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SECURITIES AND EXCHANGE COMMISSION

Washington DC 20549

 

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FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 AND 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For 26 May 2005

 

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InterContinental Hotels Group PLC

(Registrant’s name)

 

67 Alma Road, Windsor, Berkshire, SL4 3HD, England

(Address of principal executive offices)

 

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Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  ¨    Form 40-F  ¨

 

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.    Yes  ¨    No  ¨

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable

 

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EXHIBIT INDEX

 

Exhibit Number		Exhibit Description
99.1		1st Quarter Results dated 26 May 2005

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

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Exhibit 99.1

 

26 May 2005

 

InterContinental Hotels Group PLC

First Quarter Results to 31 March 2005

 

Key Highlights

 

•

Hotels operating profit increased from £46m to £65m, despite the typically weak Easter trading period falling in March, versus April in 2004. This increase includes a £15m benefit from no depreciation being charged under IFRS on assets held for sale.

 

•

Hotels managed and franchised profit increased 9% from £53m to £58m.

 

•

Group operating profit increased from £51m to £76m.

 

•

Adjusted earnings per share increased from 5.7p to 7.5p.

 

•

RevPAR increased 6.8% across the group. Americas and Asia Pacific saw strongest, primarily rate-driven, growth.

 

•

System size grew by 1,000 rooms with 8,500 rooms opened. 12,000 new rooms signed, taking pipeline to a record 85,300 rooms, 16% of current system size.

 

•

Further progress on hotel assets disposals, including sale of Crowne Plaza United Nations for $34m announced yesterday. Sale of UK estate completed and £960m further cash proceeds received, taking sales completed to £1.8bn to date

 

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

 

“We have made a positive start to the year. Our asset disposal programme is progressing well and RevPAR in each of our regions is up year on year. We have seen many encouraging performances across our portfolio including Holiday Inn in the UK, and InterContinental, Staybridge and Candlewood Suites in the US. Priority Club Rewards, our loyalty scheme, continues to grow, as do bookings made through our reservations systems, increasing our delivery to our owners and franchisees. I believe we have many further opportunities to build the business on this solid base.”

 

International Financial Reporting Standards (IFRS)

 

This is IHG’s first accounting period under IFRS. Before significant non-trading items, IFRS earnings from continuing operations for the quarter do not materially differ from earnings under UK GAAP. However, under IFRS no depreciation is charged on assets held for sale. In the case of IHG’s disposal programme this represents a £15m saving in depreciation in the quarter.

 

Americas

 

RevPAR grew 7.6% in a strong market, mainly driven by rate growth. Corporate group business was particularly strong. InterContinental and IHG’s extended stay brands continued to outperform their market segments. The Holiday Inn brand family maintained a significant RevPAR premium to their market segments in the period.

 

Operating profit increased 35% from $62m to $84m, including an IFRS $7m depreciation benefit from assets held for sale. Improved profitability was driven by RevPAR and margin improvements across the business. InterContinental properties performed well, particularly those hotels in New York, Miami and Buckhead, Atlanta, which opened in November 2004 and is beating management expectations. Profit from managed hotels increased significantly, driven largely by the performance of InterContinental, Staybridge and Candlewood Suites. Franchised business profit saw gains through RevPAR increases and a higher level of fees from franchise sales, with 9,400 rooms signed in the quarter versus 5,200 rooms in Q1 2004.

 

EMEA

 

RevPAR grew 3.1%, with performances varying across different markets. In the UK, Holiday Inn RevPAR grew 5.2%, outperforming the market. Growth was driven by a higher level of business travel and a favourable guest response to recent management initiatives. RevPAR in Continental Europe was flat, although the InterContinental brand experienced some growth, led by InterContinental Le Grand Paris.

 

Operating profit increased 63% from £16m to £26m. This includes an IFRS £11m depreciation benefit from assets held for sale offset by the negative impacts, totalling approximately £5m, from the refurbishment disruption at the InterContinental London and the receipt of a lower level of liquidated damages than in Q1 2004.

 

Asia Pacific

 

RevPAR grew 8.0%, driven by rate. Strong demand in China and Hong Kong was a major driver of the growth.

 

Operating profit increased 33% from $12m to $16m, underpinned by the performance of the InterContinental Hong Kong. Profits also grew at managed properties in the region, driven by continued strength in China, Australia and New Zealand.

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System and pipeline size

 

System size increased to 535,200 rooms from 534,200 at 31 December 2004. Net room additions were 3,200, but 2,200 room exits from disposals without flag (400 rooms) and hotels permanently damaged by hurricanes in 2004 (1,800 rooms) reduced the reported increase to 1,000 rooms. 8,500 rooms were added, and 5,300 rooms removed. Key openings in the quarter included InterContinental Aphrodite Hills Resort in Cyprus, InterContinental Abu-Soma Resort in Egypt, Crowne Plaza Helsinki and Crowne Plaza Acapulco.

 

A high level of pipeline activity was maintained with 12,000 room signings leading to a record pipeline size of 85,300. 75% of pipeline rooms are in IHG’s key markets of US, UK and China.

 

Revenue delivery to IHG’s hotel owners

 

Room nights booked through IHG’s reservation channels increased from 35% to 37%, and those booked via Priority Club Rewards from 28% to 29%. Bookings through the Internet have increased over the past year from 12% to 14%, and the proportion of those through IHG’s own websites from 74% to 81%. Priority Club Rewards membership increased by over a million members in the quarter, and now stands at 24.8 million, the largest loyalty scheme in the hotel industry.

 

Asset sales

 

Good progress has been made, with 123 hotel disposals announced, including the $34m sale of the Crowne Plaza United Nations announced yesterday morning. The UK estate disposal has been completed and £960m further cash proceeds received, taking to £1.8bn the proceeds since separation.

 

Britvic

 

Operating profit increased 22% to £11m, as a result of management action to improve manufacturing efficiency and reduce costs. Net revenue increased 1% and branded volume 3%. The Ben Shaws acquisition has been integrated, with the Pennine Spring water brand rolled out through Britvic’s distribution channels. This acquisition gives Britvic its own spring water brand in this fast growing market segment. The soft drinks market remains competitive, especially in carbonates, though Pepsi has maintained market share in this challenging sector. Britvic’s J2O brand continued to gain market share over the last twelve months.

 

Current trading

 

While the first quarter delivered satisfactory trading, seasonally it is the smallest quarter. Although bookings are ahead of the same time last year, booking lead times remain short. The US, UK and Asia continue to display strong demand, whereas the outlook for Continental Europe remains unpredictable with low visibility.

 

Appendix 1: RevPAR performance, first quarter 2005

 

		Jan			Feb			Mar			Quarter 1			Apr			YTD (Jan- Apr)
Americas
IC O&L comparable		11.1	%		18.3	%		10.9	%		13.2	%		24.6	%		16.5	%
CP NA (system)		6.7	%		7.6	%		4.4	%		6.0	%		17.2	%		8.9	%
HI NA (system)		6.7	%		7.3	%		5.5	%		6.4	%		10.1	%		7.5	%
EX NA (system)		9.6	%		9.3	%		9.6	%		9.4	%		11.3	%		10.0	%
EMEA
IC O&L comparable		7.3	%		17.3	%		(2.4	)%		6.4	%		24.9	%		11.3	%
HI UK Regions		6.3	%		10.3	%		(0.7	)%		4.9	%		18.8	%		8.3	%
HI UK London		12.2	%		8.2	%		0.4	%		6.4	%		17.4	%		9.2	%
Asia Pacific
IC O&L comparable		52.7	%		13.7	%		17.7	%		26.8	%		36.9	%		29.5	%

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Appendix 2: Disposal programme detail

 

		Number of hotels		Proceeds			Net book value				Annual EBITDA forgone		Annual EBIT forgone
Disposed to date		123		£	1.78bn		£	1.81	bn		Approximately £160m		Approximately £110m
On the market		22			—		£	420	m		—		—
Remaining hotels		52			—		£	1.45	bn		—		—

 

For a full list please visit http:/www.ihgplc.com/investors

 

Appendix 3: Return of funds programme

 

		Timing		Total return				Returned to date				Still to be returned
£500m special dividend		Paid December 2004		£	501	m		£	501	m			Nil
First £250m share buyback		Completed in 2004		£	250	m		£	250	m			Nil
Second £250m share buyback		Ongoing		£	250	m		£	128	m		£	122	m
£1,000m capital return*		By 8 July 2005		£	1,000	m*			Nil			£	1,000	m*
Total*				£	2,001	m*		£	879	m		£	1,122	m*

 

*	The actual capital return will depend on the number of shares in issue at the record date, therefore the currently expected return is an approximation.

 

For further information, please contact:

 

Investor Relations (Gavin Flynn/Paul Edgecliffe-Johnson):		+44 (0) 1753 410 176
		+44 (0) 7808 098 972
Media Affairs (Leslie McGibbon):		+44 (0) 1753 410 425
		+44 (0) 7808 094 471

 

High resolution images to accompany this announcement are available for the media to download free of charge from www.vismedia.co.uk . This includes profile shots of the key executives.

 

Teleconference for Analysts

 

A teleconference with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director) will commence at 9.00 am (London time) on 26 May 2005. There will be an opportunity to ask questions. The conference call will conclude at approximately 9.30 am (London time).

 

To join us for this conference call please dial the relevant number below by 9.00 am (London time).

 

International dial-in		+44 (0)1452 562 717
UK dial-in		0800 073 8968
US dial-in		1866 832 0732

 

A recording of the conference call will be available for 7 days. To access this please dial the relevant number below and use the access number 6226776#

 

International dial-in		+44 (0)1452 55 0000
UK dial-in		0845 245 5205

 

US Call

 

A teleconference with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director) will commence at 9.00 am (New York time) on 26 May 2005. There will be an opportunity to ask questions. The conference call will conclude at approximately 9.30 am (New York time).

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US toll free dial in		1866 832 0732
International dial in		+44(0) 1452 562 717
UK dial in		0800 073 8968

 

A recording of the conference call will be available for 7 days. To access this please dial the relevant number below and use the access number 6303054#

 

International dial-in		+44 (0)1452 55 0000
UK dial-in		0845 245 5205

 

Website

 

The full release and supplementary data will be available on our website from 7.00 am on 26 May 2005. The web address is www.ihgplc.com/q1

 

Note to Editors:

 

InterContinental Hotels Group PLC of the United Kingdom [LON:IHG, NYSE:IHG (ADRs)] is the world’s largest hotel group by number of rooms. InterContinental Hotels Group owns, manages, leases or franchises, through various subsidiaries, more than 3,500 hotels and 535,000 guest rooms in nearly 100 countries and territories around the world. The Group owns a portfolio of well recognised and respected hotel brands including InterContinental^® Hotels & Resorts, Crowne Plaza^® Hotels & Resorts, Holiday Inn^® Hotels and Resorts, Holiday Inn Express^®, Staybridge Suites^®, Candlewood Suites^® and Hotel Indigo^TM, and also manages the world’s largest hotel loyalty programme, Priority Club^® Rewards, with over 24 million members worldwide. In addition to this, InterContinental Hotels Group has a 47.5% interest in Britvic, one of the two leading manufacturers of soft drinks, by value and volume, in Great Britain.

 

InterContinental Hotels Group offers information and online reservations for all its hotel brands at www.ichotelsgroup.com and information for the Priority Club Rewards programme at www.priorityclub.com.

 

For the latest news from InterContinental Hotels Group, visit our online Press Office at www.ihgplc.com/media.

 

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 ‘ target’, ‘expect’, ‘intend’, ‘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.

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INTERCONTINENTAL HOTELS GROUP PLC

UNAUDITED INCOME STATEMENT

For the three months ended 31 March 2005

 

		3 months ended 31 March 2005									3 months ended 31 March 2004
		Continuing operations £m			Discontinuing operations £m			Total £m			Continuing operations £m			Discontinuing operations £m			Total £m
Revenue (note 3)		404			129			533			389			147			536
Cost of sales		(269	)		(97	)		(366	)		(266	)		(112	)		(378	)
Administrative expenses		(57	)		—			(57	)		(55	)		—			(55	)
		78			32			110			68			35			103
Depreciation and amortisation		(34	)		-	*		(34	)		(30	)		(18	)		(48	)
Other operating income & expenses		—			—			—			(4	)**		—			(4	)
Operating profit (note 4)		44			32			76			34			17			51
Net financing costs		(11	)		—			(11	)		(4	)		—			(4	)
Profit before tax		33			32			65			30			17			47
Tax (note 8)		(8	)		(11	)		(19	)		20			(5	)		15
Profit after tax		25			21			46			50			12			62
Gain on sale of assets, net of tax		—			9			9			—			4			4
Profit available for shareholders		25			30			55			50			16			66
Attributable to:
Equity holders of the parent								51									64
Minority interest								4									2
Profit for the period								55									66
Earnings per ordinary share (note 9):
Basic		4.1	p		4.8	p		8.9	p		6.8	p		2.1	p		8.9	p
Diluted		4.0	p		4.7	p		8.7	p		6.7	p		2.1	p		8.8	p
Adjusted		4.1	p		—			7.5	p		4.1	p		—			5.7	p

 

*	Under IFRS, no depreciation is charged on assets following classification as held for sale. Held for sale operating results are included in discontinuing operations.

**	Adjustment to market value of the Group’s investment in FelCor Lodging Trust Inc. Following adoption of IAS 39 at 1 January 2005 adjustments to market value are recorded directly in equity.

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INTERCONTINENTAL HOTELS GROUP PLC

UNAUDITED CASH FLOW STATEMENT

For the three months ended 31 March 2005

 

		2005 3 months ended 31 March £m			2004 3 months ended 31 March £m
Cash from operations (note 10)		17			96
Interest paid		(9	)		(2	)
Tax paid		(12	)		(30	)
Net cash from operating activities		(4	)		64
Cash flows from investing activities
Capital expenditure – Hotels		(32	)		(28	)
Disposal proceeds – Hotels		245			19
Capital expenditure – Soft Drinks		(16	)		(21	)
Net cash from investing activities		197			(30	)
Cash from financing activities
Proceeds from issue of share capital		3			2
Repurchase of shares		(47	)		(35	)
Dividends paid		(17	)		(17	)
Borrowings movement		(112	)		27
Net cash from financing activities		(173	)		(23	)
Net movement in cash and cash equivalents in the period		20			11
Cash and cash equivalents at beginning of the period		72			411
Exchange rate effects		(1	)		(1	)
Cash and cash equivalents at end of the period		91			421

 

UNAUDITED STATEMENT OF CHANGES IN EQUITY

For the three months ended 31 March 2005

 

Movement in IHG shareholders’ equity:		2005 3 months ended 31 March £m			2004 3 months ended 31 March £m
At 31 December		1,821			2,323
Adoption of IAS 39		(4	)		—
As restated at 1 January 2005		1,817			2,323
Net profit for the period (excluding minority interests of £4m (2004 £2m))		51			64
Exchange movement on foreign currency denominated net assets, borrowings and currency swaps		6			(17	)
Valuation losses taken to equity, net of tax		(19	)		—
Total recognised income and expense for the period		38			47
Issue of ordinary shares		3			2
Purchase of own shares		(67	)		(52	)
Movement in shares in ESOP trust and Share schemes		(1	)		1
At 31 March		1,790			2,321

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INTERCONTINENTAL HOTELS GROUP PLC

UNAUDITED BALANCE SHEET

As at 31 March 2005

 

		Unaudited 2005 31 March £m			Unaudited 2004 31 December £m
ASSETS
Property, plant and equipment		1,915			1,926
Goodwill		154			152
Intangible assets		76			54
Investment in associates		42			42
Other financial assets		59			69
Total non-current assets		2,246			2,243
Inventories		46			42
Trade and other receivables		437			401
Current tax receivable		14			14
Cash and cash equivalents		91			72
Other financial assets		70			80
Total current assets		658			609
Non-current assets classified as held for sale		1,585			1,826
Total assets		4,489			4,678
LIABILITIES
Short-term borrowings		(99	)		(32	)
Trade and other payables		(631	)		(628	)
Current tax payable		(280	)		(261	)
Total current liabilities		(1,010	)		(921	)
Loans and other borrowings		(969	)		(1,156	)
Employee benefits		(145	)		(173	)
Provisions and other payables		(106	)		(108	)
Deferred tax payable		(234	)		(234	)
Total non-current liabilities		(1,454	)		(1,671	)
Liabilities classified as held for sale		(132	)		(148	)
Total liabilities		(2,596	)		(2,740	)
Net assets		1,893			1,938
EQUITY
IHG shareholders’ equity		1,790			1,821
Minority equity interests		103			117
Total equity and reserves		1,893			1,938

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INTERCONTINENTAL HOTELS GROUP PLC

NOTES TO THE UNAUDITED QUARTERLY FINANCIAL STATEMENTS

 

1.	Basis of preparation

 

For all periods up to and including the year ended 31 December 2004, InterContinental Hotels Group PLC (‘IHG’) prepared its financial statements in accordance with UK generally accepted accounting practice (‘UK GAAP’). From 1 January 2005 IHG is required to prepare consolidated financial statements in accordance with International Financial Reporting Standards (‘IFRS’) as endorsed by the European Union (‘EU’). Consequently, financial information for interim quarters of 2005 must be prepared on the basis of IFRS.

 

These interim financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’. The unaudited financial statements for the quarter ended 31 March 2005 and the restatement of financial information for the year ended 31 December 2004 and the quarter ended 31 March 2004 have been prepared in accordance with IFRS expected to be endorsed by the EU and available for use by listed European companies at 31 December 2005 (with the exception of IAS 32 ‘Financial Instruments: Disclosure and Presentation’ and IAS 39 ‘Financial Instruments: Recognition and Measurement’ (as amended) for the 2004 information). These International Financial Reporting Standards, Standing Interpretations Committee (‘SIC’) and International Financial Reporting Interpretations Committee (‘IFRIC’) interpretations issued by the International Accounting Standards Boards (‘IASB’) are subject to ongoing review and possible amendment or interpretive guidance and are therefore still subject to change which may require further adjustments to this information before it is included in the 2005 Annual Report and Financial Statements.

 

In the information for the year ended 31 December 2004 and the interim quarters of 2004 financial assets and financial liabilities are accounted for on the basis of UK GAAP. The effect of adopting IAS 39 at 1 January 2005 is shown in the statement of changes in equity for 2005.

 

Details of the accounting policies applied in the quarter ended 31 March 2005 are set out in the International Financial Reporting Information in IHG’s Annual Report 2004. The policies assume that the amendments to IAS 19 ‘Employee Benefits’ published in December 2004 by the IASB, allowing actuarial gains and losses to be recognised in full through reserves, will be endorsed by the EU.

 

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 Annual Report and Financial Statements for the year ended 31 December 2004 which contain an unqualified audit report have been filed with the Registrar of Companies.

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Transition to International Financial Reporting Standards

 

An explanatory note setting out IHG’s accounting policies under IFRS, the major differences between UK GAAP and IFRS for IHG, and reconciliations of UK GAAP to IFRS for the Income statement for the year ended 31 December 2004 and Balance sheets at 1 January 2004 and 31 December 2004 is included within the 2004 Annual Report and Financial Statements. In addition, the reconciliations for the 2004 interim period included in this report are set out below:

 

		2004 3 months ended 31 March £m
Profit for the period under UK GAAP		65
Adjustments:
Goodwill amortisation		3
Pensions accounting adjustments		(2	)
Profit for the period under IFRS		66
		2004 31 March £m
Shareholder’s equity under UK GAAP		2,551
Adjustments:
Dividend accrual		70
Pension accounting adjustments		(123	)
Deferred tax adjustments		(180	)
Goodwill amortisation		3
Shareholders’ equity under IFRS		2,321

 

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 3 months ended 31 March is £1= $1.90 (2004, £1 = $1.84).

 

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=$1.88 (2004 £1 = $1.83).

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3.

Revenue

 

		2005 3 months* ended 31 March £m		2004 3 months** ended 31 March £m
Hotels
Americas (note 5)		115		115
EMEA (note 6)		183		190
Asia Pacific (note 7)		36		33
Central		10		10
		344		348
Soft Drinks		189		188
		533		536

 

*	Other than for Soft Drinks which reflects the 16 weeks ended 17 April 2005.

**	Other than for Soft Drinks which reflects 16 weeks ended 10 April 2004.

 

4.	Operating profit

 

		2005 3 months* ended 31 March £m			2004 3 months** ended 31 March £m
Operating profit
Americas (note 5)		44			33
EMEA (note 6)		26			16
Asia Pacific (note 7)		9			7
Central		(14	)		(10	)
Hotels		65			46
Soft Drinks		11			9
		76			55
Other operating item		—			(4	)
Operating profit ***		76			51

 

*	Other than for Soft Drinks which reflects the 16 weeks ended 17 April 2005.

**	Other than for Soft Drinks which reflects the 16 weeks ended 10 April 2004.

***	£32m of total operating profit relates to discontinuing operations (£17m in 2004). All discontinuing relates to Hotels operations.

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5

Americas

 

		2005 3 months ended 31 March $m			2004 3 months ended 31 March $m
Revenue
Owned & Leased		51			40
Managed		25			13
Franchised		85			79
Continuing operations		161			132
Discontinuing operations – Owned & Leased		58			79
Total $m		219			211
Sterling equivalent £m		115			115
Operating profit
Owned & Leased		3			—
Managed		8			—
Franchised		75			67
Continuing operations		86			67
Discontinuing operations– Owned & Leased		14			6
		100			73
Regional overheads		(16	)		(11	)
Total $m		84			62
Sterling equivalent £m		44			33

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6.

EMEA

 

		2005 3 months ended 31 March £m			2004 3 months ended 31 March £m
Revenue
Owned & Leased		70			70
Managed		10			12
Franchised		6			5
Continuing operations		86			87
Discontinuing operations – Owned & Leased		97			103
Total		183			190
Operating profit
Owned & Leased		(4	)		(3	)
Managed		6			8
Franchised		4			4
Continuing operations		6			9
Discontinuing operations – Owned & Leased		25			14
		31			23
Regional overheads		(5	)		(7	)
Total		26			16

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7.	Asia Pacific

 

		2005 3 months ended 31 March $m			2004 3 months ended 31 March $m
Revenue
Owned & Leased		57			48
Managed		10			9
Franchised		1			1
Continuing operations		68			58
Discontinuing operations – Owned & Leased		—			2
Total $m		68			60
Sterling equivalent £m		36			33
Operating profit
Owned & Leased		11			8
Managed		8			6
Franchised		1			1
Continuing operations		20			15
Regional overheads		(4	)		(3	)
Total $m		16			12
Sterling equivalent £m		9			7

 

8.

Tax

 

Tax on total profit before tax has been calculated using an estimated effective annual tax rate of 29%.

 

Excluding the effect of prior year items the effective tax rate on total profit before tax would be approximately 36%. Prior year items have been treated as relating wholly to continuing operations. In 2005, the gain on sale of assets includes a tax credit of £1m. In 2004, the tax credit on continuing operations included an exceptional tax credit of £24m.

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9.	Earnings per share

 

				2005 3 months ended 31 March						2004 3 months ended 31 March
		Continuing		Total			Continuing			Total
Profit available for shareholders (£m)		25		55			50			66
Basic weighted average number of shares (millions)		617		617			737			737
Pence per share:
Basic earnings		4.1		8.9			6.8			8.9
Gain on sale of assets, less tax thereon		—		(1.4	)		—			(0.5	)
Adjustment to market value of the Group’s investment in FelCor Lodging Trust Inc.		—		—			0.5			0.5
Exceptional tax credit		—		—			(3.2	)		(3.2	)
Adjusted earnings		4.1		7.5			4.1			5.7

 

Adjusted earnings per ordinary share is disclosed in order to show performance before significant non-trading items.

 

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. The resulting weighted average number of ordinary shares for the three months to 31 March 2005 is 629m (3 months to 31 March 2004, 745m).

 

10.	Cash from operations

 

		2005 3 months ended 31 March £m			2004 3 months ended 31 March £m
Hotels		48			67
Soft Drinks		(31	)		29
		17			96

 

Included in cash from operations are inflows of £32m (2004 £35m) of operating profit before interest and depreciation and amortisation related to discontinuing operations. Included in cash from investing activities are inflows of £233m (2004 £10m) related to discontinuing operations.

---

11.

Net debt

 

		2005 31 March £m			2004 31 December £m
Cash and cash equivalents		91			72
Other borrowings:
Due within one year		(99	)		(32	)
Due after one year		(969	)		(1,156	)
		(977	)		(1,116	)

 

12.	Net assets

 

		2005 31 March £m			2004 31 December £m
Hotels		3,275			3,514
Soft Drinks		226			168
		3,501			3,682
Net debt		(977	)		(1,116	)
Other net non-operating liabilities		(631	)		(628	)
		1,893			1,938

 

END