InterContinental Hotels 2004 first Hotels 2004 first InterContinental half results half results Richard North Richard North Chief Executive
Richard Solomons Solomons Richard Finance Director Finance Director
Summary Summary � Hotel results remain strong � Soft drinks continues to grow turnover � Interim dividend raised to 4.30p per share � £1bn return of funds since separation � Special one-off contribution to pension fund of approximately £50m
IHG Group IHG Group Profit & Loss Account Profit & Loss Account Proforma Proforma Change Change 6 6 mths mths to to 6 6 mths mths to to £m £m % 30 June 04* 30 June 04* 30 June 03* 30 June 03* % Turnover 1,101 1,043 5.6 EBITDA 254 213 19.2 Operating Profit 153 114 34.2 Interest (10) (22) 54.5 Profit before Tax 143 92 55.4 Tax rate 18% 25% Earnings per share 14.2p 7.6p 86.8 4.05p + Dividend 4.30p 6.2 * Excludes exceptional items * Excludes exceptional items + Interim 2003; 9 months to June 2003 + Interim 2003; 9 months to June 2003
Results Results 6 months to 30 June 2004 6 months to 30 June 2004 Proforma Proforma Change Change 6 mths 6 mths to to 6 mths 6 mths to to £m £m % 30 Jun 04 30 Jun 04 30 Jun 03 30 Jun 03 % Hotels Hotels Turnover 735 708 3.8 Turnover 735 708 3.8 Operating Profit 113 75 50.7 Operating Profit 113 75 50.7 Soft Drinks Soft Drinks Turnover 366 335 9.3 Turnover 366 335 9.3 Operating Profit 40 39 2.6 Operating Profit 40 39 2.6
Hotels Operating Profit Hotels Operating Profit 6 months to 30 June 2004 6 months to 30 June 2004 Proforma Proforma 6 mths mths to to 6 6 mths mths to to 6 $m $m % % 30 Jun 04 30 Jun 04 30 Jun 03 30 Jun 03 Americas 145 131 10.7 Americas 145 131 10.7 EMEA 91 51 78.4 EMEA 91 51 78.4 Asia Pacific 17 3 466.7 Asia Pacific 17 3 466.7 Central Overheads Central Overheads (47) (47) (63) (63) 25.4 25.4 Total Operating Profit $m Total Operating Profit $m 206 206 122 122 68.9 68.9 Total Operating Profit £m 113 75 50.7 Total Operating Profit £m 113 75 50.7 Total EBITDA £m 190 152 25.0 Total EBITDA £m 190 152 25.0
Hotels Operating Profit Hotels Operating Profit 3 months to 30 June 2004 3 months to 30 June 2004 Proforma Proforma 3 mths mths to to 3 3 mths mths to to 3 $m $m % % 30 Jun 04 30 Jun 04 30 Jun 03 30 Jun 03 Americas 86 81 6.2 Americas 86 81 6.2 EMEA 62 31 100.0 EMEA 62 31 100.0 Asia Pacific 7 (4) - Asia Pacific 7 (4) - Central Overheads Central Overheads (30) (30) (32) (32) 6.3 6.3 Total Operating Profit $m Total Operating Profit $m 125 125 76 76 64.5 64.5 Total Operating Profit £m 69 46 50.0 Total Operating Profit £m 69 46 50.0 Total EBITDA £m 107 84 27.4 Total EBITDA £m 107 84 27.4
Owned & Leased Estate Owned & Leased Estate Comparable RevPAR RevPAR growth for growth for Comparable 18 months to 30 June 2004 18 months to 30 June 2004
Americas Operating Profit Americas Operating Profit 6 months to 30 June 2004 6 months to 30 June 2004 Proforma Proforma 6 mths mths to to 6 6 mths mths to to 6 $m $m % % 30 Jun 04 30 Jun 04 30 Jun 03 30 Jun 03 Americas - Owned & Leased 22 17 29.4 - Managed 4 5 (20.0) - Franchised 148 136 8.8 Total 174 158 10.1 Regional Overheads (29) (27) (7.4) Total Americas Operating profit $m 145 131 10.7 Total Americas Operating profit £m 80 82 (2.4)
Americas - - Franchised Hotels Franchised Hotels Americas RevPAR Movement Movement RevPAR 3 mths 3 mths to to 6 mths 6 mths to to RevPAR Movement Movement RevPAR 30 Jun 04 30 Jun 04 30 Jun 04 30 Jun 04 Holiday Inn Holiday Inn 5.3% 5.3% 5.0% 5.0% Express Express 6.3% 6.3% 6.8% 6.8% 6 months to 30 Jun 04 Holiday Inn Express Holiday Inn Express Change in royalty rate (0.02)% pts (0.02)% pts Change in royalty rate (0.02)% pts (0.02)% pts Change in number of (1.0%) 6.2% Change in number of (1.0%) 6.2% rooms available rooms available Operating profit up $12m to $148m Operating profit up $12m to $148m
EMEA Operating Profit EMEA Operating Profit 6 months to 30 June 2004 6 months to 30 June 2004 Proforma Proforma 6 mths mths to to 6 mths mths to to 6 6 £m £m % % 30 Jun 04 30 Jun 03 30 Jun 03 30 Jun 04 EMEA - Owned & Leased 38 30 26.7 - Managed 15 8 87.5 - Franchised 9 8 12.5 Total 62 46 34.8 Regional Overheads (12) (14) 14.3 Total EMEA 50 32 56.3 Total EMEA $m 91 51 78.4
EMEA - - Owned & Leased Owned & Leased EMEA Comparable RevPAR RevPAR Movement Movement Comparable 3 mths mths to to 6 mths mths to to 3 6 RevPAR Movement Movement RevPAR 30 Jun 04 30 Jun 04 30 Jun 04 30 Jun 04 InterContinental 8.5% 4.0% InterContinental 8.5% 4.0% Crowne Plaza Plaza 9.8% 7.5% Crowne 9.8% 7.5% Holiday Inn 9.3% 8.6% Holiday Inn 9.3% 8.6% HIUK London 27.7% 22.3% HIUK London 27.7% 22.3% HIUK Regions 5.3% 6.7% HIUK Regions 5.3% 6.7% O&L Operating profit up £8m to £38m O&L Operating profit up £8m to £38m
Asia Pacific Operating Profit Asia Pacific Operating Profit 6 months to 30 June 2004 6 months to 30 June 2004 6 mths 6 mths to to 6 mths mths to to 6 mths mths to to 6 6 $m $m % (04 v 02) % (04 v 02) 30 Jun 02 30 Jun 02 30 Jun 04 30 Jun 04 30 Jun 03 30 Jun 03 Asia Pacific - Owned & Leased 13 6 14 (7.1) - Managed 12 4 9 33.3 - Franchised 2 2 3 (33.3) Total 27 12 26 3.8 Regional Overheads (10) (9) (9) (11.1) Total Asia Pacific 17 3 17 - Total Asia Pacific £m 9 1 11 (18.2)
Capital Expenditure Capital Expenditure continues to be controlled continues to be controlled Hotels Capex Spend, £m, 2001 - � Spend continues to 2004F 700 trend downwards 600 500 � Forecast for 2004 400 reduced to £250m 300 200 100 � Britvic expected spend 0 remains at £80m 2001A 2002A 2003A 2004F (old) 2004F (new)
Soft Drinks Soft Drinks 6 months to June 30 2004 6 months to June 30 2004 � Volume up 7.7% as all major brands perform strongly and gain share � Turnover up 9.3% to £366m � Operating Profit up 2.6% to £40m
IHG Group IHG Group Cash Flow Cash Flow Proforma Proforma 6 mths mths to to 6 6 mths 6 mths to to £m £m 30 Jun 04 30 Jun 04 30 Jun 03 30 Jun 03 Operating Profit 153 114 Depreciation/Amortisation 101 99 Working capital/other (20) 25 Capital expenditure (109) (158) Cash flow before disposals 125 80 Disposals 88 18 Operating cash flow 213 98
Exceptional Items Exceptional Items 6 months to 30 June 2004 6 months to 30 June 2004 £m FelCor carrying value adjustment 6 Profit on disposal of assets 18 Exceptional interest 6 Tax on exceptional items (3) Exceptional tax credit 138
IHG Group Balance Sheet IHG Group Balance Sheet £m m £ 30 Jun 04 30 Jun 03 30 Jun 04 30 Jun 03 Tangible assets 3,892 4,456 Tangible assets 3,892 4,456 Intangible assets 147 157 Intangible assets 147 157 Working capital 9 (54) Working capital 9 (54) Long- -term liabilities term liabilities (160) (216) Long (160) (216) Net operating assets 3,888 4,343 Net operating assets 3,888 4,343 Net debt (520) (942) Net debt (520) (942) Other non- -operating liabilities operating liabilities (731) (870) Other non (731) (870) Net assets 2,637 2,531 Net assets 2,637 2,531
Return of Funds Return of Funds � £213m of initial share buyback programme complete, £37m remaining � Special Dividend of £500m with associated share consolidation to be paid in December 2004 � Further Buyback of £250m once existing programme completes £1bn Return of Funds £1bn Return of Funds
Summary Summary � Hotel results remain strong � Soft drinks continues to grow turnover and profit � Interim dividend raised to 4.30p per share � £1bn return of funds since separation � Special one-off contribution to pension fund of £50m
Richard North Richard North Chief Executive
The highlights of today’ ’s s The highlights of today announcement . . . announcement . . . � Brand performance and system delivery continue to grow strongly � Focused strategy based on key strengths: � Grow brands � Develop managed & franchised business � Additional asset disposals � Further £750m return as part of ongoing programme; £1bn announced to date
At Separation we laid out a clear At Separation we laid out a clear strategy strategy � Develop high quality, strongly differentiated brands � Extend network of hotels through largely capital free franchise and management contracts and only very selectively through ownership where returns are high � Significantly reduce capital intensity to drive up returns � Leverage global system scale economies to drive RevPAR and reduce operating cost � Continue to develop our people
This strategy was supported by This strategy was supported by an initial set of key actions an initial set of key actions � Redesign organisation � Strengthen management � Significantly reduce costs � Reduce capital expenditure � Reduce asset intensity � Begin returning funds to shareholders
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