Headlines

o

5,267 net rooms added in the quarter. System size up 6% year on year, taking the total to 590,361 rooms (3,983 hotels).

o

Global constant currency RevPAR growth of 3.5%; impacted by Easter timing.

o

Total gross revenue* from all hotels in IHG’s system of £2.2bn, up 10% at constant currency.

o

Continuing revenue up 15% from £196m to £226m, up 14% at constant currency. Excluding £7m liquidated damages relating to one Americas development project leaving the pipeline, continuing revenues up 10% at constant currency.

o

Continuing operating profit up 38% from £45m to £62m, up 40% at constant currency. Excluding £7m liquidated damages, continuing operating profit up 24% at constant currency.

o

Adjusted continuing earnings per share (“EPS”) up 47% to 11.6p. Adjusted total EPS of 12.0p. Basic total EPS of 10.6p.

o

19,678 rooms signed, taking the pipeline to 231,553 rooms (1,720 hotels), equal to 39% of IHG’s existing system size.

*See appendix 5 for definition. All figures and movements unless otherwise noted are at actual exchange rates and before exceptional items. See appendix 3 for analysis of financial headlines. Constant exchange rate comparatives shown in appendix 4.

Commenting on the results and trading, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:

“IHG delivered a good performance in the first quarter of 2008. Growth in revenue per available room (RevPAR) of 3.5% was solid given the adverse impact of the timing of Easter. We increased the number of rooms in our system by over 5,200, more than twice the increase in the first quarter of 2007. We signed over 150 hotels into our development pipeline which now stands at over 1,700 hotels, giving good visibility on future openings.

“We continue to focus on strengthening our brands. The response from our owner community to the Holiday Inn relaunch has been very encouraging and we now have 21 hotels operating with some or all of the elements of the new brand standards and identity ahead of our full roll out which begins in the summer.

“Even in a less certain economic environment our broad market coverage, record pipeline, strong brands and resilient fee based business model position us well for continued growth.”

Rooms – strong signings and openings

o

In the quarter 19,678 rooms were signed. The growth of the InterContinental brand continued with five hotels signed, including three in the Americas, taking the total pipeline of hotels to 62. IHG signed its first Hotel Indigo outside the US in London which is due to open in Paddington in the third quarter, and its second Staybridge Suites hotel in the Middle East. This takes the pipeline of Staybridge Suites hotels outside the Americas region to 10. The first Staybridge Suites hotel in the UK will open in June in Liverpool.

o

11,113 rooms were added to the system and 5,846 rooms were removed, in line with our strategy of driving quality growth, giving net room additions of 5,267.

o

The pipeline now stands at 1,720 hotels (231,553 rooms). The pipeline of Holiday Inn brand family hotels increased by 23 and now stands at 1,100 hotels (129,232 rooms).

Americas: solid performance

Revenue performance

RevPAR increased 2.3%, driven by rate, with RevPAR growth of 4.6% in the first two months of the year and a 1.2% decline in March due to the timing of Easter. Continuing revenue grew 14% from $201m to $230m, driven by 11% growth in revenues from owned and leased hotels and 16% growth in managed and franchised revenues. Excluding the impact of $13m liquidated damages, continuing revenues grew 8%.

Operating profit performance

Operating profit from continuing operations increased 20% to $112m. Excluding the impact of $13m liquidated damages, continuing operating profit grew 6%. Continuing owned and leased hotel profit increased by $3m to $7m driven by ongoing improvement in trading at the InterContinental Boston, which opened in November 2006 and 10% RevPAR growth at the InterContinental New York. Managed hotel profit increased $12m to $23m including the liquidated damages, and franchised hotel profit increased $4m to $97m.

EMEA: strong performance in the Middle East

Revenue performance

RevPAR increased 5.9%, driven by rate, with RevPAR growth of 9.1% in the first two months and 0.8% in March. The Middle East continued to perform strongly, growing RevPAR by 20.2%. Continental Europe grew RevPAR by 5.7%, including a 12.3% increase in France. In the UK, Holiday Inn and Holiday Inn Express outperformed their market segment recording RevPAR growth of 1.5%. Continuing revenues increased 18% driven by 29% growth in managed and franchised revenues.

Operating profit performance

Operating profit from continuing operations increased £8m to £15m. The contribution from continuing owned and leased hotels increased by £4m to £2m, driven by RevPAR growth of 11.9% at the InterContinental Paris Le Grand and continued improvement in trading at the InterContinental London Park Lane following the completion of its refurbishment in June 2007. Managed hotel profit increased by 38% from £8m to £11m reflecting the increase in number of hotels under management and strong growth in the Middle East. Franchised hotel profit increased from £6m to £7m reflecting 3.8% RevPAR growth and 9.1% net rooms growth.

Asia Pacific: further growth across all brands

Revenue performance

RevPAR increased 5.1%, driven by rate, with RevPAR growth of 6.1% in the first two months and 3.4% in March. InterContinental and Holiday Inn brand performance were strongest with 7.3% and 9.4% RevPAR growth respectively. Greater China RevPAR increased 3.2%, driven by both occupancy and rate growth. Continuing revenues increased 16% to $72m.

Operating profit performance

Operating profit from continuing operations increased 31% to $17m. Owned and leased hotel operating profit increased $2m to $10m driven by RevPAR growth of 9.2% at the InterContinental Hong Kong after completion of its rolling refurbishment at the end of 2007. Managed hotel profit increased $5m to $14m driven by the contribution from the increasing number of hotels under IHG management in the region.

Overheads, Tax and Exceptional items

In the first quarter aggregated regional overheads increased £1m to £17m and central costs increased £1m to £18m.

Based on the position at the end of the quarter the tax charge on profit from continuing and discontinued operations, excluding the impact of exceptional items, has been calculated using an estimated effective annual tax rate of 29% (Q1 2007: 28%). As previously disclosed, the effective tax rate in 2008 is expected to be in the mid to high 20s and then will trend upwards over time.

As previously announced IHG will make a non-recurring revenue investment of £30m to accelerate implementation of the global relaunch of the Holiday Inn brands, which will be treated as an exceptional item. £3m has been charged in the period.

Disposals and returns of funds

IHG’s net debt at the period end was £845m, including the $200m (£101m) finance lease on the InterContinental Boston.

1.6m shares were repurchased under IHG’s buyback programme during the first quarter, at a cost of £13m, leaving £87m of the current buyback programme to be completed.

After the period end, IHG sold its 17% interest in the Crowne Plaza Amsterdam City Centre for €18m (£14m) including a €6m (£5m) agreed settlement for the previous management contract and €2m (£1m) repayment of existing loans. IHG will continue to manage the hotel under a new 40 year management contract including renewals.

Number of hotels

Proceeds

Net book value

Disposed since April 2003

181

£3.0bn

£2.9bn

Remaining hotels

18

£0.9bn

Americas

EMEA

Asia Pacific

Total

Openings

7,456

2,434

1,223

11,113

Removals

(4,536)

(636)

(674)

(5,846)

Net room additions

2,920

1,798

549

5,267

Signings

15,060

1,659

2,959

19,678

Three months to 31 Mar £m

Total

Americas

EMEA

Asia Pacific

Central

2008

2007

2008

2007

2008

2007

2008

2007

2008

2007

Franchised operating profit

57

55

49

48

7

6

1

1

Managed operating profit

29

19

11

6

11

8

7

5

Continuing owned and leased operating profit

11

4

4

2

2

(2)

5

4

Regional overheads

(17)

(16)

(8)

(8)

(5)

(5)

(4)

(3)

Continuing operating profit pre central overheads

80

62

56

48

15

7

9

7

Central overheads

(18)

(17)

-

-

-

-

-

-

(18)

(17)

Continuing operating profit

62

45

56

48

15

7

9

7

(18)

(17)

Discontinued owned and leased operating profit

2

1

2

1

-

-

-

-

Total operating profit

64

46

58

49

15

7

9

7

(18)

(17)

Americas

EMEA

Asia Pacific

Total***

Actual currency*

Constant currency**

Actual currency*

Constant currency**

Actual currency*

Constant

currency**

Actual currency*

Constant currency**

Growth

17%

19%

114%

114%

29%

29%

38%

40%

Exchange rates

USD:GBP

EUR:GBP

Q1 2008

1.98

1.32

Q1 2007

1.95

1.49

Investor Relations (Heather Wood; Catherine Dolton):

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Conference ID:

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Conference ID:

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International dial-in:

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US Toll Free:

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3 months ended 31 March 2008

3 months ended 31 March 2007

Before

exceptional

items

Exceptional

items

(note 8)

Total

Before

exceptional

items

Exceptional

items

(note 8)

Total

£m

£m

£m

£m

£m

£m

Continuing operations

Revenue (note 3)

226

-

226

196

-

196

Cost of sales

(104)

-

(104)

(98)

-

(98)

Administrative expenses

(47)

(4)

(51)

(40)

-

(40)

Other operating income and expenses

1

-

1

1

16

17

____

____

____

____

____

____

76

(4)

72

59

16

75

Depreciation and amortisation

(14)

(1)

(15)

(14)

-

(14)

_____

_____

____

_____

_____

____

Operating profit (note 4)

62

(5)

57

45

16

61

Financial income

2

-

2

3

-

3

Financial expenses

(17)

-

(17)

(8)

-

(8)

____

____

____

____

____

____

Profit before tax

47

(5)

42

40

16

56

Tax (note 9)

(13)

1

(12)

(12)

2

(10)

____

____

____

____

____

____

Profit for the period from continuing operations

34

(4)

30

28

18

46

Profit for the period from discontinued operations (note 10)

1

-

1

1

-

1

____

____

____

____

____

____

Profit for the period attributable to the equity holders of the parent

35

(4)

31

29

18

47

====

====

====

====

====

====

Earnings per ordinary share

(note 11):

Continuing operations:

Basic

10.3p

13.0p

Diluted

10.2p

12.6p

Adjusted

11.6p

7.9p

Adjusted diluted

11.5p

7.7p

Total operations:

Basic

10.6p

13.3p

Diluted

10.5p

12.9p

Adjusted

12.0p

8.2p

Adjusted diluted

11.9p

7.9p

====

====

====

====

2008

3 months

ended 31 March

£m

2007

3 months

ended 31 March

£m

Income and expense recognised directly in equity

Gains/(losses) on valuation of available-for-sale assets

3

(4)

Actuarial (losses)/gains on defined benefit pension plans

(4)

11

Exchange differences on retranslation of foreign operations

10

1

____

____

9

8

____

____

Transfers to the income statement

On disposal of available-for-sale assets

-

(4)

____

____

-

(4)

____

____

Tax

Tax on items above taken directly to or transferred from equity

2

-

Tax related to share schemes recognised directly in equity

(2)

3

____

____

-

3

____

____

Net income recognised directly in equity

9

7

Profit for the period

31

47

____

____

Total recognised income and expense for the period attributable to the equity holders of the parent

40

54

====

====

2008

3 months

ended 31 March

2007

3 months

ended 31 March

£m

£m

Profit for the period

31

47

Adjustments for:

Net financial expenses

15

5

Income tax charge

13

10

Exceptional operating items before depreciation

4

(16)

Depreciation and amortisation

15

15

Equity settled share-based cost, net of payments

1

(1)

_____

_____

Operating cash flow before movements in working capital

79

60

Increase in net working capital

(27)

(25)

Retirement benefit contributions, net of cost

(11)

(10)

Cash flows relating to exceptional operating items

(3)

-

_____

_____

Cash flow from operations

38

25

Interest paid

(16)

(6)

Interest received

2

4

Tax paid

(3)

(2)

_____

_____

Net cash from operating activities

21

21

_____

_____

Cash flow from investing activities

Purchases of property, plant and equipment

(9)

(18)

Purchase of intangible assets

(5)

(3)

Purchases of associates and other financial assets

-

(9)

Disposal of assets, net of costs

-

(5)

Proceeds from associates and other financial assets

4

22

_____

_____

Net cash from investing activities

(10)

(13)

_____

_____

Cash flow from financing activities

Proceeds from the issue of share capital

1

3

Purchase of own shares

(13)

(25)

Purchase of own shares by employee share trusts

-

(43)

Proceeds on release of own shares by employee share trusts

-

1

Increase in borrowings

38

55

_____

_____

Net cash from financing activities

26

(9)

_____

_____

Net movement in cash and cash equivalents in the period

37

(1)

Cash and cash equivalents at beginning of the period

52

179

Exchange rate effects

-

-

_____

_____

Cash and cash equivalents at end of the period

89

178

=====

=====

2008

31 March

2007

31 March

2007

31 December

£m

£m

£m

ASSETS

Property, plant and equipment

983

950

962

Goodwill

113

110

110

Intangible assets

173

161

167

Investment in associates

34

32

33

Retirement benefit assets

43

-

32

Other financial assets

86

100

93

_____

_____

_____

Total non-current assets

1,432

1,353

1,397

_____

_____

_____

Inventories

3

3

3

Trade and other receivables

253

248

235

Current tax receivable

48

12

54

Cash and cash equivalents

89

178

52

Other financial assets

18

7

9

_____

_____

_____

Total current assets

411

448

353

Non-current assets classified as held for sale

58

92

57

______

______

______

Total assets

1,901

1,893

1,807

=====

=====

=====

LIABILITIES

Loans and other borrowings

(8)

(5)

(8)

Trade and other payables

(381)

(381)

(390)

Current tax payable

(219)

(224)

(212)

_____

_____

_____

Total current liabilities

(608)

(610)

(610)

_____

_____

_____

Loans and other borrowings

(926)

(365)

(869)

Retirement benefit obligations

(60)

(50)

(55)

Trade and other payables

(141)

(111)

(139)

Deferred tax payable

(85)

(77)

(82)

_____

_____

_____

Total non-current liabilities

(1,212)

(603)

(1,145)

Liabilities classified as held for sale

(3)

(5)

(3)

_____

_____

_____

Total liabilities

(1,823)

(1,218)

(1,758)

=====

=====

=====

Net assets (note 14)

78

675

49

=====

=====

=====

EQUITY

Equity share capital

82

69

81

Capital redemption reserve

5

4

5

Shares held by employee share trusts

(15)

(40)

(41)

Other reserves

(1,528)

(1,528)

(1,528)

Unrealised gains and losses reserve

22

19

19

Currency translation reserve

17

(3)

6

Retained earnings

1,492

2,146

1,504

______

______

______

IHG shareholders’ equity (note 15)

75

667

46

Minority equity interest

3

8

3

______

______

______

Total equity

78

675

49

=====

=====

=====

1.

Basis of preparation

These interim financial statements have been prepared in accordance with International Accounting Standard 34 ‘Interim Financial Reporting’ using, on a consistent basis, the accounting policies set out in the 2007 InterContinental Hotels Group PLC (the Group or IHG) Annual Report and Financial Statements.
 
These interim financial statements are unaudited and do not constitute statutory accounts of the Group within the meaning of Section 240 of the Companies Act 1985. The auditors have carried out a review of the financial information in accordance with the guidance contained in ISRE 2410 (UK and Ireland) ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued by the Auditing Practices Board.
 
The financial information for the year ended 31 December 2007 has been extracted from the Group’s published financial statements for that year which contain an unqualified audit report and which have been filed with the Registrar of Companies.
 

2.

Exchange rates

The results of overseas operations have been translated into sterling at the weighted average rates of exchange for the period. In the case of the US dollar, the translation rate for the three months ended 31 March is £1= $1.98 (2007 3 months, £1 = $1.95). In the case of the euro, the translation rate for the three months ended 31 March is £1 = €1.32 (2007 3 months, £1 = €1.49).

Foreign currency denominated assets and liabilities have been translated into sterling at the rates of exchange on the last day of the period. In the case of the US dollar, the translation rate is £1=$1.99 (2007 31 March £1 = $1.96; 31 December £1 = $2.01). In the case of the euro, the translation rate is £1 = €1.26 (2007 31 March £1 = €1.47; 31 December £1= €1.36).

3.

Revenue

2008

3 months

ended 31 March

2007

3 months

ended 31 March

£m

£m

Continuing operations

Americas (note 5)

116

102

EMEA (note 6)

58

49

Asia Pacific (note 7)

36

32

Central

16

13

____

____

226

196

Discontinued operations (note 10)

5

10

____

____

231

206

====

====

4.

Operating profit

2008

3 months

ended 31 March

2007

3 months

ended 31 March

£m

£m

Continuing operations

Americas (note 5)

56

48

EMEA (note 6)

15

7

Asia Pacific (note 7)

9

7

Central

(18)

(17)

____

____

62

45

Exceptional operating items (note 8)

(5)

16

____

___

57

61

Discontinued operations (note 10)

2

1

____

___

59

62

====

===

5.

Americas

2008

3 months

ended 31 March

2007

3 months

ended 31 March

$m

$m

Revenue

Owned & leased

63

57

Managed

53

38

Franchised

114

106

____

____

Continuing operations

230

201

Discontinued operations – Owned & leased

11

17

____

____

Total $m

241

218

====

====

Sterling equivalent £m

Continuing operations

116

102

Discontinued operations

5

9

____

____

121

111

====

====

Operating profit

Owned & leased

7

4

Managed

23

11

Franchised

97

93

Regional overheads

(15)

(15)

____

____

Continuing operations

112

93

Discontinued operations – Owned & leased

3

2

____

____

Total $m

115

95

====

====

Sterling equivalent £m

Continuing operations

56

48

Discontinued operations

2

1

____

____

58

49

====

====

6.

EMEA

2008

3 months

ended 31 March

2007

3 months

ended 31 March

£m

£m

Revenue

Owned & leased

27

25

Managed

20

16

Franchised

11

8

____

____

Continuing operations

58

49

Discontinued operations – Owned & leased

-

1

____

____

Total

58

50

====

====

Operating profit

Owned & leased

2

(2)

Managed

11

8

Franchised

7

6

Regional overheads

(5)

(5)

____

____

Total – continuing operations

15

7

====

====

7.

Asia Pacific

2008

3 months

ended 31 March

2007

3 months

ended 31 March

$m

$m

Revenue

Owned & leased

40

36

Managed

28

22

Franchised

4

4

____

____

Total $m

72

62

====

====

Sterling equivalent £m

36

32

====

====

Operating profit

Owned & leased

10

8

Managed

14

9

Franchised

2

2

Regional overheads

(9)

(6)

____

____

Total $m

17

13

====

====

Sterling equivalent £m

9

7

====

====

All results relate to continuing operations.

8.

Exceptional items

2008

3 months

ended 31 March

2007

3 months

ended 31 March

£m

£m

Exceptional operating items

Gain on sale of associate investment

-

11

Gain on sale of other financial assets

-

5

Office reorganisations (a)

(2)

-

Holiday Inn brand relaunch (b)

(3)

-

____

____

(5)

16

====

====

Tax

Tax on exceptional operating items

1

2

====

====

All exceptional items relate to continuing operations.

a)

Relates to further costs incurred on the relocation of the Group’s head office and the closure of its Aylesbury facility.

b)

Relates to costs incurred in support of the worldwide relaunch of the Holiday Inn brand family that was announced on 24 October 2007.

9.

Tax

The tax charge on the combined profit from continuing and discontinued operations, excluding the impact of exceptional items (note 8), has been calculated using an estimated effective annual tax rate of 29% (2007 28%), analysed as follows.
 

3 months ended 31 March 2008

3 months ended 31 March 2007

Profit

Tax

Tax

Profit

Tax

Tax

£m

£m

rate

£m

£m

rate

Before exceptional items:

Continuing operations

47

(13)

40

(12)

Discontinued operations

2

(1)

1

-

____

____

____

____

49

(14)

29%

41

(12)

28%

Exceptional items:

Continuing operations

(5)

1

16

2

____

____

____

____

44

(13)

57

(10)

====

====

====

====

Analysed as:

UK tax

(2)

(4)

Foreign tax

(11)

(6)

____

____

(13)

(10)

====

====

By also excluding the effect of prior year items, the equivalent effective tax rate would be approximately 35% (2007 34%). Prior year items have been treated as relating wholly to continuing operations.
 

10.

Discontinued operations

Discontinued operations are those relating to hotels sold or those classified as held for sale as part of the asset disposal programme that commenced in 2003. These disposals underpin IHG’s strategy of growing its managed and franchised business whilst reducing asset ownership.
 

The results of discontinued operations which have been included in the consolidated income statement, are as follows:
 

2008

3 months

ended 31 March

2007

3 months

ended 31 March

£m

£m

Revenue

5

10

Cost of sales

(3)

(8)

____

____

2

2

Depreciation and amortisation

-

(1)

____

____

Operating profit

2

1

Tax

(1)

-

____

____

Profit for the period from discontinued operations

1

1

====

====
 

2008

3 months

ended 31 March

pence per share

2007

3 months

ended 31 March

pence per share

Earnings per share from discontinued operations

Basic

0.3

0.3

Diluted

0.3

0.3

====

====

The effect of discontinued operations on segment results is disclosed in notes 5 and 6.
 

11.

Earnings per ordinary share

Basic earnings per ordinary share is calculated by dividing the profit 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 options outstanding during the period.
 
Adjusted earnings per ordinary share is disclosed in order to show performance undistorted by exceptional items, to give a more meaningful comparison of the Group’s performance.

2008

2007

3 months ended

31 March

3 months ended

31 March

Continuing

operations

Total

Continuing

operations

Total

Basic earnings per share

Profit available for equity holders (£m)

30

31

46

47

Basic weighted average number of ordinary shares (millions)

292

292

354

354

Basic earnings per share (pence)

10.3

10.6

13.0

13.3

====

=====

====

=====

Diluted earnings per share

Profit available for equity holders (£m)

30

31

46

47

Diluted weighted average number of ordinary shares (millions) (see below)

295

295

365

365

Diluted earnings per share (pence)

10.2

10.5

12.6

12.9

====

=====

===

===

Adjusted earnings per share

Profit available for equity holders (£m)

30

31

46

47

Less adjusting items (note 8):

Exceptional operating items (£m)

5

5

(16)

(16)

Tax (£m)

(1)

(1)

(2)

(2)

____

____

____

____

Adjusted earnings (£m)

34

35

28

29

Basic weighted average number of ordinary shares (millions)

292

292

354

354

Adjusted earnings per share (pence)

11.6

12.0

7.9

8.2

====

====

====

====

Diluted weighted average number of ordinary shares (millions)

295

295

365

365

Adjusted diluted earnings per share (pence)

11.5

11.9

7.7

7.9

====

====

====

====

2008

3 months

ended 31 March

millions

2007

3 months

ended 31 March

millions

Diluted weighted average number of ordinary shares is calculated as:

Basic weighted average number of ordinary shares

292

354

Dilutive potential ordinary shares – employee share options

3

11

____

____

295

365

====

====

12.

Net debt

2008

31 March

2007

31 March

2007

31 December

£m

£m

£m

Cash and cash equivalents

89

178

52

Loans and other borrowings – current

(8)

(5)

(8)

Loans and other borrowings – non-current

(926)

(365)

(869)

____

____

____

Net debt

(845)

(192)

(825)

====

====

====

Finance lease liability included above

(101)

(99)

(100)

====

====

====

13.

Movement in net debt

2008

3 months ended

31 March

2007

3 months ended

31 March

2007

12 months ended

31 December

£m

£m

£m

Net increase/(decrease) in cash and cash equivalents

37

(1)

(131)

Add back cash flows in respect of other components of net debt:

Increase in borrowings

(38)

(55)

(553)

____

____

____

Increase in net debt arising from cash flows

(1)

(56)

(684)

Non-cash movements:

Finance lease liability

(2)

(2)

(9)

Exchange and other adjustments

(17)

-

2

____

____

____

Increase in net debt

(20)

(58)

(691)

Net debt at beginning of the period

(825)

(134)

(134)

____

____

____

Net debt at end of the period

(845)

(192)

(825)

====

====

====

14.

Net assets

2008

31 March

2007

31 March

2007

31 December

£m

£m

£m

Americas

402

427

388

EMEA

420

375

376

Asia Pacific

274

283

267

Central

83

71

83

____

____

____

1,179

1,156

1,114

Net debt

(845)

(192)

(825)

Unallocated assets and liabilities

(256)

(289)

(240)

____

____

____

78

675

49

====

====

====

15.

Statement of changes in IHG shareholders’ equity

2008

3 months ended

31 March

2007

3 months ended

31 March

2007

12 months ended

31 December

£m

£m

£m

At beginning of period

46

678

678

Total recognised income and expense for the period

40

54

240

Equity dividends paid

-

-

(773)

Issue of ordinary shares

1

3

16

Purchase of own shares

(13)

(25)

(81)

Movement in shares in employee share trusts

(6)

(47)

(64)

Equity settled share-based cost

7

4

30

____

____

____

At end of the period

75

667

46

====

====

====

The proposed final dividend of 14.9 pence per share for the year ended 31 December 2007 is not recognised in these accounts as it remains subject to approval at the Annual General Meeting to be held on 30 May 2008. If approved, the dividend will be paid on 6 June 2008 to shareholders who were registered on 28 March 2008 at an expected total cost of £44m.

16.

Capital commitments and contingencies

At 31 March 2008 amounts contracted for but not provided for in the financial statements for expenditure on property, plant and equipment was £9m (2007 31 December £10m; 31 March £23m).
 
At 31 March 2008 the Group had contingent liabilities of £10m (2007 31 December £5m; 31 March £5m), mainly comprising guarantees given in the ordinary course of business.
 
In limited cases, the Group may provide performance guarantees to third-party owners to secure management contracts. The maximum exposure under such guarantees is £110m (2007 31 December £121m; 31 March £113m). It is the view of the Directors that, other than to the extent that liabilities have been provided for in these financials statements, such guarantees are not expected to result in financial loss to the Group.
 
The Group has 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, such warranties are not expected to result in financial loss to the Group.

Other commitments

In March and June 2007, the Company made the first two payments of £10m under the agreement to make special pension contributions of £40m to the UK pension plan. A further payment of £10m was made on 31 January 2008 and the final £10m is scheduled for payment in 2009.
 
On 24 October 2007, the Group announced a worldwide relaunch of its Holiday Inn brand family. In support of this relaunch, IHG will make a non recurring revenue investment of £30m which will be charged to the income statement as an exceptional item during 2008, of which £3m has been charged in the first quarter.

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 interim financial report for the three months ended 31 March 2008 which comprises the Group income statement, Group statement of recognised income and expense, Group cash flow statement, Group balance sheet and the related notes 1 to 17. We have read the other information contained in the interim 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 ISRE 2410 (UK and Ireland) '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 interim financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom’s Financial Services 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 interim financial report has been prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the European Union.

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 Ireland) 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 interim financial report for the three months ended 31 March 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom’s Financial Services Authority.

 

 

Ernst & Young LLP

London

6 May 2008