Holiday Inn 2008 Annual Report Download - page 70

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68 IHG Annual Report and Financial Statements 2008
6 Finance costs
2008 2007
$m $m
Financial income
Interest income 11 15
Fair value gains 13
12 18
Financial expenses
Interest expense 95 90
Finance charge payable under finance leases 18 18
113 108
Interest income and expense relate to financial assets and liabilities held at amortised cost, calculated using the effective interest
rate method.
Included within interest expense is $12m (2007 $21m) payable to the Group’s loyalty programme relating to interest on the accumulated
balance of cash received in advance of the redemption of points awarded.
7 Tax
2008 2007
Note $m $m
Income tax
UK corporation tax at 28.5% (2007 30.0%):
Current period 13 45
Benefit of tax reliefs on which no deferred tax previously recognised –(1)
Adjustments in respect of prior periods (28) (33)
(15) 11
Foreign tax: a
Current period 130 200
Benefit of tax reliefs on which no deferred tax previously recognised (6) (15)
Adjustments in respect of prior periods (63) (100)
61 85
Total current tax 46 96
Deferred tax:
Origination and reversal of temporary differences 26 (67)
Changes in tax rates (1) (4)
Adjustments to estimated recoverable deferred tax assets (4) 5
Adjustments in respect of prior periods (13) 8
Total deferred tax 8(58)
Total income tax charge on profit for the year 54 38
Further analysed as tax relating to:
Profit before exceptional items 101 90
Exceptional items (note 5):
Exceptional operating items (17) –
Exceptional tax credit b(25) (60)
Gain on disposal of assets (5) 8
54 38
The total tax charge can be further analysed as relating to:
Profit on continuing operations 54 24
Profit on discontinued operations 56
Gain on disposal of assets (5) 8
54 38
a Represents corporate income taxes on profit taxable in foreign jurisdictions, a significant proportion of which relates to the Group’s US subsidiaries.
b Represents the release of provisions which are exceptional by reason of their size or nature relating to tax matters which have been settled or in respect
of which the relevant statutory limitation period has expired.
Notes to the Group financial statements continued