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OVERVIEW BUSINESS REVIEW GOVERNANCE
GROUP FINANCIAL
STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS OTHER INFORMATION
Notes to the Group Financial Statements 107
12. Goodwill
2012 2011
$m $m
Cost
At 1 January 233 233
Exchange adjustments 1 –
At 31 December 234 233
Impairment
At 1 January and 31 December (141) (141)
Net book value
At 31 December 93 92
At 1 January 92 92
Goodwill arising on business combinations that occurred before 1 January 2005 was not restated on adoption of IFRS as permitted by IFRS 1.
Impairment charges are included within impairment on the face of the Group income statement and all cumulative impairment losses
relate to the Americas managed cash-generating unit (CGU) (see below).
Goodwill has been allocated to CGUs for impairment testing as follows:
Cost Net book value
2012 2011 2012 2011
$m $m $m $m
Asia Australasia franchised and managed operations 93 92 93 92
Americas managed operations 141 141 – –
234 233 93 92
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. These calculations use pre-tax cash flow forecasts
derived from the most recent financial budgets and strategic plans approved by management covering a five-year period or, in the
absence of up-to-date strategic plans, the financial budget for the next year with an extrapolation of the cash flows for the following four
years, using growth rates based on management’s past experience and industry growth forecasts. After the five-year planning period, the
terminal value of future cash flows is calculated based on perpetual growth rates that do not exceed the average long-term growth rates
for the relevant markets. Pre-tax discount rates are used to discount the cash flows based on the Group’s weighted average cost of capital
adjusted to reflect the risks specific to the business model and territory of the CGU being tested.
Asia Australasia goodwill
At 31 December 2012, the recoverable amount of the CGU has been assessed based on the approved budget for 2013 and strategic plans
covering a five-year period, a perpetual growth rate of 3.5% (2011 3.5%) and a discount rate of 14.3% (2011 13.9%).
Impairment was not required at either 31 December 2012 or 31 December 2011 and management believe that the carrying value of the
CGU would only exceed its recoverable amount in the event of highly unlikely changes in the key assumptions.
Americas goodwill
Goodwill relating to the Americas managed operations was impaired in full in 2009. As goodwill impairment cannot be reversed, there is
no sensitivity around any assumptions that could lead to further impairment adjustments.