Holiday Inn 2014 Annual Report Download - page 109

General information
This document constitutes the Annual Report and Financial
Statements in accordance with UK Listing Rules requirements
and the Annual Report on Form 20-F in accordance with the US
Securities Exchange Act of 1934. Prior to 2013 the Group issued
separate documents.
The Consolidated Financial Statements of InterContinental Hotels
Group PLC (the Group or IHG) for the year ended 31 December
2014 were authorised for issue in accordance with a resolution
of the Directors on 16 February 2015. InterContinental Hotels
Group PLC (the Company) is incorporated and domiciled in
Great Britain and registered in England and Wales.
Changes in accounting policies
With effect from 1 January 2014, the Group has adopted ‘Offsetting
Financial Assets and Financial Liabilities’ (Amendments to IAS 32).
The amendments clarify that to offset financial assets and financial
liabilities, the Group’s right of offset must be legally enforceable
in the normal course of business, in the event of default, and in
the event of insolvency or bankruptcy of the Group and all of the
counterparties. Following a detailed review of the Group’s cash
pooling arrangements which have previously been presented net
within cash and cash equivalents (see note 17), management have
determined that the right of offset is not enforceable in all of the
above circumstances. As a result, the overdrafts within the cash
pools are now presented as current loans and other borrowings.
The amendments to IAS 32 are applicable retrospectively, requiring
the restatement of prior year comparatives and the presentation
of a third statement of financial position as at 31 December 2012
as required by IAS 1 ‘Presentation of Financial Statements’.
The adoption of the amendments to IAS 32 increases cash and
cash equivalents and current loans and other borrowings by $107m
in 2014 (2013 $114m, 2012 $192m) but has no impact on the net
financial position of the Group nor the reporting of net debt. Cash
and cash equivalents presented in the Group statement of cash
flows continue to be presented net of overdrafts as permitted by
IAS 7 ‘Statement of Cash Flows’.
In addition, with effect from 1 January 2014, the Group has adopted
Amendment to IAS 36 ‘Impairment of Assets – Recoverable
Amount Disclosures for Non-Financial Assets’, Amendment to IAS
39 ‘Novation of Derivatives and Continuation of Hedge Accounting’
and IFRIC 21 ‘Levies’. The adoption of these amendments to
standards and interpretations has had no material impact on the
Group’s financial performance or position and there has been no
requirement to restate prior year comparatives.
Summary of significant accounting policies
Basis of preparation
The Consolidated Financial Statements of IHG have been prepared
on a going concern basis and under the historical cost convention,
except for available-for-sale equity securities and derivatives
which are measured at fair value. The Consolidated Financial
Statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as issued by the IASB and
in accordance with IFRS asadopted by the European Union (EU)
and as applied in accordance with the provisions of the Companies
Act 2006. IFRS as adopted by the EU differs in certain respects
from IFRS as issued by the IASB. However, the differences have
no impact on the Consolidated Financial Statements for the
years presented.
Presentational currency
The Consolidated Financial Statements are presented in millions
ofUS dollars following a management decision to change the
reporting currency from sterling during 2008. The change was
made to reflect the profile of the Group’s revenue and operating
profit which are primarily generated in US dollars or US dollar-
linked currencies.
The currency translation reserve was set to nil at 1 January 2004
ontransition to IFRS and this reserve is presented on the basis
that the Group has reported in US dollars since this date. Equity
share capital, the capital redemption reserve and shares held by
employee share trusts are translated into US dollars at the rates
of exchange on the last day of the period; the resultant exchange
differences are recorded in other reserves.
The functional currency of the parent company remains sterling
since this is a non-trading holding company located in the United
Kingdom that has sterling denominated share capital and whose
primary activity is the payment and receipt of sterling dividends
and of interest on sterling denominated external borrowings and
inter-company balances.
Basis of consolidation
The Consolidated Financial Statements comprise the Financial
Statements of the parent company and entities controlled by
the Group. Control exists when the Group has:
• power over an investee (i.e. existing rights that give it the current
ability to direct the relevant activities of the investee);
• exposure, or rights, to variable returns from its involvement
with the investee; and
• the ability to use its power over the investee to affect its returns.
All intra-group balances and transactions are eliminated
onconsolidation.
The assets, liabilities and results of those businesses acquired
or disposed of are consolidated for the period during which they
were under the Group’s control.
The Group operates a deferred compensation plan in the US
which allows certain employees to make additional provision for
retirement, through the deferral of salary with matching company
contributions. Employees can draw down on the plan in certain
limited circumstances during employment. The assets of the plan
are held in a company-owned trust which is not consolidated as
the relevant activity of the trust, being the investment of the funds
in the trust, is directed by the participating employees of the plan
and the company has no exposure to the gains and losses resulting
from those investment decisions. The assets of the trust are held
solely for the benefit of the participating employees and to pay plan
expenses, other than in the case of a company insolvency in which
case they can be claimed by the general creditors of the company.
At 31 December 2014, the trust had assets with a fair value of
$148m (2013 $135m).
STRATEGIC REPORT GOVERNANCE
GROUP FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
107
Accounting policies