Holiday Inn 2010 Annual Report Download - page 93

Download and view the complete annual report

Please find page 93 of the 2010 Holiday Inn annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

OVERVIEW BUSINESS REVIEW
THE BOARD,
SENIOR MANAGEMENT AND
THEIR RESPONSIBILITIES
GROUP FINANCIAL
STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS USEFUL INFORMATION
19. Trade and other payables
2010 2009
$m $m
Current
Trade payables 113 99
Other tax and social security payable 35 29
Other payables 226 278
Accruals 348 262
722 668
Non-current
Other payables 464 408
Trade payables are non-interest-bearing and are normally settled within an average of 45 days.
Other payables include $531m (2009 $470m) relating to the future redemption liability of the Group’s loyalty programme, of which $92m
(2009 $86m) is classified as current and $439m (2009 $384m) as non-current.
20. Provisions
2010 2009
$m $m
Onerous management contracts
At 1 January 65 –
Provided 3 65
Utilised (58) –
At 31 December 10 65
Analysed as:
Current 8 65
Non-current 2 –
10 65
The onerous management contracts provision relates to the unavoidable net cash outflows that are expected to be incurred under
performance guarantees associated with certain management contracts. The non-current portion of the provision is expected to be utilised
over the period to 2020.
The amount provided in 2009 was recognised as an exceptional item (note 5).
21. Financial risk management
Overview
The Group’s treasury policy is to manage financial risks that arise in
relation to underlying business needs. The activities of the treasury
function are carried out in accordance with Board approved policies
and are subject to regular audit. The treasury function does not
operate as a profit centre.
The treasury function seeks to reduce the financial risk of the
Group and manages liquidity to meet all foreseeable cash needs.
Treasury activities include money market investments, spot and
forward foreign exchange instruments, currency options, currency
swaps, interest rate swaps and options and forward rate
agreements. One of the primary objectives of the Group’s treasury
risk management policy is to mitigate the adverse impact of
movements in interest rates and foreign exchange rates.
Market risk exposure
The US dollar is the predominant currency of the Group’s revenue
and cash flows. Movements in foreign exchange rates can affect
the Group’s reported profit, net assets and interest cover. To hedge
translation exposure, wherever possible, the Group matches
the currency of its debt (either directly or via derivatives) to the
currency of its net assets, whilst maximising the amount of US
dollars borrowed to reflect the predominant trading currency.
Foreign exchange transaction exposure is managed by the forward
purchase or sale of foreign currencies or the use of currency
options. Most significant exposures of the Group are in currencies
that are freely convertible.
A general strengthening of the US dollar (specifically a five cent
fall in the sterling:US dollar rate) would increase the Group’s profit
before tax by an estimated $3.5m (2009 $1.6m) and decrease net
assets by an estimated $5.6m (2009 $4.1m). Similarly, a five cent
fall in the euro:US dollar rate would reduce the Group’s profit
before tax by an estimated $1.4m (2009 $0.7m) and decrease net
assets by an estimated $8.2m (2009 $4.5m).
Notes to the Group financial statements 91