Thanks. Good morning, everyone and welcome to IHG’s 2018 full year results presentation. I’m Heather Wood, Head of Investor Relations. And in a moment, I am going to hand over to Keith Barr, Chief Executive Officer and Paul Edgecliffe-Johnson, Chief Financial Officer, to take you through our results in more detail. But first, as we won’t be holding a separate call for U.S. investors today but will be making the replay of this presentation available on our website, I need to remind you that in the discussion today, the company may make certain forward-looking statements as defined under U.S. law. So please refer to this morning’s announcement and our SEC filings, the factors that could lead the actual results to differ materially from those expressed in or implied by any such forward-looking statements. I will now hand the presentation over to Keith.

Thanks, Heather. Good morning, everyone. In a moment, Paul will talk you through our financial performance. But first, let me share some quick highlights. We delivered a strong performance in 2018. Our room signings and openings were at the highest level for a decade and we are driving real momentum in each of our regions, delivering 2.5% RevPAR growth for the group. Together with net system size growth of 4.8%, this drove underlying operating profit up 6% and underlying earnings per share up 19%. Our high-quality fee streams and disciplined use of capital continue to generate significant cash flow. Coupled with our strong performance and confident outlook, we have taken the decision to increase our total annual ordinary dividend by 10%, in addition to the $500 million special dividend that we paid last month. 2018 has been a year of meaningful change for IHG. Last February, we set out a series of strategic initiatives, which were underpinned by a renewed focus on delivering long-term sustainable growth for our business. Combined, these initiatives will help drive industry-leading net rooms growth over the medium term, along with continued strong returns for our owners and shareholders, whilst delivering on our commitment to provide true hospitality for everyone. At the heart of this are our brands. We are constantly enhancing our established portfolio and we are moving quickly to add new brands in the underserved areas of the market where we see a clear opportunity to strengthen our offer to guests and owners. To that point, our rollout of Avid and VOCO we did pace in 2018, and we added Regent Hotels & Resorts to our luxury portfolio. Further strengthening our luxury footprint is the acquisition of Six Senses announced last week, an event that extends to our mainstream category with the news today…

Thank you, Keith and good morning everyone. Before I get into the details, there is a little feedback. Can you hear me okay? Yes. Before I get into details, I should remind you that my commentary focuses on our results from reportable segments. These exclude the impact of hotel cost reinvestment and the system funds, which are now reported as part of our group results following our adoption of IFRS 15 at the beginning of 2018. Focusing on these reportable segments, we’re pleased to report another year of strong financial performance, with growth in all our key metrics. Starting with the column on the right hand side of the slide, reported revenue increased 12% to $1.9 billion and operating profit increased 8% to $816 million. On an underlying basis, so excluding current year acquisitions, $13 million of individually significant liquidated damages and at constant currency, we grew revenue by 6%. Underlying revenue and operating profit from the fee business grew 7%. This resulted in our fee margin being up 10 basis points year-on-year at constant currency, and I’ll come back to the drivers of this shortly. Underlying interest increased by $15 million, reflecting the impact of high U.S. dollar interest rates on bank borrowings and balances with the system funds, along with finance charges related to deferred and contingent consideration on acquisitions. For 2019, I expect our underlying interest charge will be higher, partly due to $20 million of interest on the €500 million bond we raised in November. 2019 interest will also include around $30 million of charges relating to the adoption of IFRS 16 and finance charges on acquisitions, two-thirds of which has a corresponding benefit to operating profit and so will not impact net income. Our reported tax rate fell to 22%, in line with guidance, predominantly…

Thanks, Paul. You will recognize our strategic model on this slide. I’m going to talk today about the progress we are making against the strategic initiatives designed to make this model work harder. We are successfully redeploying resources across our business to better leverage our scale and drive an acceleration in growth. IHG Rewards Club Loyalty program is a key part of our owner value proposition. We have seen the member contribution grow by 4 percentage points over the past 4 years, and we are enhancing the program to drive even greater levels of member engagement. We have continued to strengthen our enterprise and enhance revenue delivery with our new Guest Reservation System now fully rolled out across our entire estate. GRS will allow us to maximize revenue delivery for our owners, and it forms a key component of our cloud-based technology platform, IHG Concerto. In short, IHG Concerto will increase efficiency in hotels and help future-proof our business, and both IHG and our owners are rightly very excited about it. When it comes to our owners more broadly, the investments we are making in our development capabilities and our existing relationships are driving an increase in signings pace. Our franchise products in Greater China are helping us broaden our owner base. And we continue to invest across the hotel lifecycle to help make sure we are turning our signings into openings at a faster pace. And we continue to make significant progress in strengthening our established brands and further enhancing our offer through targeted acquisitions and new brand launches. I am going to spend a bit of time now looking at how we are enhancing our loyalty and digital proposition and some of the specific actions we have taken in 2018. Our revenue delivery enterprise supports the 5,600 hotels…

[Operator Instructions] [Technical Difficulty]

Jamie?

Good morning. Jamie Rollo from Morgan Stanley. Three questions on room openings, please. First, what’s happening in China? Because the signings fell by about a quarter in the fourth quarter and the removals doubled in the year. So, is that a sign of just weaker owner confidence or is that just timing? Secondly, again, what’s happening with avid? 20-ish signings in the fourth quarter, another sequential slowdown, if that’s the sort of run rate going forward, is that not a bit disappointing? And then finally, if we look at the bigger picture at the group level for net openings this year, I know you’re talking about 6-ish percent medium term, but it sounds like with removals being up again this year and the exit rate of signings weaker, are we looking at another year of under 5%? Thank you.

Paul, do you want to take China Q4?

Sure. So obviously, when you’re opening up as many hotels as we are in China and signing as many, it will vary a little bit quarter by quarter. And there’s no underlying drop off in the level of interest in signing the brands. We had a very strong first 9 months of signings. And there may be in a few deals the team could have got over the year in the fourth quarter but didn’t quite get there, so they’ll come in the first quarter of the year. So, you tend to see that a little bit after a very strong first 9 months of the year. And the same with openings really. We did have one large 2 large unbranded hotels that we took out in China in the fourth quarter, which we’d signed a few years ago. The owner was going to put CapEx in and bring them into the brands as the representation that we wanted them to be in one of our brands. In the end, we couldn’t make that work with them, so we exited those. So that’s part of the reason for the high level of removals there.

I think, Jamie, on your other question, when you think about avid on the way that we launched that brand to the market to the owner communities, we built up a significant pent-up demand for avid before we were able to sign it because we did have the FDD available for a period of time. So that led to the acceleration of signings in getting the 170-plus signed to date. We think the run rate of 20 to 25 per quarter going forward is about the right run rate for the brand. We’re quite happy to see that because that will continue to grow at pace. In net openings, I think when we launched the strategic initiatives a year ago, we said that we’re going to accelerate the industry-leading net rooms growth over the medium term. And so, we saw an acceleration in 2018 and we expect to see an acceleration into 2019 into 2020 as, again, the existing business effectively drives the bulk of that and the new brands and new initiatives kind of are the top of that and gives the incremental growth.

Is that an acceleration on the 4.8% including the 2 deals or the 4.3%?

On top of the 4.8%. So, I mean, we would be disappointed we think industry-leading is in the 5% to 6% range and we’d be disappointed if we weren’t somewhere in the 5s.

Hi good morning. I am Richard Clarke from Bernstein. Apologies for my voice. A couple of questions on margin, please. You pointed to the fact that kind of underlying margin went up 80 basis points this year. Why is that below the historic run rate, which I think is around 135? And then secondly, thinking into next year, are there any additional investments you’re making that means you can’t get back up to that sort of 100 basis points or even the 80 basis points number? And then the last question on Six Senses. By my maths, you’re paying about 5x per room what you paid for Regent. So just thinking about how you can think about getting a return on that $300 million compared to what you paid for Regent? Thanks.

So why don’t I take these ones. So, we did 10 basis points of margin in 2018, obviously quite a lot below our historic run rate. I did say at this time last year it was going to be lumpy. There are 2 things that are impacting on the margin. If you exclude that and they are one-offs that only really happen in 2018, then we’ll be back at 80 basis points, which is a little below our long-term run rate. When you’re going through so much change as we have been, some of the levers that we would normally pull to drive the margin, really control the costs are harder to do through a year of transformation. Our focus on cost efficiency, on procurement, on really delivering long-term sustainable growth in margins hasn’t changed though, so I would expect that going forward, we’re still going to see strong growth in margins. Whether it’s 100 or whether it’s 135, we’ll have to see. We do have a few more areas that we can invest in, which Keith was talking about. So, in a given year, we might earn another couple of million dollars behind that, which might mean rather than 135, it’s 100. So, looking into 2019, I’m pretty confident on the 80 to so the 80 to 120 basis point range, so in the middle of that most likely. And look, in terms of Six Senses versus Regent, they’re very different businesses that we’re buying and different acquisition structures as well. I mean, Six Senses is more, if you like evolved. With the acquisition of Regent, we’re buying we bought an IP shell almost, which we’re then having to invest significantly behind to build that back out. Six Senses, we’re buying a lot of a big pipeline in that. So, it’s not a particularly easy comparison. With Six Senses, of course, you also have to take off the tax advantage that we get in looking at the price there. It will grow over time from the open hotels and the pipeline to a business that we’ll be making better than $50 million of fee income over time. So that’s really how we think about the business, what’s the opportunity in the longer term.

Thanks, Richard.

Good morning. It’s Alex Brignall from Redburn. Three questions, please. The first one on Concerto, you’ve talked about the increased ability to manage pricing for owners. Could you talk a little bit about what we might expect to see on numbers that we can look at within our models? So, call it RevPAR or revenue or overall pricing, that would be great thank you. On luxury, how much of that growth in that as an area of focus has to do with some of the pressures that we see in structural pressures within the industry on distribution or on other new entrants? And then thirdly, this is extremely boring. But on interest costs, they were higher this year and I don’t think all the bond was in there. So, could you just guide as to where that might be for next year, please? Thank you very much.

I’ll let Paul pickup the very exciting topic of interest. So, starting on Concerto, so when we rolled out the program, we talked about the initial phase being the foundational component to it and that’s rolling out additional functionality. So, in 2019, we’ll be piloting attribute pricing effectively and then begin rolling it out across different regions and different brands over time, and then having more functionality every year thereafter. We’re not going to provide specific guidance on every single piece of functionality. We roll out because of like an app update, it will be 2 to 4 times a year we’re rolling out some new functionality. But we’re doing it because, fundamentally, we believe it’s going to do a few things. One is, will increase overall pricing ability at the hotels. Now we’re principally a franchise estate so it’s a question of how did the franchisees take advantage of it, but we’ve got robust training around that. We also think those can help us on the conversion side, too, by us being able to package up and serve content and pricing and products differently across our brands to be much more relevant, too. So clearly, we’re making the investment in there because we believe it will drive incremental revenues to our hotels, but we’re not going to guide on specifically any uplift in RevPAR by functionality. The reason for luxury, when we sat there a few years ago and looked at our portfolio saying we’ve got a great brand with InterContinental, now 200 hotels, let’s be candid about, there are some markets where we have reached scale, where there’s no more InterContinentals to put in that market. And so what other opportunities could we access if we had a different brand? In Shanghai now, we have 6 in Shanghai,…

So, interest is complicated at the moment with IFRS 16. I guess, the simpler piece is the euro bond because we have put out what the interest costs on that was. So, you’ll we brought it out in November so you’ll then have the full year impact of that. IFRS 16 is fiendishly complicated, if I’m honest, in that it brings an additional income into EBIT, and then you have additional interest charges coming through together with some interest charges that relate to the deferred consideration on the Regent acquisition as that’s unamortized over time. The IR team, very happy to spend lots of time talking through all the moving parts on that to help you get your numbers to the right place. But the easiest part of it, as I say, is the bond. The other pieces will probably take a little bit of just talking through, factor by factor.

Thanks. It’s Jarrod Castle from UBS. Also three if I may, please. There has been a little bit of, I guess, cautious comments from the likes of Hilton and Choice in terms of kind of their RevPAR guidance, so interesting just to get your thoughts. Secondly, I mean, you spoke a little bit about a bit more about the luxury segment. But how do you approach kind of the kind of build versus buy question, given that building new brands is part of your DNA? And then just coming back to the fee margin progression, I mean, how many years do you think you could keep pushing within that 80 to 120 basis point range? Thanks.

Do you want to take 1 and 3?

Yes. So, in terms of Hilton and Choice, I think that Hilton’s guidance was pretty much what people expected eventually. I think they narrowed down their range, but you’re better off talking to Chris as to what he’s expecting there. Typically, we don’t perform materially differently to Hilton. They have a slightly more weight slightly greater weighting into the upscale, a few more hotels up there. We’re actually pleased with our fourth quarter numbers. Outperforming the mid-scale segment is not easy but we did outperform, and we’re hoping that, that will continue with the key we’re doing differently, which we think is giving us some assistance there. So, we’ll continue to track that. And then if you look at the U.S. longer term, the supply-demand dynamics still look pretty good. And we’ve built a business there with very preferred brands. If you look at China, our business continues to perform well there. We’ve got a very broadly spread business right across all the different tiers of the market, and demand continues to be very strong there. It’s really a, it’s a domestic business, which does demand adjust. And in terms of the margin progression, I guess, if you go back in 2004, so I think that over the next 15 years, we could sort of average up 135 basis points of margin progression. I might not have been that confident. I guess that we have and there’s a lot that we’ve over that time. Partly it is aided, as you know, by the fact that some of our franchise income in the U.S. comes through at very high margins because we do have a large overhead base there already. If you think about China, where we’ve got a very strong infrastructure there and we’re not done to see more of the growth coming through there, without having to add much more costs, that’s helping us. And as I’d say, we’re also very focused on procurement, cost efficiency and continuing to drive up the margin in the business. So, I wouldn’t put an upper level on it. We still think there’s lots of opportunity.

In terms of luxury and build versus buy, I think it goes back to thinking about our overall strategy about how do we build out our brand portfolio and really using kind of our strategic analysis to understand where the pools of demand that are out there that we can access, in what segments and then what’s our ability to really win against those segments. So, if we’re in mainstream, we’re going to build it organically. I mean, we effectively can go it just falls into what we do better than anyone else in the industry is build mainstream brands and scale them up quickly in the most important markets. And so, we wouldn’t need to go buy that. I think VOCO was another good example of in the upscale segment. We recognize we could build that brand out. When you move into luxury, I don’t think anyone out there in the industry has proven to be successful without investing either quite a bit in physical assets, going out investing a lot of capital in a lot of hotels to position them well over time in luxury than to create a brand. That’s just expensive and takes a lot of time. It isn’t on our strategy in terms of how we want to use our capital. And so, going out and finding, honestly, companies that have been built over time by other individuals that are still asset light that we can then scale up, and luxury was what we said we would do, and I think Regent and Six Senses are bang-on strategy, both in terms of where they fall in the segments and also how we acquire them. And that’s what we’ll continue to consider to do going forward, both organically and inorganically, where we see a big enough demand and a gap in our portfolio.

Hi good morning. It’s Jaafar Mestari from Exane BNP Paribas. Two questions for me, please. Firstly, on the new studio brand, can you tell us a little bit more about the price points compared to Candlewood, Staybridge and a little bit more about the launch strategy? Who’s the target audience there if we compare it to, say, avid, where you built a lot of pent-up demand, where you signed mostly with your existing owners? Is this something similar here? And then second question related on the strategy you’ve unveiled 18 months ago now. If I remember correctly, it was one angle which was adding new brands. I’m not saying it’s done, but I think we’ve seen many examples of that. What about the second pillar, which I think you described as evolving the owner proposition? So, is it going to be continuous small tweaks to TRS functionalities, et cetera? Or is there a big reveal where we wake up one day and you say we add 150 management personnel in the U.S. or something like that, more of a step change?

Excellent. Again, so in regards on the new studio brand, I think in terms of we made the announcement today that we’re moving into the space, which is similar to what we’ve done in the past with VOCO. So, our intention will be to later on this year do a scale launch to our owning community, talking about the brand positioning, the proposition, the name, the visualized entities, the design, and then having an FDD available later on this year to then be able to sell it effectively. And so, kind of very similar path to what we were able to do with VOCO and with avid as well. So essentially to be able to be selling this brand in 2019 to our core owners in the U.S., in terms of the price point, it’s going to be an upper mid-scale, so it’s going to be sitting from a price point below where Staybridge Suites is going to be currently today. Upper mid-scale is where Holiday Inn, Holiday Inn Express are basically positioned. And again, it will be an opportunity for both a new build principally, but also a conversion play for appropriate high-quality upper mid-scale assets that have the right physical design, too. So, whereas avid was pure-play new build, this will be principally new build but with some conversion opportunities. We did yes, we didn’t lean in to saying we’re going to be launching new brands to fill customer needs I mean, owner needs. We’ll continue to look at that. I think, right now, we’ve done a fair bit in a short period of time and so want to make sure that we continue to scale and execute those. We’ve done a lot on the enterprise as well too. Concerto is a key component of that in our technology and digital platforms, so continuing to up-weight our investment there. We also do have quite a bit of work happening on the owner proposition in terms of how we engage with owners. And it’s really around how do we go faster from signings to ground breaks to openings, providing more value through procurement to make our properties even more high value in terms of returns to owner, and then how do they ramp up those hotels faster. So, we’re making significant investment in those areas as well, too. So, it is kind of the holistic approach of having the right brands in the right markets and then continuing to enhancing our revenue delivery and services is the way that we’re going to continue to create more value. So, we’re being quite balanced about it. We have talked a lot about brands, but there’s a lot happening behind the scenes in those other areas.

It’s Julian Easthope from RBC. Yes, 3 quick questions from me. First one, in terms of your ability to make any further acquisitions now, you’re 2.9x pro forma in terms of your net debt-to-EBITDA and you got a limit of 2.5 to 3x or at least a target. So, I just wondered how far you’d be happy to breach that if anything else further came up, or are you limited on acquisitions now? Secondly, probably the weakest spot at the moment is Middle East in terms of the performance. I just and that appears to be as much supply driven as it is anything else. So, I just wonder what your thoughts are as to how the Middle East is likely to progress from a supply point of view. And finally, the sort of nerdy question. IFRS 16, will you restate 2018? And will I presume that you’ll we should adopt it for first half and as well as the full year and should we just assume an equal split between the 2? Thanks.

Thanks, Julian. So, in terms of acquisitions, we have made these two acquisitions in a relatively quick succession. We also returned the $500 million in January. So that takes us to 2.9x on 2018 earnings. The business does deliver pretty quickly. As you know, very strong cash generation. We also do still own a few assets, not huge. And we are seeing whether when we’ll monetize then you’ll remember we had some money in the evens. We put in about $130 million, $140 million of those. So, if we monetize that, we may decide to recycle that as part of the strategy. You saw it on the slides that we recycled about $45 million last year. When we talked about what we the gaps that we really wanted to close this time last year, we talked about luxury and the opportunities there, so we’re pleased with what we found there. Those were the opportunities we were particularly focused on at that time, so we are very pleased that we’ve closed those down. So, we’ve been pretty consistent with our leverage approach and our conservatism, if you like, in terms of the balance sheet. I wouldn’t expect that we’re going to be moving away from that. If something else came up and it was very, very attractive and it was very small, then we’d probably evaluate it, but I think it’s relatively unlikely in the very short term. In terms of the Middle East, the Middle East has been a good market for us over a very long term. We went into Beirut back in the 1960s with the Phoenicia there. So, we’ve got very strong brand and brand recognition is very strong, owner relationship, and it will come good again. It had some tough years, probably the new supply coming into the UAE, the political instability there, but we’re not just in any of our markets for the short term. You have to be in and support your owners, support your guests and that’s what we’ll continue to do. In terms of IFRS 16, yes, we will restate the 2018 results onto an IFRS 16 basis and it will be applicable from 1st of January 2019. And as I said with the interest, we’re very happy to spend time and just talk through all the implications that it has and the puts and the takes into the numbers because it is quite complicated. Thanks, Julian.

Upfront, sorry.

[Indiscernible]. Just a couple of questions from me, please. The first one is just on VOCO, obviously, that was conversion of branded launch. Of the 3,000 rooms in the pipeline, are they all conversions or some of them ended up being new owners as well? And then the second one, a small one, just on the U.S. RevPAR, has there been any material impact from the government shutdown? And therefore, is there any benefit sort of to be seen from 2Q onwards from that?

Great. VOCO, so we launched it principally as an upscale conversion brand. We had been approached by some owners who have new build properties who really like the brand proposition and who have embarked with us on it. So, we do actually have some new build coming into the pipeline, which we expected to happen over time. We thought we would have to get more conversions done in the marketplace to get the new build opportunity. But when we did some fantastic launch events in, we did it in Dubai, we did it in Paris, we did it in Sydney, it just generated significant owner demand already in the new build space, too, so it will have a bit more of a new build profile to it than we had expected. U.S. RevPAR government shutdown, we haven’t seen any material impact. The benefit of our scale in the U.S. is we’re not that geographically concentrated in Washington, D.C. and also into the upper upscale luxury space there. We’re in Topeka, Kansas, in Dallas, in Boston, in Chicago. So, our business is so big that the shutdown has not shown to have any material impact at this time. I think we how much more time do we have? Yes, maybe just one last question, if there is one, going once, going twice, sold.

Alright. Well, thanks everyone. Really appreciate the opportunity to be with you today and your questions, and look forward to catching up with you all in the near future.

Ladies and gentlemen that does conclude today’s call. Thank you for joining. You may now disconnect your lines.