Holiday Inn 2009 Annual Report Download - page 79

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GROUP FINANCIAL
STATEMENTS
Notes to the Group financial statements 77
5 Exceptional items
2009 2008
Note $m $m
Continuing operations
Exceptional operating items:
Cost of sales:
Onerous management contracts a(91) –
Administrative expenses:
Holiday Inn brand relaunch b(19) (35)
Reorganisation and related costs c(43) (24)
Enhanced pension transfer d(21) –
(83) (59)
Other operating income and expenses:
Gain on sale of associate investments –13
Gain on sale of other financial assets –14
Loss on disposal of hotels (note 11)* (2) (2)
(2) 25
Depreciation and amortisation:
Reorganisation and related costs c–(2)
Impairment:
Property, plant and equipment (note 10) (28) (12)
Assets held for sale (note 11) (45) –
Goodwill (note 12) (78) (63)
Intangible assets (note 13) (32) (21)
Other financial assets (note 15) (14) –
(197) (96)
(373) (132)
Tax:
Tax on exceptional operating items 112 17
Exceptional tax credit e175 25
287 42
Discontinued operations
Gain on disposal of assets (note 11):
Gain on disposal of hotels** 2–
Tax credit 45
f65
* Relates to hotels classified as continuing operations.
** Relates to hotels classified as discontinued operations.
The above items are treated as exceptional by reason of their size or nature.
a An onerous contract provision of $65m has been recognised for the future net unavoidable costs under a performance guarantee related to certain management
contracts with one US hotel owner. In addition to the provision, a deposit of $26m has been written off as it is no longer considered recoverable under the terms
of the same management contracts.
b Relates to costs incurred in support of the worldwide relaunch of the Holiday Inn brand family that was announced on 24 October 2007.
c Primarily relates to the closure of certain corporate offices together with severance costs arising from a review of the Group’s cost base.
d Relates to the payment of enhanced pension transfers to those deferred members of the InterContinental Hotels UK Pension Plan who had accepted an offer
to receive the enhancement either as a cash lump sum or as an additional transfer value to an alternative pension plan provider. The exceptional item comprises
the lump sum payments ($9m), the IAS 19 settlement loss arising on the pension transfers ($11m) and the costs of the arrangement ($1m). The payments and
transfers were made in January 2009.
e Relates to the release of provisions which are exceptional by reason of their size or nature relating to tax matters which have been settled or in respect of which
the relevant statutory limitation period has expired (see note 7).
f Relates to tax arising on disposals together with the release of provisions no longer required in respect of hotels disposed of in prior years.