Holiday Inn 2012 Annual Report Download - page 130

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128 IHG Annual Report and Financial Statements 2012
33. System Fund
The Group operates a System Fund (the Fund) to collect and administer assessments and contributions from hotel owners for specific use
in marketing, the Priority Club Rewards loyalty programme and the global reservation system. The Fund and loyalty programme are
accounted for in accordance with the accounting policies set out on page 94 of the Financial Statements.
The following information is relevant to the operation of the Fund:
2012 2011
$m $m
Income:*
Assessment fees and contributions received from hotels 1,106 1,025
Proceeds from sale of Priority Club Rewards points 144 128
Key elements of expenditure:*
Marketing 250 203
Priority Club 250 232
Payroll costs 221 182
Net surplus for the year* 12 19
Interest payable to the Fund 2 1
* Not included in the Group income statement in accordance with the Group’s accounting policies.
The payroll costs above relate to 4,431 (2011 3,885) employees whose costs are borne by the Fund.
The following liabilities relating to the Fund are included in the Group statement of financial position:
2012 2011
$m $m
Cumulative short-term net surplus 51 39
Loyalty programme liability 623 578
674 617
The net change in the loyalty programme liability and Fund surplus contributed an inflow of $57m (2011 $66m) to the Group’s cash flow
from operations.
34. Events after the reporting period
On 22 January 2013, the Group announced that it will receive $31m in liquidated damages under an agreement with a hotel owner that will
result in eight hotels leaving the IHG System on 1 March 2013. The payment is expected at the end of February 2013.
35. Principal operating subsidiary undertakings
InterContinental Hotels Group PLC was the beneficial owner of all of the equity share capital, either itself or through subsidiary
undertakings, of the following companies during the year:
Six Continents Limiteda
Hotel Inter-Continental London Limiteda
IHG Hotels Limiteda
Six Continents Hotels, Inc.b
Inter-Continental Hotels Corporationb
111 East 48th Street Holdings, LLCb
InterContinental Hotels Group Resources, Inc.b
InterContinental Hong Kong Limitedc
Société Nouvelle du Grand Hotel SAd
The companies listed above include those which principally affect the amount of profit and assets of the Group.
a Incorporated in Great Britain and registered in England and Wales.
b Incorporated in the US.
c Incorporated in Hong Kong.
d Incorporated in France.
Notes to the Group Financial Statements continued