Holiday Inn 2010 Annual Report Download - page 83

OVERVIEW BUSINESS REVIEW
THE BOARD,
SENIOR MANAGEMENT AND
THEIR RESPONSIBILITIES
GROUP FINANCIAL
STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS USEFUL INFORMATION
5. Exceptional items
2010 2009
Note $m $m
Continuing operations
Exceptional operating items
Cost of sales:
Onerous management contracts a – (91)
Administrative expenses:
Holiday Inn brand relaunch b (9) (19)
Reorganisation and related costs c (4) (43)
Enhanced pension transfer d – (21)
(13) (83)
Other operating income and expenses:
Gain on sale of other financial assets e 8 –
Gain/(loss) on disposal of hotels (note 11)* 27 (2)
35 (2)
Impairment:
Property, plant and equipment (note 10) (6) (28)
Assets held for sale (note 11) – (45)
Goodwill (note 12) – (78)
Intangible assets (note 13) – (32)
Other financial assets (note 15) (1) (14)
(7) (197)
15 (373)
Tax
Tax on exceptional operating items (8) 112
Exceptional tax credit f – 175
(8) 287
Discontinued operations
Gain on disposal of assets (note 11)
Gain on disposal of hotels** – 2
Tax credit 2 4
g 2 6
* Relates to hotels classified as continuing operations.
** Relates to hotels classified as discontinued operations.
The above items are treated as exceptional by reason of their size or nature.
a An onerous contract provision of $65m was recognised at 31 December 2009 for the future net unavoidable costs under a performance guarantee related to certain
management contracts with one US hotel owner. In addition to the provision, a deposit of $26m was written off as it is no longer considered recoverable under the terms
of the same management contracts.
b Relates to costs incurred in support of the worldwide relaunch of the Holiday Inn brand family that was announced on 24 October 2007.
c Primarily relates to the closure of certain corporate offices together with severance costs arising from a review of the Group’s cost base.
d Related to the payment of enhanced pension transfers to those deferred members of the InterContinental Hotels UK Pension Plan who had accepted an offer to receive the
enhancement either as a cash lump sum or as an additional transfer value to an alternative pension plan provider. The exceptional item in 2009 comprised the lump sum
payments ($9m), the IAS 19 settlement loss arising on the pension transfers ($11m) and the costs of the arrangement ($1m). The payments and transfers were made in
January 2009.
e Relates to the gain on sale of an investment in the EMEA region.
f Represents the release of provisions of $7m (2009 $175m) which are exceptional by reason of their size or nature relating to tax matters which had been settled or in respect
of which the relevant statutory limitation period has expired, together with, in 2010, a $7m charge relating to an internal reorganisation. This charge comprises the
recognition of deferred tax assets of $24m for capital losses and other deductible amounts, offset by tax charges of $31m.
g In 2010, relates to tax refunded relating to the sale of a hotel in a prior year. In 2009, related to tax arising on disposals together with the release of provisions no longer
required in respect of hotels disposed of in prior years.
Notes to the Group financial statements 81