inventories
|
5
|
6
|
|
Trade
and other receivables
|
507
|
666
|
|
Current
tax receivable
|
14
|
16
|
|
Other
financial assets
|
1
|
4
|
|
Derivative
financial instruments
|
-
|
1
|
|
Cash
and cash equivalents
|
688
|
195
|
|
Contract
costs
|
4
|
5
|
|
Contract
assets
|
23
|
23
|
|
|
______
|
______
|
|
Total current assets
|
1,242
|
916
|
|
Assets
classified as held for sale
|
-
|
19
|
|
|
______
|
______
|
|
Total assets (note 4)
|
4,140
|
4,194
|
|
|
_____
|
_____
|
|
LIABILITIES
|
|
|
|
Loans
and other borrowings
|
(790)
|
(87)
|
|
Lease
liabilities
|
(64)
|
(65)
|
|
Trade
and other payables
|
(371)
|
(568)
|
|
Deferred
revenue
|
(341)
|
(555)
|
|
Provisions
|
(27)
|
(40)
|
|
Current
tax payable
|
(37)
|
(50)
|
|
|
______
|
______
|
|
Total current liabilities
|
(1,630)
|
(1,365)
|
|
|
______
|
______
|
|
Loans
and other borrowings
|
(1,870)
|
(2,078)
|
|
Lease
liabilities
|
(504)
|
(595)
|
|
Derivative
financial instruments
|
-
|
(20)
|
|
Retirement
benefit obligations
|
(101)
|
(96)
|
|
Deferred
compensation plan liabilities
|
(213)
|
(218)
|
|
Trade
and other payables
|
(85)
|
(116)
|
|
Deferred
revenue
|
(1,234)
|
(1,009)
|
|
Provisions
|
(33)
|
(22)
|
|
Deferred
tax liabilities
|
(74)
|
(118)
|
|
|
______
|
______
|
|
Total non-current liabilities
|
(4,114)
|
(4,272)
|
|
Liabilities
classified as held for sale
|
-
|
(22)
|
|
|
______
|
______
|
|
Total liabilities
|
(5,744)
|
(5,659)
|
|
|
_____
|
_____
|
|
Net liabilities
|
(1,604)
|
(1,465)
|
|
|
_____
|
_____
|
|
EQUITY
|
|
|
|
IHG
shareholders’ equity
|
(1,612)
|
(1,473)
|
|
Non-controlling
interest
|
8
|
8
|
|
|
______
|
______
|
|
Total equity
|
(1,604)
|
(1,465)
|
|
|
_____
|
_____
|
|
*
Restated for deferred compensation plan investments and liabilities
(see note 1).
|
|
|
|
|
2020
6 months ended
30 June
|
2019
6 months ended
30 June
|
|
|
|
$m
|
$m
|
|
|
|
|
|
|
|
(Loss)/profit for the period
|
(210)
|
306
|
|
|
Adjustments
reconciling (loss)/profit for the period to cash flow from
operations before contract acquisition costs (note 13)
|
258
|
3
|
|
|
|
_____
|
_____
|
|
|
Cash
flow from operations before contract acquisition costs
|
48
|
309
|
|
|
Contract
acquisition costs
|
(26)
|
(17)
|
|
|
|
_____
|
_____
|
|
|
Cash flow from operations
|
22
|
292
|
|
|
Interest
paid
|
(34)
|
(33)
|
|
|
Interest
received
|
1
|
2
|
|
|
Tax
paid on operating activities
|
(3)
|
(67)
|
|
|
|
_____
|
_____
|
|
|
Net cash from operating activities
|
(14)
|
194
|
|
|
|
_____
|
_____
|
|
|
Cash flow from investing activities
|
|
|
|
|
Purchase
of property, plant and equipment
|
(21)
|
(31)
|
|
|
Purchase
of intangible assets
|
(36)
|
(46)
|
|
|
Investment
in other financial assets
|
(2)
|
(5)
|
|
|
Acquisition
of businesses, net of cash acquired
|
-
|
(295)
|
|
|
Contingent
purchase consideration paid
|
-
|
(4)
|
|
|
Capitalised
interest paid
|
-
|
(2)
|
|
|
Distributions
from associates and joint ventures
|
5
|
-
|
|
|
Disposal
of hotel assets, net of costs and cash disposed
|
1
|
-
|
|
|
Repayments
of other financial assets
|
12
|
5
|
|
|
|
_____
|
_____
|
|
|
Net cash from investing activities
|
(41)
|
(378)
|
|
|
|
_____
|
_____
|
|
|
Cash flow from financing activities
|
|
|
|
|
Purchase
of own shares by employee share trusts
|
-
|
(3)
|
|
|
Dividends
paid to shareholders
|
-
|
(649)
|
|
|
Transaction
costs relating to shareholder returns
|
-
|
(1)
|
|
|
Principal
element of lease repayments
|
(20)
|
(22)
|
|
|
Issue
of commercial paper
|
738
|
-
|
|
|
(Decrease)/increase
in other borrowings
|
(125)
|
376
|
|
|
|
_____
|
_____
|
|
|
Net cash from financing activities
|
593
|
(299)
|
|
|
|
_____
|
_____
|
|
|
Net movement in cash and cash equivalents, net of overdrafts, in
the period
|
538
|
(483)
|
|
|
|
|
|
|
|
Cash
and cash equivalents, net of overdrafts, at beginning of the
period
|
108
|
600
|
|
|
Exchange
rate effects
|
(14)
|
13
|
|
|
|
_____
|
_____
|
|
|
Cash and cash equivalents, net of overdrafts, at end of the
period
|
632
|
130
|
|
|
|
_____
|
_____
|
|
|
|
|
||
|
1.
|
Basis of preparation
|
|
|
These condensed interim financial statements have been prepared in
accordance with the Disclosure Guidance and Transparency Rules of
the United Kingdom’s Financial Conduct Authority and IAS 34
‘Interim Financial Reporting’. Other than the changes
described below, they have been prepared on a consistent basis
using the same accounting policies and methods of computation set
out in the InterContinental Hotels Group PLC (the Group or IHG)
Annual Report and Form 20-F for the year ended 31 December
2019.
These condensed interim financial statements are unaudited and do
not constitute statutory accounts of the Group within the meaning
of Section 435 of the Companies Act 2006. The auditors have carried
out a review of the financial information in accordance with the
guidance contained in ISRE (UK and Ireland) 2410 ‘Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity’ issued by the Auditing Practices
Board.
With
the exception of the accounting for a deferred compensation plan
and the presentational change to the Group income statement as
detailed below, financial information for the year ended 31
December 2019 has been extracted from the Group’s published
financial statements for that year which were prepared in
accordance with IFRSs as adopted by the European Union and which
have been filed with the Registrar of Companies. The
auditor’s report on those financial statements was
unqualified with no reference to matters to which the auditor drew
attention by way of emphasis and no statement under s498(2) or
s498(3) of the Companies Act 2006.
The Group operates a deferred compensation plan in the US which
allows certain employees to make additional provision for
retirement, through the deferral of salary with matching company
contributions within a dedicated trust. The Group has re-assessed
the accounting judgement for this plan which was previously not
consolidated based on a control analysis as disclosed in the
Group’s prior year financial statements. The Group has
revisited the judgement regarding the extent of its control over
the plan by placing more weighting on some of the Group’s
legal rights and, giving consideration to both IFRS 10 and IAS 19,
the Group has changed its accounting policy to recognise the
related assets and liabilities on the balance sheet at their
respective fair values. Due to the way in which the plan is
managed, the assets and liabilities are for the same amount, with
no net impact on profit or loss. The effect on the prior year
financial statements is the recognition and presentation of
deferred compensation plan investments of $218m (2018: $193m) and
matching deferred compensation plan liabilities. There is no net
impact on the comparative income statements, nor would there have
been any net impact on the income statement in earlier
periods.
The presentation of the Group income statement has been amended to
include impairment loss on financial assets as a separate line
item. Accordingly, the reconciliation of (loss)/profit for the
period to cash flow from operations before contract acquisition
costs has also been amended.
Going concern
The Group’s fee-based model and wide geographic spread mean
that it is well placed to manage through uncertain times. However,
during the Covid-19 crisis many of the Group’s hotels were
temporarily closed, while others are experiencing historically low
levels of occupancy and room rates. As at 30 June 2020, 10% of the
global estate remained closed and the Group has reported a global
year on year RevPAR decline of (75)% for the second
quarter.
The Group has taken various actions to manage cash outflows,
including a reduction in staff costs, professional fees, capital
expenditure and the suspension of the ordinary
dividend.
The Group has taken steps to strengthen its liquidity, including a
waiver of existing covenants on its syndicated and bilateral
revolving credit facilities until 31 December 2021 and the
issuance of £600m commercial
paper under the UK Government’s Covid Corporate Financing Facility
(“CCFF”), maturing on 16 March 2021. The covenant
waiver agreement introduces a minimum liquidity covenant of $400m
tested at half year and full year until 30 June 2021. The
maturities of the Group’s $1.275bn syndicated revolving
credit facility and $75m bilateral revolving credit facility have
also been extended for 18 months to September
2023.
|
|
|
As at 30 June 2020 the Group had total liquidity of $1,961m,
comprising $1,350m of undrawn bank facilities and $611m of cash and
cash equivalents (net of overdrafts and restricted
cash).
There
remains unusually limited visibility on the pace and scale of
market recovery and therefore there are a wide range of possible
planning scenarios over the going concern period.
In adopting the going concern
basis for preparing these condensed interim financial statements
the Directors have considered a scenario which is based on a slow
and steady recovery during 2020, with a further gradual improvement
during 2021 consistent
with the five-year RevPAR recovery period used as the underlying
assumption for our impairment assessment. Under this scenario, the
Group is forecast to generate positive cash flows over the period
to 30 September 2021. The principal risks and uncertainties which
could be applicable under this scenario have been considered and
are all able to be absorbed within the $400m liquidity
covenant.
The Directors also reviewed reverse stress test scenarios which
concluded that the Group has sufficient headroom to operate within
the $400m liquidity covenant for at least 15 months even in a
theoretical 'zero occupancy' environment. This assumes that the
CCFF is either rolled over or refinanced, and that additional cost
savings to operating and capital expenditure would be made in the
event of a prolonged downturn. Without refinancing or rolling over
the CCFF, but still assuming additional cost savings, the revenue
required to operate within the minimum liquidity covenant would be
comparable to that earned during the second quarter of 2020. The
Group does not need to make significant structural changes in order
to continue to operate as a going concern.
Having reviewed these scenarios, the Directors have a reasonable
expectation that the Group has sufficient resources to continue
operating for a period of at least twelve months from the date of
approving the interim financial statements. Accordingly, these
condensed interim financial statements have been prepared on a
going concern basis.
|
|
2.
|
Impact of Covid-19 on critical accounting policies and the uses of
judgements, estimates and assumptions
|
|
a)
|
Critical accounting policies and the uses of judgements, estimates
and assumptions
These
condensed interim financial statements may not be indicative of the
full year performance due to the impact of Covid-19.
The
ongoing financial impact of Covid-19 is highly dependent on the
severity and duration of the pandemic. In applying the
Group’s accounting policies, management are required to make
judgements, estimates and assumptions. The critical judgement for the Group, as disclosed
in the 2019 Annual Report and Form 20-F is in respect of the System
Fund. No other critical judgements have been made in applying the
Group’s accounting policies.
The critical estimates and assumptions disclosed in the 2019 Annual
Report and Form 20-F (measuring the deferred revenue relating to
the loyalty programme and impairment testing of the UK portfolio),
continue to be applicable. Impairment testing of Kimpton is no
longer a critical estimate as the remaining carrying value is not
significant. Reflecting the impact of Covid-19 management
have reassessed the areas of critical estimates and assumptions at
30 June 2020:
Impairment testing of non-current assets
On 11 March 2020, the World Health Organisation raised the public
health emergency situation caused by the outbreak of
Covid-19 to an international pandemic. As social distancing
measures and travel restrictions came into effect around the world,
occupancy levels dropped to historic lows and fell short of the
Group’s expectations of reasonably possible outcomes for the
2020 financial year which had been used to assess impairment as at
31 December 2019. Disruption to travel
continues, with limited visibility on the pace and scale of market
recovery.
The recoverable amounts of non-current assets have been determined
from cash flow projections which reflect the impact of Covid-19.
The key assumption is RevPAR growth, which is based on a slow and
steady recovery during the second half of 2020, reflecting that
global occupancy levels as at the end of July remain in the region
of approximately 45%. The five-year recovery period from 2021
assumes that corporate travel recovers slowly as businesses control
costs in the wake of the pandemic and that international travel and
groups business takes longer to recover due to ongoing social
distancing measures. See note 8.
|
|
|
Variable lease payments
The UK
portfolio lease and two German hotel leases contain guarantees that
the Group will fund any shortfalls in lease payments up to an
annual and cumulative cap. Previously the minimum
‘in-substance fixed’ lease payments were estimated to
be equal to the cumulative amount guaranteed under the lease
agreements and therefore a right-of-use asset and corresponding
lease liability equal to the guaranteed amount were recognised. The
unprecedented impact of Covid-19 on the hospitality industry has
caused the UK leased hotels to be closed for an extended period and
is expected to result in historically low occupancies as the hotels
reopen. This has resulted in a reassessment of the estimate of
‘in-substance fixed’ lease payments, as there is no
floor to the rent reductions applicable under these leases, and the
circumstances in which no rent would be payable are no longer
considered to be remote. See note 7.
Expected credit losses
The
Group has undertaken a number of actions to support owners,
including the waiver of certain fees, extended credit terms and,
where appropriate, the use of payment plans. Although owners may,
depending on factors including their geographical location, have
access to government programmes designed to support businesses
during this time, the Group is unable to assess the full impact of
this support on the recoverability of outstanding trade
receivables. Considering these factors, there is increased
uncertainty in calculating expected credit losses. See note
8.
Loyalty programme
Significant
estimation uncertainty exists in projecting members’ future
consumption activity and the number of points that will never be
consumed (‘breakage’), particularly in light of
Covid-19 which may alter the behaviour of loyalty programme
members. In response to Covid-19 the Group has extended its
policies for points expiration and elite status which, together
with the impact of a slow market recovery, will extend the period
over which members consume points. This is also subject to
estimation uncertainty and has resulted in a greater portion of
loyalty programme deferred revenue being classed as non-current.
Based on the conditions existing at the balance sheet date, a one
percentage point decrease/increase in the breakage estimate
relating to earned points would increase/reduce the deferred
revenue liability by $46m.
|
|
b)
|
Accounting policies
The
Group’s accounting policies are included in the 2019 Annual Report and Form 20-F. Given the
exceptional items recorded in the six months ended 30 June 2020,
the accounting policy used in determining exceptional items is
included below.
In
addition, during the period the Group has received government
support in respect of its leased hotels; previously the Group has
not disclosed an accounting policy in respect of government grants
as the amounts received have not been material. The relevant
accounting policy is set out below.
Exceptional items
The
Group discloses certain financial information both including and
excluding exceptional items. The presentation of information
excluding exceptional items allows a better understanding of the
underlying trading performance of the Group and provides
consistency with the Group’s internal management reporting.
Exceptional items are identified by virtue of either their size,
nature, or incidence so as to facilitate comparison with prior
periods and to assess underlying trends in the financial
performance of the Group and its regional operating segments. In
determining whether an event or transaction is specific, management
considers quantitative as well as qualitative factors.
Examples
of exceptional items that meet the above definition and which have
been presented as exceptional items in prior years include, but are
not restricted to, gains and losses on the disposal of assets,
impairment charges and reversals and restructuring
costs.
In the
current year, the impact of Covid-19 relating to items which meet
the criteria as set out above, are presented within exceptional
items. Any subsequent reversal of these amounts will also be
presented within exceptional items.
|
|
|
Government grants
Government
support of $11m has been received in 2020 in relation to employee
costs at certain of the Group’s leased hotels. Additionally,
ongoing support has been received in the form of tax credits which
have also been applicable in prior years and which relate to the
Group’s corporate office presence in certain countries. In
the Group income statement, total income of $16m has been matched
against the payroll costs that the grants and credits are intended
to compensate. There are no unfulfilled conditions or other
contingencies attaching to these grants.
|
|
3.
|
Exchange
rates
|
|
|
The
results of operations have been translated into US dollars at the
average rates of exchange for the period. In the case of sterling,
the translation rate is $1 = £0.79 (2019 $1 = £0.77). In
the case of the euro, the translation rate is $1 = €0.91
(2019 $1 = €0.89).
Assets
and liabilities have been translated into US dollars at the rates
of exchange on the last day of the period. In the case of sterling,
the translation rate is $1 = £0.82 (30 June 2019 $1 =
£0.79; 31 December 2019 $1 = £0.76). In the case of the
euro, the translation rate is $1 = €0.89 (30 June 2019 $1 =
€0.88; 31 December 2019 $1 = €0.89).
|
|
|
Revenue
|
2020
6 months ended
30 June
|
2019
6 months ended
30 June
|
|
|
|
$m
|
$m
|
|
|
|
|
|
|
|
Americas
|
262
|
520
|
|
|
EMEAA
|
134
|
338
|
|
|
Greater
China
|
18
|
66
|
|
|
Central
|
74
|
88
|
|
|
|
_____
|
_____
|
|
|
Revenue
from reportable segments
|
488
|
1,012
|
|
|
System
Fund revenues
|
385
|
675
|
|
|
Reimbursement
of costs
|
375
|
593
|
|
|
|
_____
|
_____
|
|
|
Total revenue
|
1,248
|
2,280
|
|
|
|
_____
|
_____
|
|
|
|
||
|
|
(Loss)/profit
|
2020
6 months ended
30 June
$m
|
2019
6 months ended
30 June
$m
|
|
|
|
|
|
|
|
Americas
|
153
|
344
|
|
|
EMEAA
|
(16)
|
88
|
|
|
Greater
China
|
(5)
|
36
|
|
|
Central
|
(58)
|
(58)
|
|
|
|
_____
|
_____
|
|
|
Operating
profit from reportable segments
|
74
|
410
|
|
|
System
Fund
|
(52)
|
47
|
|
|
Operating
exceptional items (note 7)
|
(255)
|
(15)
|
|
|
|
_____
|
_____
|
|
|
Operating (loss)/profit
|
(233)
|
442
|
|
|
Net
finance costs
|
(58)
|
(57)
|
|
|
Fair
value gains/(losses) on contingent purchase
consideration
|
16
|
(10)
|
|
|
|
_____
|
_____
|
|
|
(Loss)/profit before tax
|
(275)
|
375
|
|
|
|
_____
|
_____
|
|
|
All
results relate to continuing operations.
|
||
|
|
Assets
|
2020
30 June
$m
|
2019
31 December
Restated*
$m
|
|
|
|
|
|
|
|
Americas
|
1,698
|
2,002
|
|
|
EMEAA**
|
771
|
978
|
|
|
Greater
China
|
105
|
136
|
|
|
Central
|
747
|
772
|
|
|
|
_____
|
_____
|
|
|
Segment assets
|
3,321
|
3,888
|
|
|
|
|
|
|
|
Unallocated
assets:
|
|
|
|
|
Derivative
financial instruments***
|
5
|
1
|
|
|
Tax
receivable
|
32
|
44
|
|
|
Deferred
tax assets
|
94
|
66
|
|
|
Cash
and cash equivalents
|
688
|
195
|
|
|
|
_____
|
_____
|
|
|
Total assets
|
4,140
|
4,194
|
|
|
|
_____
|
_____
|
|
5.
|
Revenue
|
|
|
Disaggregation of revenue
The following tables present Group revenues disaggregated by type
of revenue stream and by reportable segment:
|
|
6 months ended 30 June 2020
|
|
|
|
|
|
|
|
Americas
$m
|
EMEAA
$m
|
Greater China
$m
|
Central
$m
|
Total
$m
|
|
|
|
|
|
|
|
|
Franchise
and base management fees
|
224
|
51
|
17
|
-
|
292
|
|
Incentive
management fees
|
2
|
6
|
1
|
-
|
9
|
|
Central
revenue
|
-
|
-
|
-
|
74
|
74
|
|
|
_____
|
_____
|
_____
|
_____
|
_____
|
|
Revenue
from fee business
|
226
|
57
|
18
|
74
|
375
|
|
Revenue
from owned, leased and managed lease hotels
|
36
|
77
|
-
|
-
|
113
|
|
|
_____
|
_____
|
_____
|
_____
|
_____
|
|
|
262
|
134
|
18
|
74
|
488
|
|
|
_____
|
_____
|
_____
|
_____
|
|
|
System
Fund revenues
|
|
|
|
|
385
|
|
Reimbursement
of costs
|
|
|
|
|
375
|
|
|
|
|
|
|
_____
|
|
Total revenue
|
|
|
|
|
1,248
|
|
|
|
|
|
|
_____
|
|
6 months ended 30 June 2019
|
|
|
|
|
|
|
|
Americas
$m
|
EMEAA
$m
|
Greater China
$m
|
Central
$m
|
Total
$m
|
|
|
|
|
|
|
|
|
Franchise
and base management fees
|
411
|
117
|
42
|
-
|
570
|
|
Incentive
management fees
|
7
|
41
|
24
|
-
|
72
|
|
Central
revenue
|
-
|
-
|
-
|
88
|
88
|
|
|
_____
|
_____
|
_____
|
_____
|
_____
|
|
Revenue
from fee business
|
418
|
158
|
66
|
88
|
730
|
|
Revenue
from owned, leased and managed lease hotels
|
102
|
180
|
-
|
-
|
282
|
|
|
_____
|
_____
|
_____
|
_____
|
_____
|
|
|
520
|
338
|
66
|
88
|
1,012
|
|
|
_____
|
_____
|
_____
|
_____
|
|
|
System
Fund revenues
|
|
|
|
|
675
|
|
Reimbursement
of costs
|
|
|
|
|
593
|
|
|
|
|
|
|
_____
|
|
Total revenue
|
|
|
|
|
2,280
|
|
|
|
|
|
|
_____
|
|
|
Contract assets
Contract assets are recorded in respect of key money payments, the
difference, if any, between the face and market value of loans made
to owners, and the value of payments under performance
guarantees.
At 30 June 2020, the amount of performance guarantees included
within trade and other payables was $1m (31 December 2019 $2m) and
the maximum exposure remaining under such guarantees was $82m (31
December 2019 $85m).
|
|
6.
|
Other operating income
|
|||
|
|
Other operating income includes:
|
|||
|
|
|
2020
6 months ended
30 June
$m
|
2019
6 months ended
30 June
$m
|
|
|
|
Business
interruption insurance proceeds
|
4
|
-
|
|
|
|
Litigation
settlement
|
4
|
-
|
|
|
|
Gain on
disposal of hotel assets
|
3
|
-
|
|
|
7.
|
Exceptional items
|
||||
|
|
|
2020
6 months ended
30 June
$m
|
2019
6 months ended
30 June
$m
|
||
|
|
|
|
|
|
|
|
|
|
Cost of
sales and administrative expenses:
|
|
|
|
|
|
|
Derecognition
of right-of-use assets
|
(49)
|
-
|
|
|
|
|
Derecognition
of lease liabilities
|
71
|
-
|
|
|
|
|
Provision
for onerous contractual expenditure (note 9)
|
(10)
|
-
|
|
|
|
|
Reorganisation
costs
|
(4)
|
(10)
|
|
|
|
|
Acquisition
and integration costs
|
(3)
|
(5)
|
|
|
|
|
Provision
for guarantees on third party debt
|
(2)
|
-
|
|
|
|
|
|
_____
|
_____
|
|
|
|
|
|
3
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of financial assets (note 8)
|
|
|
|
|
|
|
Trade
and other receivables
|
(22)
|
-
|
|
|
|
|
Trade
deposits and loans
|
(41)
|
-
|
|
|
|
|
|
_____
|
_____
|
|
|
|
|
|
(63)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of other non-current assets (note 8)
|
|
|
|
|
|
|
Intangible
assets
|
(47)
|
-
|
|
|
|
|
Property,
plant and equipment
|
(85)
|
-
|
|
|
|
|
Right-of-use
assets
|
(5)
|
-
|
|
|
|
|
Investment
in associates*
|
(21)
|
-
|
|
|
|
|
Contract
assets
|
(37)
|
-
|
|
|
|
|
|
_____
|
_____
|
|
|
|
|
|
(195)
|
-
|
|
|
|
|
|
_____
|
_____
|
|
|
|
Total operating exceptional items
|
(255)
|
(15)
|
||
|
|
|
_____
|
_____
|
||
|
|
|
|
|
||
|
|
Fair value gains on contingent purchase consideration (note
9)
|
21
|
-
|
||
|
|
|
_____
|
_____
|
||
|
|
Tax
|
|
|
||
|
|
|
Tax on
exceptional items (note 10)
|
51
|
3
|
|
|
|
|
_____
|
_____
|
||
|
|
*
Presented net of a $13m fair value gain, see note 8.
All
items above relate to continuing operations.
|
|
|
Derecognition of right-of-use assets and lease
liabilities
The UK
portfolio lease and two German hotel leases contain guarantees that
the Group will fund any shortfalls in lease payments up to an
annual and cumulative cap. Previously the minimum
‘in-substance fixed’ lease payments were estimated to
be equal to the cumulative amount guaranteed under the lease
agreements and therefore a right-of-use asset and corresponding
lease liability equal to the guaranteed amount were recognised. The
unprecedented impact of Covid-19 on the hospitality industry has
resulted in a reassessment of this estimate, as there is no floor
to the rent reductions applicable under these leases, and the
circumstances in which no rent would be payable are no longer
considered to be remote. The lease liabilities and right-of-use
assets associated with these leases have therefore been
derecognised, as they are now considered to be fully variable. See
note 9 for further detail in respect of the UK
portfolio.
|
|
|
Reorganisation costs
In
2020, relates to reorganisation costs in respect of the UK
portfolio (see note 9); no amounts have been recorded in relation
to the reorganisation announced in July 2020 (see note 19). In
2019, related to a comprehensive efficiency programme to fund a
series of new strategic initiatives to drive an acceleration in
IHG’s future growth. The programme was completed in 2019 and
no further restructuring costs related to this programme were
incurred in 2020. The 2019 cost included consultancy fees of $5m
and severance costs of $3m; an additional $13m was charged to the
System Fund.
Acquisition and integration costs
In
2019, primarily related to the acquisition of Six Senses and, in
2020, relates to the integration of that business into the
operations of the Group.
Provision for guarantees on third party debt
Represents
the expected share of interest payments over the period from 2020
to 2022 arising under a guarantee made by the Group in respect of a
third-party bank loan. These guarantees are commercially similar in
nature to key money or trade deposits, as they are used to secure
management and franchise agreements, hence amounts arising as a
result of Covid-19 have been treated as exceptional for consistency
with impairment of contract assets.
|
|
|
Tax on exceptional items
A
deferred tax credit of $51m has been recorded on exceptional items.
This comprises deferred tax (charges)/credits of $(5)m on the
derecognition of the lease assets and liabilities, $14m on the
impairment of financial assets; $42m on the impairment of other
non-current assets; $(4)m on the fair value gains on contingent
purchase consideration; and $4m on the remaining exceptional
items.
|
|
8.
a)
|
Impairment
Trade and other receivables
The
impairment charge in respect of trade and other receivables for the
six months ended 30 June 2020 was $37m (2019 $7m). This amount and
$41m relating to trade deposits and loans (see note 7) comprise the
total impairment loss on financial assets on the Group income
statement. A further impairment charge of $22m was recognised
within System Fund expenses (2019 $5m).
Management
assessed the impact of Covid-19 on the expected credit losses for
older trade and other receivables. In addition, groups of customers
with similar attributes, with objective evidence of credit
impairment arising as a result of Covid-19, have been identified as
having an increased credit risk and have been provided for on a
specific basis.
As a
result of the above procedures $22m was found to be directly
incremental as a result of Covid-19 and has been presented within
exceptional items (see note 7).
Gross
trade receivables total $499m; $35m of receivables billed prior to
the start of March and therefore prior to Covid-19 being declared
an international pandemic have not been provided for reflecting
management’s current assessment of recoverability. These
balances could result in additional credit losses if they are
ultimately found to be uncollectible.
Over
the remainder of the year the Group may collect receivables which
are included within the incremental expected credit losses above;
accordingly, any subsequent release of the respective provision
will be recognised within the same line item as the initial
provision and presented within exceptional items.
|
|
b)
|
Non-current assets
Covid-19
was considered as a trigger for impairment testing for
substantially all non-current assets.
Cash
flow projections used for impairment testing were based on the
latest financial forecasts for 2020 and assume that RevPAR recovers
to 2019 levels over a five-year period from 2021.
Impairment
charges are analysed by region as follows:
|
|
6
months ended 30 June 2020
|
Americas
|
EMEAA
|
Greater China
|
Total
|
|
|
|
$m
|
$m
|
$m
|
$m
|
|
|
|
|
|
|
|
|
|
Intangible
assets
|
(12)
|
(32)
|
(3)
|
(47)
|
|
|
Property,
plant and equipment
|
(35)
|
(50)
|
-
|
(85)
|
|
|
Right-of-use
assets
|
-
|
(5)
|
-
|
(5)
|
|
|
Investment
in associates*
|
(21)
|
-
|
-
|
(21)
|
|
|
Contract
assets
|
(33)
|
(4)
|
-
|
(37)
|
|
|
Trade
deposits and loans
|
(33)
|
(8)
|
-
|
(41)
|
|
|
|
_____
|
_____
|
_____
|
_____
|
|
|
|
(134)
|
(99)
|
(3)
|
(236)
|
|
|
|
_____
|
_____
|
_____
|
_____
|
|
|
|
|
|
|
|
|
|
*
Presented net of a $13m fair value gain on a put option over part
of the Group’s investment in the Barclay associate. The
investment value and option value are presented separately in the
statement of financial position; the put option value of $13m is
presented within derivative financial instruments.
|
|
||||
|
There was no
impairment of goodwill and indefinite life
brands
For
impairment testing of all non-current assets, the key assumptions
that underpin the forecasts are RevPAR growth and, in the case of
goodwill and indefinite life brands, net System size growth. Growth
is based on industry forecasts, revised for the estimated impact of
Covid-19 and adjusted for historical experience of how the Group
has performed compared to these expectations. Cash flows beyond the
five-year period are extrapolated using terminal growth rates that
do not exceed the average long-term growth rates for the relevant
markets.
Management
have modelled a downside scenario to assess the sensitivity of
impairment to changes in projections. The alternative scenario
considers a deeper economic downturn in 2021 and a lack of recovery
in demand, with limited RevPAR growth in 2021 and revenue not
returning to 2019 levels within the five-year period. The scenario
includes cost savings being actioned by the Group. Under this
downside scenario, additional impairment of $108m is estimated (net
of $11m fair value gains), mainly impacting owned and leased assets
in the Americas region. Goodwill and brands were not impaired using
the downside scenario, although any additional decline to that
already assumed in the downside scenario would result in an
impairment of the goodwill and indefinite life brands allocated to
the Americas managed CGU.
Pre-tax
discount rates used ranged from 8.9%-13.7% for goodwill and
indefinite life brands, 7.0%-12.0% for property, plant and
equipment, right-of-use assets and associate investments, and 8.3%
to 13.1% for management agreements.
An
increase of 1% in the discount rate used would result in additional
impairment of $49m (net of $9m fair value gains), mainly relating
to owned and leased assets in the Americas region.
Impairment
of trade deposits and loans, which are included within other
financial assets on the Group statement of financial position,
primarily relates to a deposit of $66m made to Service Properties
Trust (“SVC”) in connection with a portfolio of
management agreements. The deposits are non-interest-bearing and
repayable at the end of the management agreement terms and are
therefore held at a discounted value of $33m. The balance of $33m
is recorded as a contract asset. As a result of Covid-19 the
deposit has been used to fund owner returns and is not expected to
be recoverable. The deposit and associated contract asset have
therefore been impaired in full. See note 19 for post balance sheet
events related to the SVC portfolio.
The
recoverable amount of acquired management agreements is $10m which
is the maximum sensitivity to further impairment.
In the
event the economic recovery is quicker than expected, the
recoverable amounts of assets and cash-generating units would
likely improve and could result in future reversals of impairment
charges
|
|
|
9.
|
UK portfolio
|
|
|
|
|
|
|
|
|
|
Included
within exceptional items (see note 7) are the following items
relating to the UK portfolio (2019 $nil):
|
||
|
|
|
|
|
|
|
|
2020
6 months ended
30 June
$m
|
|
|
|
|
|
|
|
|
Provision
for onerous contractual expenditure
|
(10)
|
|
|
|
|
|
|
|
|
Reorganisation
costs
|
(4)
|
|
|
|
|
|
|
|
|
Derecognition
of lease assets and liabilities:
|
|
|
|
|
Right-of-use
assets
|
(22)
|
|
|
|
Lease
liabilities
|
40
|
|
|
|
|
|
|
|
|
Impairment
of property, plant and equipment
|
(50)
|
|
|
|
|
|
|
|
|
Fair
value gains on contingent purchase consideration
|
21
|
|
|
|
|
_____
|
|
|
|
Total exceptional items before tax
|
(25)
|
|
|
|
|
_____
|
|
|
|
The UK
portfolio has continued to experience challenging trading
conditions as a result of Covid-19, with all 12 hotels closing for
business on 24 March 2020. Although the first hotels re-opened in
July 2020, others are subject to a phased re-opening plan over
several months and once open are expected to experience low
occupancies and lower than usual non-room revenues. The Group has
withheld rent payments due since 1 April 2020 (other than payments
of ground rent) with consideration given to the UK Government
commercial tenant protection measures which are in place until 30
September 2020.
Under
the terms of the leases, the Group is committed to certain items of
contractual expenditure. A provision has been recognised to the
extent the costs of the remaining contractual expenditure exceed
the future economic benefits expected to be received under the
leases. Of the total provision, $3m is classified within current
liabilities.
In June
2020 the hotels launched a collective consultation process to
restructure hotel operations in response to the future impact of
Covid-19 on hotel occupancy and revenues. $4m has been provided in
respect of this cost.
As
described in note 7, the right-of-use asset and lease liability
relating to the UK portfolio have been derecognised as a result of
the re-estimation of the ‘in-substance fixed’ rent
payable under the leases. The leases are now considered to be fully
variable.
Impairment
testing was performed on the remaining property, plant and
equipment in the portfolio using management forecasts covering a
five-year period and a UK long-term growth rate thereafter. The
projections assume that RevPAR for the UK hotels does not recover
to 2019 levels during the forecast period, which also negatively
impacts gross operating profit due to cost inflation. On this
basis, the recoverable amount of the portfolio was assessed as $nil
and all remaining property, plant and equipment has been fully
impaired.
Contingent
purchase consideration comprises the present value of the
above-market element of the expected lease payments to the lessor.
The above-market assessment is determined by comparing the expected
lease payments as a percentage of forecast hotel operating profit
(before depreciation and rent) with market metrics, on a hotel by
hotel basis. A fair value gain of $21m was recognised in the
period, arising from a reduction in expected future rentals payable
such that there is no remaining above-market element.
|
||
|
10.
|
Tax
|
|
|
The
interim effective rate of tax, excluding the impact of exceptional
items, see note 7, and System Fund, has been calculated at (127)%
(2019 21%). Within the six months ended 30 June 2020, the
Group recognised a tax credit of $19m on one-off (including prior
year) items, predominantly in connection with adjustments to
deferred taxes following an internal group restructuring, UK law
change and prior year items. Excluding these one-off items,
the effective tax rate would be 45%. This adjusted rate is higher
than the UK statutory corporation tax rate of 19% due to higher
taxed overseas profits (particularly in the US) and a distortive
impact of unrelieved foreign taxes and other non-tax deductible
expenses due to the low profit base.
Taxation
on exceptional items totalled a credit of $51m, representing
deferred tax impacts on the accounting exceptional items set out in
note 7.
|
|
|
|
6 months ended 30 June 2020
|
6 months ended 30 June 2019
|
|||||
|
|
|
Profit/(loss)
$m
|
Tax
$m
|
Tax
rate
|
Profit
$m
|
Tax
$m
|
Tax
rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before
exceptional items and System Fund
|
11
|
14
|
(127)%
|
343
|
(72)
|
21%
|
|
|
|
System
Fund
|
(52)
|
-
|
|
47
|
-
|
|
|
|
|
Exceptional
items (note 7)
|
(234)
|
51
|
|
(15)
|
3
|
|
|
|
|
|
_____
|
_____
|
|
_____
|
_____
|
|
|
|
|
|
(275)
|
65
|
|
375
|
(69)
|
|
|
|
|
|
_____
|
_____
|
|
_____
|
_____
|
|
|
|
|
Analysed
as:
|
|
|
|
|
|
|
|
|
|
|
UK
tax
|
|
25
|
|
|
(10)
|
|
|
|
|
Foreign
tax
|
|
40
|
|
|
(59)
|
|
|
|
|
|
_____
|
|
|
_____
|
|
|
|
|
|
|
65
|
|
|
(69)
|
|
|
|
|
|
|
_____
|
|
|
_____
|
|
|
|
|
Net tax
paid in the six months ended 30 June 2020 totalled $3m, consisting
of payments of $27m and refunds in respect of prior year periods of
$24m. As a result of Covid-19, many jurisdictions have
enacted temporary legislation that has deferred the due date of
corporate income taxes. Absent this legislation, additional
taxes of $10m would have been due for payment in the six months
ended 30 June 2020, all of which are now due in the six months
ended 31 December 2020.
|
|
11.
|
(Loss)/earnings per ordinary share
|
|
|
Basic
earnings per ordinary share is calculated by dividing the profit or
loss for the period available for IHG equity holders by 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 awards
outstanding during the period.
Adjusted
earnings per ordinary share* is disclosed in order to show
performance undistorted by exceptional items and changes in the
fair value of contingent purchase consideration, to give a more
meaningful comparison of the Group’s
performance.
Additionally,
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 gain or loss from operating the Fund over the longer
term.
IHG
also records an interest charge on the outstanding cash balance
relating to the IHG Rewards Club programme. These interest payments
are recognised as interest income for the Fund and interest expense
for IHG. The Fund also benefits from the capitalisation of interest
related to the development of the next-generation Guest Reservation
System. As the Fund is included on the Group income statement,
these amounts are included in reported Group net financial
expenses. Given that all results related to the Fund are
excluded from the calculation of adjusted earnings per ordinary
share, these interest amounts are deducted from profit available
for equity holders.
* See
the Use of Non-GAAP measures section in the Interim Management
Report.
|
|
|
Continuing and total operations
|
2020
6 months ended
30 June
|
2019
6
months ended
30 June
Restated*
|
|
|
|
Basic (loss)/earnings per ordinary share
|
|
|
|
|
|
(Loss)/profit
available for equity holders ($m)
|
(210)
|
306
|
|
|
|
Basic
weighted average number of ordinary shares (millions)
|
182
|
183
|
|
|
|
Basic
(loss)/earnings per ordinary share (cents)
|
(115.4)
|
167.2
|
|
|
|
|
_____
|
_____
|
|
|
|
Diluted (loss)/earnings per ordinary share
|
|
|
|
|
|
(Loss)/profit
available for equity holders ($m)
|
(210)
|
306
|
|
|
|
Diluted
weighted average number of ordinary shares (millions)
|
182
|
184
|
|
|
|
Diluted
(loss)/earnings per ordinary share (cents)
|
(115.4)
|
166.3
|
|
|
|
|
_____
|
_____
|
|
|
|
Adjusted earnings per ordinary share
|
|
|
|
|
|
(Loss)/profit
available for equity holders ($m)
|
(210)
|
306
|
|
|
|
Adjusting
items ($m):
|
|
|
|
|
|
|
System
Fund revenues and expenses
|
52
|
(47)
|
|
|
|
Interest
attributable to the System Fund
|
(4)
|
(9)
|
|
|
|
Operating
exceptional items (note 7)
|
255
|
15
|
|
|
|
Change
in fair value of contingent purchase consideration*
|
(16)
|
10
|
|
|
|
Tax on
exceptional items (note 7)
|
(51)
|
(3)
|
|
|
|
______
|
______
|
|
|
|
Adjusted
earnings ($m)
|
26
|
272
|
|
|
|
Basic
weighted average number of ordinary shares (millions)
|
182
|
183
|
|
|
|
Adjusted
earnings per ordinary share (cents)
|
14.3
|
148.6
|
|
|
|
|
_____
|
_____
|
|
|
|
Diluted
weighted average number of ordinary shares (millions)
|
182
|
184
|
|
|
|
Adjusted
diluted earnings per ordinary share (cents)
|
14.3
|
147.8
|
|
|
|
|
_____
|
_____
|
|
|
|
The
diluted weighted average number of ordinary shares is calculated
as:
|
||
|
|
|
2020
millions
|
2019
millions
|
|
|
Basic
weighted average number of ordinary shares
|
182
|
183
|
|
|
Dilutive
potential ordinary shares
|
-
|
1
|
|
|
|
______
|
______
|
|
|
|
182
|
184
|
|
|
|
_____
|
_____
|
|
|
The
effect of the notional exercise of outstanding ordinary share
awards is anti-dilutive for the six months to 30 June 2020, and
therefore has not been included in the diluted earnings per share
calculation.
|
||
|
12.
|
Dividends and shareholder returns
|
|||||
|
|
|
2020
cents per share
|
2019
cents per share
|
2020
$m
|
2019
$m
|
|
|
|
Paid
during the period:
|
|
|
|
|
|
|
|
|
Final
(declared for previous year)
|
-
|
78.1
|
-
|
139
|
|
|
|
Special
|
-
|
262.1
|
-
|
510
|
|
|
|
|
_____
|
_____
|
_____
|
_____
|
|
|
|
|
-
|
340.2
|
-
|
649
|
|
|
|
|
_____
|
_____
|
_____
|
_____
|
|
|
Proposed
for the period:
|
|
|
|
|
|
|
|
|
Interim
|
-
|
39.9
|
-
|
72*
|
|
|
|
_____
|
_____
|
_____
|
_____
|
|
|
|
*
Amount paid.
|
|
|
|
|
|
|
|
In
October 2018, the Group announced a $500m return of funds to
shareholders by way of a special dividend and share consolidation.
On 11 January 2019, shareholders approved the share consolidation
on the basis of 19 new ordinary shares of 20 340/399p per share for
every 20 existing ordinary shares of 19 17/21p, which became
effective on 14 January 2019 and resulted in the consolidation of
10m shares. The dividend was paid on 29 January 2019. The dividend
and share consolidation had the same economic effect as a share
repurchase at fair value.
On 20
March 2020, the Board withdrew its recommendation of a final
dividend in respect of 2019 of 85.9¢ per share (~$150m). An
interim dividend in respect of 2020 will not be paid. The Board
will continue to defer consideration of further dividends until
visibility of the pace and scale of market recovery has
improved.
The
total number of shares held as treasury shares at 30 June 2020 was
5.1m.
|
|||||
|
13.
|
Reconciliation of (loss)/profit for the period to cash flow from
operations before contract acquisition costs
|
|
|
2020
6
months ended
30
June
|
2019
6 months ended
30 June*
|
|
|
|
$m
|
$m
|
|
|
|
|
|
|
|
(Loss)/profit
for the period
|
(210)
|
306
|
|
|
Adjustments
for:
|
|
|
|
|
|
Net
financial expenses
|
58
|
57
|
|
|
Fair
value (gains)/losses on contingent purchase
consideration
|
(16)
|
10
|
|
|
Income
tax (credit)/charge
|
(65)
|
69
|
|
|
Depreciation and
amortisation
|
55
|
56
|
|
|
System
Fund depreciation and amortisation
|
30
|
25
|
|
|
Impairment loss on
financial assets
|
78
|
7
|
|
|
System
Fund impairment loss on financial assets
|
22
|
5
|
|
|
Other
impairment charges
|
195
|
-
|
|
|
Other
operating exceptional items (including System Fund)
|
(3)
|
28
|
|
|
Share
of losses of associates and joint ventures
|
6
|
-
|
|
|
Share-based
payments cost
|
15
|
20
|
|
|
Dividends from
associates and joint ventures
|
-
|
1
|
|
|
Increase in
deferred revenue
|
14
|
47
|
|
|
Increase in
contract costs
|
(2)
|
(5)
|
|
|
Retirement benefit
contributions, net of costs
|
(1)
|
(1)
|
|
|
Utilisation of
provisions, net of charge
|
4
|
2
|
|
|
Changes
in net working capital
|
(107)
|
(298)
|
|
|
Cash
flows relating to exceptional items
|
(30)
|
(30)
|
|
|
Contract assets
deduction in revenue
|
13
|
10
|
|
|
Other
movements in contract assets
|
(5)
|
-
|
|
|
Other
items
|
(3)
|
-
|
|
|
|
_____
|
_____
|
|
Total
adjustments
|
258
|
3
|
|
|
|
_____
|
_____
|
|
|
Cash
flow from operations before contract acquisition costs
|
48
|
309
|
|
|
|
_____
|
_____
|
|
|
14.
|
Net Debt
|
|||
|
|
|
2020
30 June
|
2019
31 December
|
|
|
|
|
$m
|
$m
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
688
|
195
|
|
|
|
Loans
and other borrowings – current
|
(790)
|
(87)
|
|
|
|
Loans
and other borrowings – non-current
|
(1,870)
|
(2,078)
|
|
|
|
Lease
liabilities – current
|
(64)
|
(65)
|
|
|
|
Lease
liabilities – non-current
|
(504)
|
(595)
|
|
|
|
Lease
liabilities – classified as held for sale
|
-
|
(20)
|
|
|
|
Derivative
financial instruments hedging debt values
|
25
|
(15)
|
|
|
|
|
_____
|
_____
|
|
|
|
Net debt*
|
(2,515)
|
(2,665)
|
|
|
|
|
_____
|
_____
|
|
|
|
* See the Use of Non-GAAP measures section in the Interim
Management Report.
|
|||
|
|
In the
Group statement of cash flows, cash and cash equivalents is
presented net of $56m bank overdrafts (2019: $87m).
|
|
||
|
|
Cash
and cash equivalents includes $4m (2019: $6m) restricted for use on
capital expenditure in the UK portfolio and therefore not available
for wider use by the Group. An additional $17m (2019: $16m) is held
within countries from which funds are not currently able to be
repatriated to the Group’s central treasury
company.
Current
loans and other borrowings includes £600m ($734m) commercial
paper issued under the UK Government’s CCFF, maturing on 16
March 2021.
|
|
|
The
Group’s $1,275m revolving syndicated bank facility and $75m
revolving bilateral facility were both undrawn at 30 June 2020
(2019: $125m drawn), providing available committed facilities of
$1.35bn and total liquidity of $2bn.
Existing
covenants on the syndicated facility have been waived until 31
December 2021 and replaced with a minimum liquidity covenant of
$400m, tested at half year and full year until 30 June 2021. The
maturity of the Group’s $1,275m syndicated revolving credit
facility has been extended for 18 months to September 2023 and
following the balance sheet date the Group’s bilateral
facility was extended for 18 months to
September 2023 (note 19).
|
|
15.
|
Movement in net debt
|
|||
|
|
|
2020
6 months ended
30 June
|
2019
6 months ended
30 June
|
|
|
|
|
$m
|
$m
|
|
|
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents, net of
overdrafts
|
538
|
(483)
|
|
|
|
Add
back cash flows in respect of other components of net
debt:
|
|
|
|
|
|
|
Principal
element of lease payments
|
20
|
22
|
|
|
|
Issue
of commercial paper
|
(738)
|
-
|
|
|
|
Decrease/(increase)
in other borrowings
|
125
|
(376)
|
|
|
|
_____
|
_____
|
|
|
|
Increase
in net debt arising from cash flows
|
(55)
|
(837)
|
|
|
|
|
|
|
|
|
|
Non-cash
movements:
|
|
|
|
|
|
|
Lease
obligations
|
67
|
(32)
|
|
|
|
Increase
in accrued interest
|
(15)
|
(22)
|
|
|
|
Acquisitions
and disposals
|
19
|
(19)
|
|
|
|
Exchange
and other adjustments
|
134
|
28
|
|
|
|
_____
|
_____
|
|
|
|
Decrease/(increase) in net debt
|
150
|
(882)
|
|
|
|
|
|
|
|
|
|
Net
debt at beginning of the period
|
(2,665)
|
(1,965)
|
|
|
|
|
_____
|
_____
|
|
|
|
Net debt at end of the period
|
(2,515)
|
(2,847)
|
|
|
|
|
_____
|
_____
|
|
|
16.
|
Accounting classification of financial instruments
|
|
|
|
|
|
2020
30 June
$m
|
2019
31 December
Restated*
$m
|
|
|
Financial assets
|
|
|
|
|
Financial
assets measured at fair value through other comprehensive
income:
|
|
|
|
|
Equity
securities
|
90
|
133
|
|
|
|
_____
|
_____
|
|
|
Financial
assets measured at fair value through profit or loss:
|
|
|
|
|
Money
market funds:
|
|
|
|
|
Cash
and cash equivalents
|
180
|
35
|
|
|
Other
financial assets
|
16
|
16
|
|
|
Other
financial assets
|
-
|
3
|
|
|
Derivative
financial instruments
|
18
|
1
|
|
|
Deferred
compensation plan investments
|
213
|
218
|
|
|
|
_____
|
_____
|
|
|
|
427
|
273
|
|
|
|
_____
|
_____
|
|
|
Financial
assets measured at amortised cost:
|
|
|
|
|
Cash
and cash equivalents
|
508
|
160
|
|
|
Other
financial assets
|
69
|
136
|
|
|
Trade
and other receivables, excluding prepayments
|
424
|
552
|
|
|
|
_____
|
_____
|
|
|
|
1,001
|
848
|
|
|
|
_____
|
_____
|
|
|
Financial liabilities
|
|
|
|
|
Financial
liabilities measured at fair value through profit or
loss:
|
|
|
|
|
Contingent purchase
consideration
|
(76)
|
(91)
|
|
|
Derivative
financial instruments
|
-
|
(20)
|
|
|
Deferred
compensation plan liabilities
|
(213)
|
(218)
|
|
|
|
_____
|
_____
|
|
|
|
(289)
|
(329)
|
|
|
|
_____
|
_____
|
|
|
Financial
liabilities measured at amortised cost:
|
|
|
|
|
Loans
and other borrowings
|
(2,660)
|
(2,165)
|
|
|
Trade
and other payables, excluding deferred and contingent purchase
consideration
|
(356)
|
(570)
|
|
|
Deferred purchase
consideration
|
(24)
|
(23)
|
|
|
|
_____
|
_____
|
|
|
|
(3,040)
|
(2,758)
|
|
|
|
_____
|
_____
|
|
|
*
Restated for deferred compensation plan investments and liabilities
(see note 1).
|
|
|
|
|
Fair value hierarchy
The
following table provides the carrying value, fair value and
position in the fair value measurement hierarchy of the
Group’s financial assets and liabilities. Financial assets
and liabilities measured at amortised cost are only included if
their carrying amount is not a reasonable approximation of fair
value.
|
||||||
|
|
|
|
|||||
|
|
30 June 2020
|
Fair value
|
|||||
|
|
|
Carrying value
$m
|
Level 1
$m
|
Level 2
$m
|
Level 3
$m
|
Total
$m
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Equity
securities
|
90
|
-
|
-
|
90
|
90
|
|
|
|
Derivative
financial instruments
|
18
|
-
|
5
|
13
|
18
|
|
|
|
Money
market funds
|
196
|
196
|
-
|
-
|
196
|
|
|
|
Deferred
compensation plan investments
|
213
|
213
|
-
|
-
|
213
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Contingent
purchase consideration
|
(76)
|
-
|
-
|
(76)
|
(76)
|
|
|
|
Deferred
purchase consideration
|
(24)
|
(26)
|
-
|
-
|
(26)
|
|
|
|
£400m
3.875% bonds 2022
|
(500)
|
(503)
|
-
|
-
|
(503)
|
|
|
|
£300m
3.75% bonds 2025
|
(377)
|
(382)
|
-
|
-
|
(382)
|
|
|
|
£350m
2.125% bonds 2026
|
(435)
|
(414)
|
-
|
-
|
(414)
|
|
|
|
€500m
2.125% bonds 2027
|
(558)
|
(546)
|
-
|
-
|
(546)
|
|
|
|
Deferred
compensation plan liabilities
|
(213)
|
(213)
|
-
|
-
|
(213)
|
|
|
|
31 December 2019
|
|
Fair value
|
|||
|
|
|
Carrying value
$m
|
Level 1
$m
|
Level 2
$m
|
Level 3
$m
|
Total
$m
|
|
|
Assets
|
|
|
|
|
|
|
|
Equity
securities
|
133
|
8
|
-
|
125
|
133
|
|
|
Derivative
financial instruments
|
1
|
-
|
1
|
-
|
1
|
|
|
Money
market funds
|
51
|
51
|
-
|
-
|
51
|
|
|
Trade
deposits and loans
|
3
|
-
|
-
|
3
|
3
|
|
|
Deferred
compensation plan investments
|
218
|
218
|
-
|
-
|
218
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Derivative
financial instruments
|
(20)
|
-
|
(20)
|
-
|
(20)
|
|
|
Contingent
purchase consideration
|
(91)
|
-
|
-
|
(91)
|
(91)
|
|
|
Deferred
purchase consideration
|
(23)
|
(24)
|
-
|
-
|
(24)
|
|
|
£400m
3.875% bonds 2022
|
(528)
|
(567)
|
-
|
-
|
(567)
|
|
|
£300m
3.75% bonds 2025
|
(399)
|
(435)
|
-
|
-
|
(435)
|
|
|
£350m
2.125% bonds 2026
|
(462)
|
(465)
|
-
|
-
|
(465)
|
|
|
€500m
2.125% bonds 2027
|
(564)
|
(601)
|
-
|
-
|
(601)
|
|
|
Deferred
compensation plan liabilities
|
(218)
|
(218)
|
-
|
-
|
(218)
|
|
|
For
assets and liabilities measured at fair value on a recurring basis,
the Group determines whether transfers have occurred between levels
in the fair value hierarchy by reassessing categorisation (based on
the lowest level of input that is significant to the fair value
measurement as a whole) at the end of each reporting
period.
There
were no transfers between Level 1 and Level 2 fair value
measurements during the period and no transfers out of Level 3. $8m
was transferred into Level 3 relating to equity securities listed
on quoted markets which are now considered inactive.
|
|||||
|
|
Valuation techniques
Money market funds and bonds
The
fair value of money market funds and bonds is based on their quoted
market price.
Unquoted equity securities
Unquoted
equity securities are fair valued using a discounted cash flow
model. The significant unobservable inputs used to determine the
fair value of the equity securities are RevPAR growth (see note 2),
discount rate (which ranged from 6.3% to 10.0%), and a
non-marketability factor (which ranged from 20% to 30%). In prior
years, an average price-earnings (P/E) ratio was applied, however,
due to the impact of Covid-19 P/E ratios have increased
significantly, resulting in an increased level of uncertainty in
the implied valuations and therefore management’s view is
that an income approach using discounted cash flows gives a more
stable and reliable valuation.
Applying
the downside scenario described in note 8 to RevPAR growth would
result in a $10m decrease in fair value. A 1% increase/(decrease)
in the discount rate would result in a $10m (decrease)/increase in
fair value. A five-percentage point increase/(decrease) in the
non-marketability factor would result in a $5m (31 December 2019
$2m) (decrease)/increase in fair value.
Derivative financial instruments
Short-dated
foreign exchange swaps are fair valued using discounted future cash
flows, taking into consideration exchange rates prevailing on the
last day of the reporting period and interest rates from observable
swap curves. Currency swaps are measured at the present value of
future cash flows estimated and discounted back based on quoted
forward exchange rates and the applicable yield curves derived from
quoted interest rates. Adjustments for credit risk use observable
credit default swap spreads.
The put
option over part of the Group’s investment in the Barclay
associate has been valued as the excess of the amount receivable
under the option (which is based on the Group’s capital
invested to date) over fair value, as calculated for impairment
testing using discounted future cash flows as described in note 8.
The resulting gain has been presented within the impairment charge
over the associate investment in the Group income statement, given
the interaction between the value of the option and the value of
the associate investment.
Deferred purchase consideration
Deferred
purchase consideration arose in respect of the acquisition of
Regent and comprises the present value of $13m payable in 2021 and
$13m payable in 2024. The discount rate applied is based on
observable US corporate bond rates of similar term to the expected
payment dates.
Contingent purchase consideration
Regent $71m (2019: $66m)
Comprises
the present value of the expected amounts payable on exercise of
put and call options to acquire the remaining 49% shareholding in
Regent. The amount payable on exercise of the options is based on
the annual trailing revenue of Regent Hospitality Worldwide, Inc
(RHW) in the year preceding exercise, with a floor applied. The
options are exercisable in a phased manner from 2026 to 2033. The
value of the contingent purchase consideration is subject to
periodic reassessment as interest rates and RHW revenue
expectations change. The range of possible outcomes remains
unchanged from the date of acquisition at $81m to $261m
(undiscounted).
At 30
June 2020, it is assumed that $39m will be paid in 2026 to acquire
an additional 25% of RHW with the remaining 24% acquired in 2028
for $42m. This assumes that the options will be exercised at the
earliest permissible date which is consistent with the assumption
made on acquisition. The amount recognised in the financial
statements is the discounted value of the total expected amount
payable of $81m. The discount rate applied is based on observable
US corporate bond rates of similar term to the expected payment
dates.
|
|
|
The
significant unobservable inputs used to determine the fair value of
the contingent purchase consideration are the projected trailing
revenues of RHW and the date of exercising the options. If the
annual trailing revenue of RHW were to exceed the floor by 10%, the
amount of the contingent purchase consideration recognised in the
financial statements would increase by $7m (31 December 2019 $7m).
If the date for exercising the options is assumed to be 2033, the
amount of the undiscounted contingent purchase consideration would
be $86m (31 December 2019: $86m).
UK portfolio $nil (2019: $20m)
Comprises
the present value of the above-market element of the expected lease
payments to the lessor. The above-market assessment is determined
by comparing the expected lease payments as a percentage of
forecast hotel operating profit (before depreciation and rent) with
market metrics, on a hotel by hotel basis. There is no floor to the
amount payable and no maximum amount. Market rents were initially
determined with assistance of professional third-party advisors.
The fair value is subject to periodic reassessment as interest
rates and expected lease payments change.
A fair
value adjustment of $21m was recognised in the period, resulting in
a reduction to the value of the liability arising from a reduction
in expected future rentals payable (see note 9).
Forecast
base rentals have been discounted at 9.0% based on the CBRE prime
freehold regional yield benchmark, adjusted to reflect rental
growth, the leasehold nature of the assets and variable rental
structure. Forecast profit share rentals have been discounted using
a pre-tax rate of 10.4% to reflect the higher degree of variability
inherent in the profit share rentals.
The
significant unobservable inputs used to determine the fair value of
the contingent purchase consideration are the projected lease
payments and the discount rates used. The fair value is not
sensitive to reasonably possible changes in
assumptions.
Six Senses $5m (2019: $5m)
It is
expected that $5m will be payable upon certain conditions being met
relating to a project to open a pipeline property, currently
expected to be paid in 2021. If the conditions are not met, no
amounts will be paid. The impact of discounting is not
material.
|
|
|
Level 3 reconciliation
|
|
|
The
following table reconciles the movements in the fair values of
financial instruments classified as Level 3 during the
period:
|
|
|
|
Other financial assets
$m
|
Derivative financial instruments
$m
|
Contingent purchase consideration
$m
|
|
|
|
|
|
|
|
|
At 1
January 2020
|
128
|
-
|
(91)
|
|
|
Additions
|
2
|
-
|
-
|
|
|
Transfers
into Level 3
|
8
|
-
|
-
|
|
|
Repayments
|
(1)
|
-
|
-
|
|
|
Valuation
losses recognised in other comprehensive income
|
(43)
|
-
|
-
|
|
|
Change
in fair value*
|
-
|
13
|
16
|
|
|
Exchange
and other adjustments
|
(4)
|
-
|
(1)
|
|
|
|
_____
|
_____
|
_____
|
|
|
At 30 June 2020
|
90
|
13
|
(76)
|
|
|
|
_____
|
_____
|
_____
|
|
|
*$21m
fair value gain on contingent purchase consideration and $13m gain
on derivative financial instruments are recognised as exceptional
items in the Group income statement (note 7). The remaining $5m
fair value loss on contingent purchase consideration relates to
Regent.
|
|
17.
|
Commitments and guarantees
|
|
|
At 30
June 2020, the amount contracted for but not provided for in the
financial statements for expenditure on property, plant and
equipment, intangible assets and key money payments was $174m (31
December 2019 $194m).
In
limited cases, the Group may guarantee bank loans made to
facilitate third-party ownership of hotels under IHG management or
franchise agreements. These contracts are treated as insurance
contracts as IHG is insuring the bank against default by the hotel,
with a liability only being recognised in the event that a pay-out
becomes probable. At 30 June 2020, there were guarantees of $59m in
place (31 December 2019 $55m), and $2m (31 December 2019 $nil) is
included within provisions.
In
estimating amounts due under performance guarantees, the Group has
considered ‘force majeure’ provisions within its
management agreements.
|
|
18.
|
Contingencies
Security incidents
|
|
|
In
2016, the Group was notified of (a) a security incident at a number
of Kimpton hotels that resulted in unauthorised access to guest
payment card data, and (b) security incidents at a number of IHG
branded hotels including the installation of malware on servers
that processed payment cards used at restaurants and bars of 12 IHG
managed properties, together the Security Incidents.
The
Group may be exposed to investigations regarding compliance with
applicable State and Federal data security standards, and legal
action from individuals and organisations impacted by the Security
Incidents. Due to the general nature of the regulatory inquiries
received and class action filings to date, other than described
below, it is not practicable to make a reliable estimate of the
possible financial effects of any such claims on the Group at this
time. These contingent liabilities are potentially recoverable
under the Group’s insurance programmes, although specific
agreement will need to be reached with the relevant insurance
providers at the time any claim is made.
To
date, four lawsuits had been filed against IHG entities relating to
the Security Incidents, with one subsequently withdrawn in 2018. Of
the remaining three lawsuits, settlement was agreed for one in 2018
with an expected total payment of less than $2m, and in 2020 a
preliminary settlement, expected to be approximately $3m, has been
agreed for another. Both of these settlements are expected to be
paid under the Group’s insurance programmes.
Other
There
are certain indemnities and claims that the Group will be able to
pursue in relation to litigation matters which are provided for,
although it is not practicable to quantify the amounts at this
point in time.
Legal
proceedings filed against the Group in respect of one hotel in the
EMEAA region are expected to near resolution in 2020. A reliable
assessment of the final outcome cannot currently be
made.
Following
a successful reclaim of sales taxes borne by the System Fund in
historical periods, a further top-up claim for $11m has been filed
on the same basis with the relevant tax authorities relating to
more recent tax periods. The claim is expected to be settled by the
end of 2020.
From
time to time, the Group is subject to legal proceedings the
ultimate outcome of each being always subject to many uncertainties
inherent in litigation. The Group has also given warranties in
respect of the disposal of certain of its former subsidiaries. It
is the view of the Directors that, other than to the extent that
liabilities have been provided for in these financial statements,
it is not possible to quantify any loss to which these proceedings
or claims under these warranties may give rise, however, as at the
date of reporting, the Group does not believe that the outcome of
these matters will have a material effect on the Group’s
financial position.
At 30
June 2020, the Group had no other contingent liabilities (31
December 2019 $nil).
|
|
19.
|
Post balance sheet events
|
|
|
Reorganisation costs
As a
result of the severe impact of Covid-19 on the hospitality
industry, the Group has reassessed near-term priorities and the
resources needed to support reduced levels of demand and internally
announced a reorganisation programme in July 2020 which aims to
make around half of the $150m savings delivered in 2020 sustainable
into 2021.
This
reorganisation programme is expected to be completed in 2020, the
costs of which will be included within exceptional items for the
year ending 31 December 2020.
SVC portfolio
Service
Properties Trust (“SVC”) is the owner of 102 IHG
branded hotels which are operated under portfolio management
agreements and one hotel which is leased by IHG. IHG received
notices from SVC on 23 July and 4 August 2020, alleging an event of
default for non-payment of SVC’s priority return under the
portfolio agreements for the months of July and August 2020. SVC
alleges that the total amount due for July and August is $26m after
applying an outstanding deposit. SVC has notified IHG that SVC is
electing to terminate the portfolio agreements effective 30
November 2020 and that IHG may avoid the termination by paying
amounts due on or before 24 August 2020. In light of the timing of
service of the notices, IHG is not in a position to determine the
outcome. IHG has not yet responded to the notices.
In the
event the portfolio management agreements are terminated, this
would be expected to result in an immaterial reduction in fee
revenue and a decrease in annual System Fund revenue in the region
of $20m (excluding loyalty and based on 2019 revenues). Cost
reimbursement revenue would reduce by approximately $180m on the
same basis, matched by a reduction in reimbursed costs, with no
impact on operating profit.
The
termination of the hotel lease agreement would result in the
elimination of $58m right-of-use assets and $80m lease liabilities.
Other right-of-use assets of $3m and lease liabilities of $7m would
likely also be derecognised as a result of a termination.
Termination of the hotel lease would result in an annual decrease
in revenue from owned, leased and managed lease hotels of
approximately $19m (based on 2019 revenues), with an immaterial
impact on operating profit.
Extension of bilateral facilities
In August 2020, the Group’s $75m bilateral facility was
extended for 18 months to September 2023.
|
|
INDEPENDENT REVIEW REPORT TO INTERCONTINENTAL HOTELS GROUP
PLC
|
|
Introduction
We have been engaged by the Company to review the condensed set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2020 which comprises the Group income
statement, Group statement of comprehensive income, Group statement
of changes in equity, Group statement of financial position, Group
statement of cash flows and the related notes 1 to 19. We have read
the other information contained in the half yearly financial report
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
(UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has
been approved by, the Directors. The Directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European
Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the
condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of Review
We conducted our review in accordance with International Standard
on Review Engagements (UK and Ireland) 2410 ‘Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity’ issued by the Auditing Practices Board for use
in the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes
us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2020
is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure Guidance and Transparency Rules of the
United Kingdom’s Financial Conduct Authority.
Ernst & Young LLP
London
10 August 2020
|
|
|
|
InterContinental Hotels Group PLC
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
By:
|
/s/ F. Cuttell
|
|
|
Name:
|
F.
CUTTELL
|
|
|
Title:
|
ASSISTANT
COMPANY SECRETARY
|
|
|
|
|
|
|
Date:
|
11 August 2020
|
|
|
|
|