Holiday Inn 2015 Annual Report Download - page 141

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32. System Fund
The Group operates a System Fund (the Fund) to collect and administer assessments and contributions from hotel owners (other than for
Kimpton and InterContinental hotels) for specific use in marketing, the IHG Rewards Club loyalty programme and the Guest Reservation System.
The Fund and loyalty programme are accounted for in accordance with the accounting policies set out on page 98 of the Financial Statements.
Following the announcement on 14 April 2015 of the introduction of an expiration policy for points earned under the loyalty programme, the Group
released $156m from the programme’s future redemption liability. The amount released was based on the advice of an external actuary who
used statistical models to estimate the impact of the programme change on members’ behaviour. The liability release resulted in a
corresponding increase in the System Fund surplus which is also recorded in the Group statement of financial position.
The following information is relevant to the operation of the Fund:
2015
$m
2014
$m
2013
$m
Incomea:
Assessment fees and contributions received from hotels 1,351 1,271 1,154
Proceeds from sale of IHG Rewards Club points 222 196 153
Key elements of expenditurea:
Marketing 308 267 245
IHG Rewards Club 345 296 219
Payroll costs 295 267 239
Net surplus/(deficit) for the yeara118 (18) 35
Interest payable to the Fund 222
a Not included in the Group income statement in accordance with the Group’s accounting policies.
The payroll costs above relate to 5,416 (2014: 4,975, 2013: 4,615) employees whose costs are borne by the Fund.
The following liabilities relating to the Fund are included in the Group statement of financial position:
2015
$m
2014
$m
2013
$m
System Fund surplus 186 68 86
Loyalty programme future redemption liability 649 725 649
835 793 735
The net change in the loyalty programme liability and Fund surplus contributed an inflow of $42m (2014: $58m, 2013: $61m) to the Group’s cash
flow from operations.
STRATEGIC REPORT GOVERNANCE GROUP FINANCIAL STATEMENTS ADDITIONAL INFORMATIONPARENT COMPANY FINANCIAL STATEMENTS
139IHG Annual Report and Form 20-F 2015