Holiday Inn 2014 Annual Report Download - page 153

28. Operating leases
During the year ended 31 December 2014, $72m (2013 $67m, 2012 $64m) was recognised as an expense in the Group income statement
in respect of operating leases, net of amounts borne directly by the System Fund. The expense includes contingent rents of $27m
(2013 $24m, 2012 $19m). $4m (2013 $4m, 2012 $4m) was recognised as income from sub-leases.
Future minimum lease payments under non-cancellable operating leases are as follows:
2014
$m
2013
$m
Due within one year 40 42
One to two years 34 33
Two to three years 28 29
Three to four years 27 23
Four to five years 20 23
More than five years 200 202
349 352
In addition, in certain circumstances the Group is committed to making additional lease payments that are contingent on the performance
of the hotels that are being leased.
The average remaining term of these leases, which generally contain renewal options, is approximately 17 years (2013 18 years).
Nomaterialrestrictions or guarantees exist in the Group’s lease obligations.
Total future minimum rentals expected to be received under non-cancellable sub-leases are $8m (2013 $10m).
29. Capital and other commitments
2014
$m
2013
$m
Contracts placed for expenditure not provided for in the Group Financial Statements:
Property, plant and equipment 70 70
Intangible assets 47 13
117 83
The Group has also committed to invest in a number of its associates, with an estimated outstanding commitment of $89m at 31 December
2014 (2013 $20m) based on current forecasts.
30. Contingencies and guarantees
At 31 December 2014, the Group had no contingent liabilities (2013 $nil).
In limited cases, the Group may provide performance guarantees to third-party hotel owners to secure management contracts.
At 31 December 2014, the amount provided in the Financial Statements was $2m (2013 $6m) and the maximum unprovided exposure
under such guarantees was $29m (2013 $48m).
At 31 December 2014, the Group had outstanding letters of credit of $40m (2013 $41m) mainly relating to self insurance programmes.
The Group may guarantee loans made to facilitate third-party ownership of hotels in which the Group has an equity interest.
At 31 December 2014, there were guarantees of $20m in place (2013 $20m).
From time to time, the Group is subject to legal proceedings the ultimate outcome of each being always subject to many uncertainties
inherent in litigation. In particular, the Group is currently subject to a claim by Pan American Life Insurance Company, a Competition and
Markets Authority enquiry in the UK and a class action lawsuit in the US (see ‘Legal proceedings’ on page 170). The Group has also given
warranties in respect of the disposal of certain of its former subsidiaries. It is the view of the Directors that, other than to the extent that
liabilities have been provided for in these Financial Statements, it is not possible to quantify any loss to which these proceedings or claims
under these warranties may give rise, however, as at the date of reporting, the Group does not believe that the outcome of these matters
will have a material effect on the Group’s financial position.
STRATEGIC REPORT GOVERNANCE
GROUP FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
151