Holiday Inn 2006 Annual Report Download - page 74

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Notes to the Group financial statements
22 Financial instruments (continued)
Fair values
The table below compares carrying amounts and fair values of the Group’s financial instruments.
2006 2005
Carrying Carrying
value Fair value value Fair value
note £m £m £m £m
Financial assets
Cash and cash equivalents 18 179 179 324 324
Equity securities available-for-sale 15 57 57 145 145
Derivatives 15 4422
Other financial assets 15 48 48 72 72
Financial liabilities
Borrowings, excluding finance lease liabilities 20 (216) (216) (412) (412)
Liabilities under finance leases 20 (97) (97) ––
Derivatives 19 ––(6) (6)
The fair value of cash and cash equivalents approximates book value due to the short maturity of the investments and deposits. Equity
securities available-for-sale and derivatives are held on the balance sheet at fair value as set out in note 15. The fair value of other
financial assets approximates book value based on prevailing market rates. The fair value of borrowings, excluding finance lease liabilities,
approximates book value as interest rates reset to market rates on a frequent basis. The fair value of the finance lease liability is deemed
to be its book value as the inception of the lease was shortly before 31 December 2006.
Trade and other receivables and trade and other payables are not included in the above tables as their carrying value approximates to their
fair value, including the future redemption liability of the Group’s loyalty programme.
23 Employee benefits
Retirement and death in service benefits are provided for eligible Group employees in the UK principally by the InterContinental Hotels
UK Pension Plan. The plan covers approximately 410 (2005 400) employees, of which 220 (2005 240) are in the defined benefit section which
provides pensions based on final salaries and 190 (2005 160) are in the defined contribution section. The assets of the plan are held in self-
administered trust funds separate from the Group’s assets. The Group also maintains a US-based InterContinental Hotels Pension Plan
and post-employment benefits scheme. This plan is now closed to new members and pensionable service no longer accrues for current
employee members. In addition, the Group operates a number of minor pension schemes outside the UK, the most significant of which is
a defined contribution scheme in the US; there is no material difference between the pension costs of, and contributions to, those schemes.
On 14 December 2005, the Soft Drinks business, including the Britvic Pension Plan, was sold. The comparative information provided below
includes movements for the Britvic Pension Plan up to the date of disposal.
The amounts recognised in the income statement are:
Pension plans Post-employment
UK US benefits Total
2006 2005 2006 2005 2006 2005 2006 2005
Recognised in administrative expenses £m £m £m £m £m £m £m £m
Current service cost 519 ––––519
Interest cost on benefit obligation 13 30 561119 37
Expected return on plan assets (14) (32) (4) (5) ––(18) (37)
417 1111619
Recognised in other operating income and expense
Plan curtailment –(7) –––––(7)
The curtailment gain arose as a result of the sale of 73 UK hotel properties.
72 IHG Annual report and financial statements 2006