IHG 2018 Interim Results Presentation Tuesday, 7 th August 2018 Transcript produced by Global Lingo London - 020 7870 7100 www.global-lingo.com
IHG 2018 Interim Results Presentation Tuesday, 7 th August 2018 Welcome Catherine Dolton Head of Investor Relations, IHG Good morning everyone and welcome to IHG’s 2018 Interim Results Presentation. This is Catherine Dolton, Head of Investor Relations. I am joined this morning by Keith Barr, Chief Executive Officer and Paul Edgecliffe-Johnson, Chief Financial Officer. As you can see, we are holding today’s results presentation by webcast and we will be taking you through som e slides over the next 30 or so minutes. You can find the link on our corporate website and on our stock exchange announcement. If you have not already, please do log on so you can follow the slides. We will not be holding a separate call for US investors today but will be making the replay of this presentation available on our website. Before I hand over to Keith and Paul I need to remind you that in the discussions today the company may make certain forward-looking statements as defined under US law. Please refer to this morning’s announcement and the company’s SEC filings for factors that could lead actual results to differ materiall y from those expressed in or implied by any such forward-looking statements. I will now turn the call over to Keith. H1 2018 Highlights Keith Barr Chief Executive Officer, IHG Thank you for joining us today. In a moment Paul will talk you through our financial performance but let me first share some quick highlights. We have delivered a strong first-half performance with our best earnings for a decade. We are driving momentum across each of our regions, which have all performed well in the half, delivering 3.7% RevPAR growth at a Group level. Together with 4.1% net rooms growth, our best for eight years, this drove underlying operating profit up 8% and underlying earnings per share up 25%. You will see that we have taken the decision to increase our ordinary dividend by 10% reflecting the strong performance as well as our confident outlook for the rest of the year. It is just over 12 months since I became CEO and first spoke about my plans to make IHG’s well-established strategic model work even harder to accelerate our growth and deliver continued strong returns for our owners and shareholders. It has been an incredibly busy year and in February we announced a series of new strategic initiatives that build on our existing strategy and positions IHG to deliver industry-leading, net rooms growth over the medium- term. These initiatives represent a meaningful change in the way that we lead and run our business. They are funded by a comprehensive efficiency programme that will realise $125m of reinvestment by the end of 2020. We have already made good progress against each strategic initiative. Our new organisational structure is being embedded and we are starting to drive some meaningful results. You will have heard me say before that our brands are at the heart of everything we do and we have moved at pace over the last 12 months to add three more to our portfolio: avid hotels in the midscale segment; Regent Hotels & Resorts in the luxury segment; and most recently voco in www.global-lingo.com 2
IHG 2018 Interim Results Presentation Tuesday, 7 th August 2018 the upscale segment. Whilst it is still early days we are delivering against our new strategic initiatives and are continuing to drive strong performance from our existing business in each of our regions. Paul will now spend a few minutes taking you through the details of our half-year results. I will then spend a bit of time talking through the progress we are making with our brand portfolio before we open to Q&A. H1 2018 Financial Review Paul Edgecliffe-Johnson Chief financial Officer, IHG Thank you Keith, and good morning everyone. We are pleased to report a solid financial performance for the first-half with growth in all our key metrics. Before I get into the details I should remind you that our commentary focuses on our results from reportable segments. These exclude the impact of hotel cost reimbursements and the System Fund which are now reported as part of our Group results following our adoption of IFRS 15 at the beginning of this year. We set out the impact of IFRS 15 and other reporting changes at an event in April. Further information, including the event presentation and recording can be found on our website. Looking now at our performance and starting with the column on the right of the slide. Reported revenue increased 7% to $900m and operating profit increased 10% to $406m. This number did benefit from $6m of timing differences between the realisation of savings relating to our Group efficiency programme and reinvestment in growth initiatives. We continue to expect the savings to be fully reinvested on an annual basis so this $6m will reverse in the second-half. On an underlying basis, excluding $7m of individually significant liquidated damages and at constant currency, we grew revenue by 4% which translated into 8% operating profit growth. This resulted in fee margin growth of 80bps year-on-year or 170bps at constant currency. Underlying interest increased by $7m reflecting the impact of a stronger GBP on the translation of our sterling interest expense and higher USD interest rates payable on bank borrowing. Our reported tax rate fell to 23% in line with guidance predominantly due to US tax reform. The weighted average number of shares decreased by 3% as a result of a cumulative effect of the share consolidations following the special dividend payment made in May 2017. In aggregate this performance enabled us to increase our underlying earnings per share by 25% and gave the Board confidence to raise the interim dividend by 10%. Looking now at our levers of growth, we added 22,000 rooms to the system in the half. At the same time as adding these new, high quality representations of our brand, we remained focussed on removing underperforming properties, exiting 10,000 rooms. Whilst these removals were lower than in the first half of 2017, we continue to expect these to be towards the top of our 2-3% range for the full-year 2018, before trending back down again to the low end of the range over the medium-term. These additions and removals resulted in net system size growth of 4.1%, building on the acceleration we saw in 2017, when coupled with RevPAR growth of 3.7% this drove total underlying fee revenue up 5.3%. The 4,000+ rooms from Regent Hotels & Resorts and our www.global-lingo.com 3
Recommend
More recommend
