Holiday Inn 2005 Annual Report Download - page 40

Corporate information
The consolidated financial statements of InterContinental Hotels
Group PLC (IHG) for the year ended 31 December 2005 were
authorised for issue in accordance with a resolution of the
Directors on 1 March 2006. InterContinental Hotels Group PLC
(the Company) is incorporated in Great Britain and registered in
England and Wales.
Summary of significant accounting policies
BASIS OF PREPARATION
The financial statements have been prepared on an historic cost
basis, except for derivative financial instruments and available-for-
sale financial assets that have been measured at fair value. The
consolidated financial statements are presented in sterling and all
values are rounded to the nearest million (£m) except where
otherwise indicated.
STATEMENT OF COMPLIANCE
The consolidated financial statements of IHG have been prepared
in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union (EU) and as applied in
accordance with the provisions of the Companies Act 1985. As
permitted, the Group has also early adopted the amendment to
International Accounting Standard (IAS) 19 ‘Employee Benefits’
published in December 2004.
IFRS EXEMPTIONS
IFRS 1 ‘First-time Adoption of International Financial Reporting
Standards’ has been applied in preparing this financial information.
The Group has taken the following exemptions available under
IFRS 1:
a) Not to restate the comparative information disclosed
in the 2005 financial statements in accordance with IAS 32
‘Financial Instruments: Disclosure and Presentation’ and
IAS 39 ‘Financial Instruments: Recognition and Measurement’.
b) Not to restate business combinations before 1 January 2004.
c) To recognise all actuarial gains and losses on pensions
and other post-employment benefits directly in equity at
1 January 2004.
d) To retain UK GAAP carrying values of property, plant and
equipment, including revaluations, as deemed cost at
transition.
e) Not to recognise separately cumulative foreign exchange
movements up to 1 January 2004.
f) To apply IFRS 2 ‘Share-based Payments’ to grants of equity
instruments after 7 November 2002 that had not vested at
1 January 2005.
The disclosures required by IFRS 1 are given in note 33.
The principle accounting policies of the Group are set out below.
BASIS OF CONSOLIDATION
The Group financial statements comprise the financial statements
of the parent company and entities controlled by the Company. All
inter-company balances and transactions have been eliminated.
The results of those businesses acquired or disposed of are
consolidated for the period during which they were under the
Group’s control.
Shareholder approval was given on 1 June 2005 to recommended
proposals for the return of approximately £1bn to shareholders by
way of a capital reorganisation (by means of a scheme of
arrangement under Section 425 of the Companies Act 1985). Under
the arrangement, shareholders received 11 new ordinary shares
and £24.75 cash in exchange for every 15 existing ordinary shares
held on 24 June 2005. The overall effect of the transaction was that
of a share repurchase at fair value, therefore no adjustment has
been made to comparative earnings per share data (see note 9).
The capital reorganisation of InterContinental Hotels Group PLC
to New InterContinental Hotels Group PLC has been accounted
for in accordance with the principles of merger accounting as
applicable to group reorganisations. The consolidated financial
statements are therefore presented as if New InterContinental
Hotels Group PLC had been the parent company of the Group
throughout the periods presented. Following this capital
reorganisation, InterContinental Hotels Group PLC changed
its name to InterContinental Hotels PLC and re-registered as
a private limited company, InterContinental Hotels Limited;
New InterContinental Hotels Group PLC changed its name
to InterContinental Hotels Group PLC.
FOREIGN CURRENCIES
Transactions in foreign currencies are translated to the functional
currency at the exchange rates ruling on the dates of the
transactions. All foreign exchange differences arising on translation
are recognised in the income statement except on foreign currency
borrowings that provide a hedge against a net investment in
a foreign operation. These are taken directly to the currency
translation reserve until the disposal of the net investment, at
which time they are recycled against the gain or loss on disposal.
The assets and liabilities of foreign operations, including goodwill,
are translated into sterling at the relevant rates of exchange ruling
at the balance sheet date. The revenues and expenses of foreign
operations are translated into sterling at weighted average rates
of exchange for the period. The exchange differences arising on the
retranslation are taken directly to the currency translation reserve.
On disposal of a foreign operation, the cumulative amount recognised
in the currency translation reserve relating to that particular
foreign operation is recycled against the gain or loss on disposal.
corporate information and accounting policies
38 InterContinental Hotels Group 2005