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68 IHG Annual Report and Financial Statements 2007
Notes to the Group financial statements continued
11 HELD FOR SALE AND DISCONTINUED OPERATIONS (CONTINUED)
2007 2006
£m £m
Results of discontinued operations
Revenue 40 174
Cost of sales (30) (134)
10 40
Depreciation and amortisation (2) (9)
Operating profit 831
Tax (3) (12)
Profit after tax 519
Gain on disposal of assets, net of tax (note 5) 16 117
Profit for the year from discontinued operations 21 136
2007 2006
pence pence
per share per share
Earnings per share from discontinued operations
Basic 6.6 35.0
Diluted 6.4 34.1
2007 2006
£m £m
Cash flows attributable to discontinued operations
Operating profit before interest, depreciation and amortisation 10 40
Investing activities (1) (9)
Financing activities –(25)
The effect of discontinued operations on segmental results is shown in note 2.
12 GOODWILL
2007 2006
£m £m
At 1 January 109 118
Acquisition of subsidiary (note 34) –2
Exchange and other adjustments 1(11)
At 31 December 110 109
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:
2007 2006
£m £m
Americas managed operations 70 72
Asia Pacific managed and franchised operations 40 37
110 109
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.