Preliminary Results for the year to 31 December 2012
Strong growth and scale efficiencies drive double-digit
increase in profits
Financial summary1 |
2012 |
2011 |
|
% Change YoY |
Actual |
CER3 |
CER & ex. LDs4 |
Revenue |
$1,835m |
$1,768m |
4% |
5% |
6% |
Operating profit |
$614m |
$559m |
10% |
11% |
13% |
Adjsted basic EPS |
141.5¢ |
130.4¢ |
9% |
|
|
Basic EPS2 |
189.5¢ |
159.2¢ |
19% |
|
|
Total dividend per share |
64.0¢ |
55.0¢ |
16% |
|
|
Net debt |
$1,074m |
$538m |
|
|
|
Fee revenue5 growth |
6.8% |
5.7% |
|
|
|
RevPAR growth |
5.2% |
6.2% |
|
|
|
Net Rooms growth |
2.7% |
1.7% |
|
|
|
Richard Solomons, Chief Executive of InterContinental
Hotels Group PLC, said:
“2012 was another year of significant progress for IHG with
our preferred brands driving RevPAR up 5.2%, led by the US up 6.3%.
Together with 2.7% net rooms growth, which is fuelled increasingly by
our expansion in developing markets, this drove up fee revenues by an
impressive 6.8%. This growing scale allowed us to reinvest in the
business while achieving better than anticipated margin progression.
The financing environment remained tough through 2012 in many
of our key markets, but we still signed on average one hotel a day into
our pipeline. This reflects the excellent relationship we enjoy with
our owners and further strengthens our foundation for high quality
growth. We extended our portfolio of preferred brands, launching in the
first quarter of 2012 the innovative HUALUXE Hotels & Resorts and
EVEN Hotels.
The $1bn return of capital, announced in August, underlines
the benefit of our asset light strategy in delivering strong free cash
flow, and our commitment to return value to shareholders.
IHG’s proven strategy and resilient business model position us
for further good performance in 2013, despite the challenging economic
environment. The 16% increase in our dividend demonstrates the
confidence we have in our ability to deliver sustained high quality
growth, as we prepare to celebrate our 10th anniversary as a standalone
business.”
Driving High Quality Growth
- $21.2bn of total gross revenue5 from
hotels in IHG’s system, up 5%
- 2012 global RevPAR growth of 5.2%, with rate up
3.2% and occupancy up 1.2%pts
- Americas 6.1% (US 6.3%); Europe 1.7%; AMEA 4.9%;
Greater China 5.4%.
- Q4 global RevPAR growth of 3.9%: Americas 5.7%; Europe
1.2%; AMEA 1.8%; Greater China (0.3)%.
- System size of 676k rooms (4,602 hotels), up 2.7%
year on year
- 34k rooms (226 hotels) opened and 54k rooms (356
hotels) signed, both up around 5% on an underlying5 basis.
- 16k rooms removed, down 51% on 2011, and now at more
normal levels post completion of Holiday Inn relaunch.
- High quality pipeline of 169k rooms (1,053 hotels),
with c. 40% under construction.
- 5% global industry supply share and 12% active global
pipeline share support high quality growth.
- Fee revenues5 up 6.8%
- Increasing proportion of new rooms are now coming from
developing markets, driving strong fee revenue growth, albeit at lower
absolute RevPAR levels, particularly in the initial years as demand
drivers mature.
- Developing markets represent 19% of system size, 29% of
2012 room openings and 50% of our pipeline.
- Building preferred brands
- Good traction for our new brands, with 15 HUALUXE
hotels now in the pipeline and our first EVEN hotel signed in the
fourth quarter.
- Holiday Inn continues to outperform, growing premiums
to the upper midscale segment in the US over the past 5 years by 7%pts
for Holiday Inn and 5%pts for Holiday Inn Express. Holiday Inn ranked
"Highest in Guest Satisfaction Among Mid-scale Full Service Hotel
Chains" by J.D. Power and Associates for 2nd year in a row.
- Crowne Plaza repositioning programme is progressing
well.
- Hotel Indigo system size at 50 hotels with a further 47
in the pipeline (total gross revenue: $172m, up 29%).
- Best in class delivery
- 69% of rooms revenue delivered through IHG Channels and
by Priority Club Rewards members direct to hotel.
- Growing margins
- Fee based margins of 42.6%, up 2%pts, a particularly
strong result, which will revert back to more normal levels of growth
in 2013.
Asset sales
- The disposal process for InterContinental London Park Lane
has commenced, and continues for InterContinental New York Barclay.
Current Trading Update
- January global RevPAR up 6.6%, with rate up 2.1%. Americas
7.0%, Europe (0.1)%, AMEA 6.0%. Greater China up 21.0% principally
reflects the shift in timing of Chinese New Year in 2013 into February
from January.
- One individually significant liquidated damages receipt of
$31m in Americas managed in Q1 2013. $6m benefit in the full year 2013
from cessation of depreciation on the InterContinental London Park
Lane, now held for sale.
1 All figures are before
exceptional items unless otherwise noted. See appendices 3 & 4 for
financial headlines
2 After exceptional items
3 CER = constant exchange rates
4 Excluding significant liquidated damages: $16m 2011,
$3m 2012.
5 See appendix 6 for definition
Americas – Double-digit adjusted profit growth driven
by RevPAR outperformance
RevPAR increased 6.1%, with 4.1% rate growth, and fourth
quarter RevPAR increased 5.7%. US RevPAR was up 6.3% in 2012, with 6.2%
growth in the fourth quarter, despite uncertainty regarding the
presidential election and "fiscal cliff". On a total basis, including
the benefit of new hotels, US RevPAR grew 7.0% in the year,
outperforming the industry6, which was up 6.8%.
Revenue increased 1% to $837m and operating profit increased
8% to $486m. After adjusting for owned hotel disposals, liquidated
damages receipts in the managed business of $3m in 2012 and $10m in
2011 and results from managed lease hotels5, revenue was up 6% and
operating profit up 10%. This was predominantly driven by the franchise
business, where royalties were up 9% due to 6.0% RevPAR growth and 2.3%
net system size growth. Owned profits increased 41%, driven by double
digit RevPAR growth at our InterContinental hotels in Boston and San
Francisco and 4% RevPAR growth at InterContinental New York Barclay.
We opened 17k rooms, up 8% on 2011 on an underlying5
basis, including 6 Hotel Indigo hotels, and IHG's second
InterContinental hotel in Mexico City. We signed 26k rooms, with the
first EVEN hotel, a flagship property in Manhattan, New York City,
signed in October. The Holiday Inn brand family accounted for c.70% of
hotel openings and signings in the year, demonstrating the ongoing
benefits of the re-launch.
Europe – Robust performance and strong pace of openings
RevPAR increased 1.7%, with 1.2% rate growth and fourth
quarter RevPAR increased 1.2%. Despite challenging economic conditions
across Europe, RevPAR during the year grew by 2.5% in the UK and by
5.4% in Germany, where the industry benefited from a busy trade fair
schedule.
Revenue increased 8% (13% at CER) to $436m and operating
profit increased 11% (16% at CER) to $115m. At CER and after adjusting
for a leased hotel disposal and excluding results from managed lease
hotels5, revenue increased 5% and operating profit increased 16%. This
was driven by a 2.1% increase in net system size and solid RevPAR
growth, including 8.0% at InterContinental London Park Lane and 2.5% at
InterContinental Le Grand Paris, plus a $4m decrease in regional
overheads.
We signed 7k rooms (48 hotels), up 22% on 2011, including the
first 2 Holiday Inn Express hotels in Russia, 6 Holiday Inn brand
family hotels in Germany and 7 Hotel Indigo hotels, with firsts for
this brand in France, Israel and Spain. 5k rooms (39 hotels) were
opened into the system, the highest number of hotel openings in the
region in the last 4 years. Openings included InterContinental London
Westminster, our second for the brand in London, and 5 Hotel Indigo
hotels, doubling the system size in Europe for the brand.
AMEA – RevPAR growth and cost control drive good
profit growth
RevPAR increased 4.9%, with 1.8% growth in the fourth quarter.
Strong trading in South East Asia and Japan was offset by slowing
economic growth in some other markets in 2012. In the Middle East,
political tensions continue to impact trading in some countries such as
Lebanon, but markets such as Saudi Arabia and the UAE have performed
well, with RevPAR up 8.0% and 5.5% in the year, respectively.
AMEA revenue increased 1% (0% CER) to $218m and operating
profit increased 5% (4% CER) to $88m. At CER and after adjusting for a
$6m liquidated damages receipt and the related disposal in 2011 of a
hotel and partnership interest in Australia, revenue increased 3% and
operating profit increased 16%, benefiting from robust trading in the
managed business and careful cost control.
We signed 8k rooms (36 hotels) in the region, of which 4k were
Holiday Inn brand family rooms signed in India and Indonesia. We also
signed 6 InterContinental hotels, including 2 resort locations in
Australia and Thailand. We opened 4k rooms (16 hotels) in the year,
including 4 Crowne Plaza hotels, 2 Crowne Plaza Resorts and the first
Holiday Inn Express in India, in Ahmedabad. This hotel was opened by
IHG and Duet India Hotels Group, and was awarded '2012 World's Leading
New Mid-Market Hotel' by World Travel Awards.
Greater China – Increasing scale drives another year
of double-digit profit growth
RevPAR increased 5.4% with rate growth of 3.1%. RevPAR was
down 0.3% in the fourth quarter reflecting the ongoing industry-wide
impact of the China-Japan territorial island dispute, the political
leadership change and the broader economic slowdown across the region.
Revenue increased 12% (12% CER) to $230m, with fee growth5 of
16%, and operating profit was up 21% (22% CER) to $81m. This was driven
by 19% profit growth in the managed business where RevPAR was up 5.6%
and net rooms up 10% (following 14% rooms growth in 2011).
InterContinental Hong Kong also had a strong year with 6.7% RevPAR
growth and good cost control, driving owned operating profit up 22%.
We opened 8k rooms in the year, taking our system size in the
region up 12% to 62k, our 7th consecutive year of double digit room
growth. Openings included 8 Crowne Plaza hotels, 2 Hotel Indigo hotels
and Holiday Inn Macau Cotai Central, which at 1,224 rooms is the
largest Holiday Inn in the world. Signings of 13k rooms were up 11% on
2011, taking our pipeline to 51k rooms and affirming our market leading
position. Signings included 15 HUALUXE hotels.
5See appendix 6 for definition
6 Source: Smith Travel Research
Uses of Cash
- Cash generation: Free cash flow of $463m
(2011: $422m) plus $8m cash proceeds from disposals, more than covered
growth investment and ordinary dividends in the year.
- Growth Investment: 2012 growth capital
expenditure of $20m reflects the unpredictable timing of this type of
spend. $113m maintenance capital expenditure. 2013 expectations
unchanged: $100m-$200m growth capital expenditure and c.$150m
maintenance capital expenditure.
- Ordinary dividend: up 16%, the third
consecutive year of double-digit growth.
- Capital returns: $0.5bn special dividend
paid in October 2012. $107m of $0.5bn share buyback programme completed
in the fourth quarter.
Interest, debt, tax and exceptional items
- Interest: 2012 charge of $54m (2011:
$62m), decreased by $8m primarily due to lower average net debt levels.
- Net debt: $1,074m at the end of the
period, up $536m on 2011 including the payment of $612m in relation to
the special dividend and share buyback programme. IHG has extended its
maturities and diversified its debt profile, issuing a 10 year
£400m bond in the fourth quarter.
- Tax: Effective rate for 2012 is 27% (2011:
24%). 2013 tax rate expected to be in low 30s, as previously guided.
- Exceptional operating items: Net
exceptional charge before tax of $4m (2011: $35m net credit). An
exceptional tax credit of $142m relates to the settlement of prior year
matters and changes in legislation resulting in the recognition of
deferred tax assets.
- Pension: IHG has agreed with the Trustees
of the UK defined benefit pension plan to make additional contributions
of £30m in 2013 and £15m in 2014, in addition to the
£45m which was announced at Q3 results and paid in October 2012.
This follows the triennial actuarial valuation as at 31 March 2012
which showed a deficit of £132m.
Change from Quarterly to Half Yearly Reporting
- IHG will release interim management statements for Q1 and
Q3, and in line with wider UK market practice, focus on reporting full
financial statements for a more meaningful time period of 6 months.
- We will continue to publish supplementary data for rooms
and RevPAR for Q1 and Q3, and hold a conference call with Q&A
session.
Appendix 1: RevPAR Movement Summary
|
January 2013 |
Full Year 2012 |
Q4 2012 |
RevPAR |
Rate |
Occ. |
RevPAR |
Rate |
Occ. |
RevPAR |
Rate |
Occ. |
Group |
6.6% |
2.1% |
2.3pts |
5.2% |
3.2% |
1.2pts |
3.9% |
2.5% |
0.9pts |
Americas |
7.0% |
3.9% |
1.5pts |
6.1% |
4.1% |
1.2pts |
5.7% |
3.8% |
1.1% |
Europe |
(0.1)% |
1.2% |
(0.7)pts |
1.7% |
1.2% |
0.4pts |
1.2% |
0.5% |
0.5pts |
AMEA |
6.0% |
1.4% |
2.9pts |
4.9% |
1.2% |
2.4pts |
1.8% |
(0.2)% |
1.4pts |
G. China |
21.0% |
(6.7%) |
12.8pts |
5.4% |
3.1% |
1.3pts |
(0.3)% |
1.4% |
(1.1)pts |
Appendix 2: Full Year System & Pipeline Summary
(rooms)
|
System |
Pipeline |
Openings |
Removals |
Net |
Total |
YoY% |
Signings |
Total |
Group |
33,922 |
(16,288) |
17,634 |
675,982 |
3% |
53,812 |
169,030 |
Americas |
16,618 |
(9,199) |
7,419 |
449,617 |
2% |
25,536 |
72,573 |
Europe |
5,477 |
(3,335) |
2,142 |
102,027 |
2% |
7,023 |
15,184 |
AMEA |
4,243 |
(2,589) |
1,654 |
62,737 |
3% |
7,866 |
30,357 |
G. China |
7,584 |
(1,165) |
6,419 |
61,601 |
12% |
13,387 |
50,916 |
Appendix 3: Quarter 4 financial headlines
Operating
Profit $m |
Total |
Americas |
Europe |
AMEA |
G.China |
Central |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
Franchised |
128 |
118 |
108 |
99 |
15 |
14 |
3 |
4 |
2 |
1 |
- |
- |
Managed |
67 |
54 |
15 |
9 |
10 |
9 |
27 |
23 |
15 |
13 |
- |
- |
Owned & leased |
40 |
32 |
8 |
4 |
13 |
11 |
2 |
1 |
17 |
16 |
- |
- |
Regional overheads |
(36) |
(32) |
(16) |
(12) |
(10) |
(10) |
(4) |
(5) |
(6) |
(5) |
- |
- |
Profit pre central overheads |
199 |
172 |
115 |
100 |
28 |
24 |
28 |
23 |
28 |
25 |
- |
- |
Central overheads |
(38) |
(35) |
- |
- |
- |
- |
- |
- |
- |
- |
(38) |
(35) |
Group Operating profit |
161 |
137 |
115 |
100 |
28 |
24 |
28 |
23 |
28 |
25 |
(38) |
(35) |
Appendix 4: Full year financial headlines
Operating
Profit $m |
Total |
Americas |
Europe |
AMEA |
G. China |
Central |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
Franchised |
547 |
511 |
466 |
431 |
65 |
65 |
12 |
12 |
4 |
3 |
- |
- |
Managed |
221 |
208 |
48 |
52 |
32 |
26 |
90 |
87 |
51 |
43 |
- |
- |
Owned & leased |
125 |
108 |
24 |
17 |
50 |
49 |
6 |
5 |
45 |
37 |
- |
- |
Regional overheads |
(123) |
(121) |
(52) |
(49) |
(32) |
(36) |
(20) |
(20) |
(19) |
(16) |
- |
- |
Profit pre central overheads |
770 |
706 |
486 |
451 |
115 |
104 |
88 |
84 |
81 |
67 |
- |
- |
Central overheads |
(156) |
(147) |
- |
- |
- |
- |
- |
- |
- |
- |
(156) |
(147) |
Group Operating profit |
614 |
559 |
486 |
451 |
115 |
104 |
88 |
84 |
81 |
67 |
(156) |
(147) |
Appendix 5: Constant exchange rate (CER) operating
profit movement before exceptional items
|
Total*** |
Americas |
Europe |
AMEA |
G.
China |
Actual* |
CER** |
Actual*
|
CER** |
Actual* |
CER** |
Actual* |
CER** |
Actual* |
CER** |
Growth/ (decline) |
10% |
11% |
8% |
8% |
11% |
16% |
5% |
4% |
21% |
22% |
Exchange rates:
|
GBP:USD |
EUR:USD |
* US
dollar actual currency |
2012 |
0.63 |
0.78 |
** Translated
at constant 2011 exchange rates |
2011 |
0.62 |
0.72 |
*** After
central overheads |
Appendix 6: Definitions
Total gross revenue: total room revenue from
franchised hotels and total hotel revenue from managed, owned and
leased hotels. It is not revenue attributable to IHG, as it is derived
mainly from hotels owned by third parties. The metric is highlighted as
an indicator of the scale and reach of IHG's brands.
Fee revenue: Group revenue excluding owned &
leased hotels, managed leases and significant liquidated damages.
Growth stated at CER.
Fee based margins: adjusted for owned and leased
hotels, managed leases and individually significant liquidated damages
payments.
Managed lease hotels: properties structured for
legal reasons as operating leases but with the same characteristics as
management contracts.
Underlying openings & signings: openings
growth adjusted to exclude 5k US Army base rooms and 7k
InterContinental Alliance rooms opened in 2011. Signings growth
adjusted to exclude 5k US Army base rooms also signed in 2011.
Appendix 7: Investor Information for 2012 final
dividend
Ex-dividend
date: |
20 March 2013 |
Record
date: |
22 March 2013 |
Payment date:
|
31 May 2013
|
Dividend payment:
|
Ordinary shares =
27.7 pence per share
ADRs = 43.0 cents per ADR |
For further information, please contact:
Investor Relations
(Catherine Dolton; Isabel Green):
|
+44 (0)1895 512176
|
Media Relations (Yasmin Diamond; Emma Corcoran):
|
+44 (0)1895 512426
|
Presentation for Analysts and Shareholders:
A presentation with Richard Solomons, Chief Executive Officer and Tom
Singer, Chief Financial Officer will commence at 9.30am UK time on 19
February at Bank of America Merrill Lynch Financial Centre, 2 King
Edward Street, London, EC1A 1HQ. There will be an opportunity to ask
questions. The presentation will conclude at approximately 10.30am.
There will be a live audio webcast of the results presentation
on the web address www.ihgplc.com/prelims13.
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. There will also be a live dial-in facility:
UK toll:
UK toll free:
US toll:
Passcode
|
+44 (0)20 3003 2666
0808 109 0700
+1 212 999 6659
IHG
|
A replay of the conference call will also be available
following the event. To access this please dial the relevant number
below and use the access number 5273706
Replay
|
+44 (0)20 8196
1998
|
US conference call and Q&A:
There will also be a conference call, primarily for US investors and
analysts, at 9.00am Eastern Standard Time on 19 February with Richard
Solomons, Chief Executive Officer and Tom Singer, Chief Financial
Officer. There will be an opportunity to ask questions.
UK toll:
US toll:
US toll free:
Passcode
|
+44 (0)20 3003 2666
+1 212 999 6659
+1 866 966 5335
IHG
|
A replay of the conference call will also be available
following the event. To access this please dial the relevant number
below and use the access number 8384211
Replay
|
+44 (0)20 8196
1998
|
Website:
The full release and supplementary data will be available on our
website from 7.00 am (London time) on 19 February. The web address is www.ihgplc.com/prelims13.
To watch a video of Tom Singer reviewing our results visit our YouTube
channel at www.youtube.com/ihgplc.
Notes to Editors:
IHG (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is a
global organisation with nine hotel brands including
InterContinental® Hotels & Resorts, Hotel Indigo®, Crowne
Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts,
Holiday Inn Express®, Staybridge Suites®, Candlewood
Suites®, EVEN™ Hotels and HUALUXE™ Hotels & Resorts. IHG also
manages Priority Club® Rewards, the world's first and largest hotel
loyalty programme with over 71 million members worldwide.
IHG franchises, leases, manages or owns over 4,600 hotels and
more than 675,000 guest rooms in nearly 100 countries and territories.
With more than 1,000 hotels in its development pipeline, IHG expects to
recruit around 90,000 people into additional roles across its estate
over the next few years.
InterContinental Hotels Group PLC is the Group's holding
company and is incorporated in Great Britain and registered in England
and Wales.
Visit www.ihg.com
for hotel information and reservations and www.priorityclub.com
for more on Priority Club Rewards.
For our latest news, visit www.ihg.com/media, www.twitter.com/ihg,
www.facebook.com/ihg
or www.youtube.com/ihgplc.
Cautionary note regarding forward-looking statements:
This announcement contains certain forward-looking statements as
defined under US law (Section 21E of the Securities Exchange Act of
1934). These forward-looking statements can be identified by the fact
that they do not relate 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. 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. Factors that could affect the
business and the financial results are described in 'Risk Factors' in
the InterContinental Hotels Group PLC Annual report on Form 20-F filed
with the United States Securities and Exchange Commission.
Download the full Preliminary Results
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