Holiday Inn 2005 Annual Report Download - page 85

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1 ACCOUNTING POLICIES
Basis of accounting
The financial statements are prepared under the historical cost convention. They have been drawn up to comply with applicable accounting
standards. These accounts are for the Company and are not consolidated financial statements.
Fixed asset investments
Fixed asset investments are stated at cost less any provision for impairment.
2 CHANGES IN CAPITAL
On 27 June 2005, under a Court-approved scheme of arrangement made pursuant to Section 425 of the Companies Act, shareholders on
the register of the company then named InterContinental Hotels Group PLC (company number 4551528) (old IHG) at the record date
exchanged their existing ordinary shares in IHG for a combination of new ordinary shares in the Company and cash on the following basis:
for every 15 existing ordinary shares
11 new ordinary shares and
£24.75 in cash (equivalent to £1.65 for every existing ordinary share held).
Information regarding the scheme was sent to old IHG shareholders in a circular dated 3 May 2005 (the Circular). Save where the context
otherwise requires, terms and expressions used in this note shall have the same meaning as in the Circular. Under the scheme:
(a) the existing ordinary shares were cancelled and old IHG shareholders at the record date were allotted 11 new ordinary shares, credited
as fully paid, and were paid £24.75 in cash for every 15 existing ordinary shares then held; and
(b) following the cancellation of the existing ordinary shares, the issued share capital of old IHG was restored to its former amount by the
application of the whole of the reserve arising in the books of old IHG from the cancellation to issue shares of an equivalent nominal
amount to the Company.
As a result, the Company became the new holding company of old IHG and the issued ordinary share capital of the Company is owned
by the former shareholders in old IHG.
Fractional entitlements to new ordinary shares were not allotted to old IHG shareholders but were aggregated and sold on their behalf.
Under the scheme, the existing ordinary shares were cancelled and ceased to be valid.
Shareholders owned the same proportion of the Company, subject to the adjustment for fractional entitlements, immediately following
the implementation of the scheme as they held in old IHG immediately before the implementation of the scheme.
On 30 June 2005, the Court-approved reduction of capital of the Company to create approximately £2.7bn of distributable reserves, by
decreasing the nominal value of each new ordinary share issued pursuant to the scheme from £6.25 to 10p, became effective.
3 INVESTMENTS £m
At 1 January 2005 –
Additions 3,763
Impairment (996)
At 31 December 2005 2,767
notes to the company financial statements
InterContinental Hotels Group 2005 83