Holiday Inn 2012 Annual Report Download - page 104
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102 IHG Annual Report and Financial Statements 2012
6. Finance costs
2012 2011
$m $m
Financial income
Interest income on deposits 2 1
Unwinding of discount on other financial assets 1 1
3 2
Financial expenses
Interest expense on borrowings 37 42
Interest rate swaps fair value transferred from equity 1 4
Finance charge payable under finance leases 19 18
57 64
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 $2m (2011 $1m) payable to the Priority Club Rewards loyalty programme relating to interest on the
accumulated balance of cash received in advance of the redemption of points awarded.
7. Tax
2012 2011
Note $m $m
Income tax
UK corporation tax at 24.5% (2011 26.5%):
Current period 22 30
Adjustments in respect of prior periods a (34) (25)
(12) 5
Foreign tax: b
Current period 170 98
Benefit of tax reliefs on which no deferred tax previously recognised (31) (16)
Adjustments in respect of prior periods a (27) (65)
112 17
Total current tax 100 22
Deferred tax:
Origination and reversal of temporary differences 8 73
Changes in tax rates (2) (2)
Adjustments to estimated recoverable deferred tax assets (105) (12)
Adjustments in respect of prior periods 10 (9)
Total deferred tax (89) 50
Total income tax charge for the year 11 72
Further analysed as tax relating to:
Profit before exceptional items 153 120
Exceptional items (note 5):
Exceptional operating items (1) (5)
Exceptional tax credit c (141) (43)
11 72
All items above relate to continuing operations.
a Includes $37m (2011 $39m) of exceptional credits included at note c below together with other releases relating to tax matters which have been settled or in respect of which
the relevant statutory limitation period has expired.
b Represents corporate income taxes on profit taxable in foreign jurisdictions, a significant proportion of which relates to the Group’s US subsidiaries.
c Represents the recognition of $104m of deferred tax assets, principally relating to pre-existing overseas tax losses, whose value has become more certain as a result of a
change in law and the resolution of prior period tax matters, together with the associated release of $37m of provisions. In 2011 related to a $30m revision of the estimated
tax impacts of an internal reorganisation completed in 2010 together with the release of $13m of provisions.
Notes to the Group Financial Statements continued