Holiday Inn 2006 Annual Report Download - page 67

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Notes to the Group financial statements
11 Held for sale and discontinued operations (continued)
Soft Drinks
During December 2005, the Group disposed of all of its interests in the Soft Drinks business with the initial public offering of Britvic plc.
2005
Net liabilities of Soft Drinks on disposal £m
Property, plant and equipment 234
Goodwill 18
Software 25
Inventories 36
Trade and other receivables 141
Cash and cash equivalents 1
Current liabilities (162)
Borrowings (341)
Employee benefits (91)
Deferred tax 8
Minority equity interest 66
Group’s share of net liabilities disposed of (65)
Consideration
Cash consideration, net of costs paid 221
Other (2)
219
Net liabilities disposed of 65
Gain on disposal of assets, net of tax 284
Net cash inflow
Cash consideration, net of costs paid 221
Cash disposed of (1)
220
Cash flows related to discontinued operations
Operating profit before interest, depreciation and amortisation 115
Investing activities (47)
Financing activities 162
2006 2005
12 Goodwill £m £m
At 1 January 118 152
Acquisition of subsidiary (note 34) 2–
Disposals –(44)
Exchange and other adjustments (11) 10
At 31 December 109 118
Goodwill arising on business combinations that occurred before 1 January 2005 was not restated on adoption of IFRS as permitted by IFRS 1.
Goodwill has been allocated to cash-generating units (CGUs) for impairment testing as follows:
2006 2005
£m £m
The Americas managed operations 72 82
Asia Pacific managed and franchised operations 37 36
109 118
The Group tests goodwill for impairment annually, or more frequently if there are any indications that an impairment may have arisen.
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations
are those regarding discount rates and growth rates. Management estimates discount rates using pre-tax rates that reflect current market
assessments of the time value of money and the risks specific to the CGUs. Growth rates are based on management expectations and
industry growth forecasts. The growth rates used to determine cash flows beyond five years do not exceed the average long-term growth
rate for the relevant markets.
IHG Notes to the Group financial statements 65