Holiday Inn 2006 Annual Report Download - page 68

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Notes to the Group financial statements
12 Goodwill (continued)
The Americas managed operations
The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next year and
extrapolates cash flows for the following four years based on an estimated growth rate of 4% (2005 4%). After this period, the terminal
value of future cash flows is calculated based on a perpetual growth rate of approximately 3% (2005 3%). The rate used to discount the
forecast cash flow is 10.5% (2005 10.5%).
Asia Pacific managed and franchised operations
The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next year and
extrapolates cash flows for the following four years based on an estimated growth rate of 15% (2005 15%). After this period, the terminal
value of future cash flows is calculated based on a perpetual growth rate of approximately 4% (2005 4%). The rate used to discount the
forecast cash flows is 11.0% (2005 11.0%).
With regard to the assessment of value in use, management believe that the carrying values of the CGUs would only exceed their
recoverable amounts in the event of highly unlikely changes in the key assumptions.
Management Other
Software contracts intangibles Total
13 Intangible assets £m £m £m £m
Cost
At 1 January 2005 52 – 22 74
Additions 14 82 5 101
Disposals (32) – (1) (33)
Exchange and other adjustments 4228
At 31 December 2005 38 84 28 150
Additions 10 30 13 53
Acquisition of subsidiary (note 34) 17–8
Disposals – – (2) (2)
Exchange and other adjustments (6) (4) (3) (13)
At 31 December 2006 43 117 36 196
Amortisation
At 1 January 2005 (13) – (7) (20)
Provided (9) (3) (2) (14)
On disposals 7––7
Exchange and other adjustments (2) – (1) (3)
At 31 December 2005 (17) (3) (10) (30)
Provided (9) (4) (3) (16)
Exchange and other adjustments 3–14
At 31 December 2006 (23) (7) (12) (42)
Net book value
At 31 December 2006 20 110 24 154
At 31 December 2005 21 81 18 120
At 1 January 2005 39 – 15 54
66 IHG Annual report and financial statements 2006