Holiday Inn 2014 Annual Report Download - page 130
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12. Goodwill
2014
$m
2013
$m
Cost
At 1 January 221 234
Exchange adjustments (6) (13)
At 31 December 215 221
Impairment
At 1 January and 31 December (141) (141)
Net book value
At 31 December 74 80
At 1 January 80 93
Goodwill arising on business combinations that occurred before 1 January 2005 was not restated on adoption of IFRS as permitted by IFRS 1.
All cumulative impairment losses relate to the Americas managed cash-generating unit (CGU).
Goodwill has been allocated to CGUs for impairment testing as follows:
Cost Net book value
2014
$m
2013
$m
2014
$m
2013
$m
AMEA franchised and managed operations 74 80 74 80
Americas managed operations 141 141 ––
215 221 74 80
Asia, Middle East and Africa (AMEA) goodwill
The Group tests goodwill for impairment annually, or more frequently if there are any indications that an impairment may have arisen.
Therecoverable 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 using growth
rates based on management’s past experience and industry growth forecasts.
At 31 December 2014, the recoverable amount of the CGU has been assessed based on the approved budget for 2015 and strategic plans
covering a five-year period, a perpetual growth rate of 3.5% (2013 3.5%) and a discount rate of 13.7% (2013 15.5%). The perpetual
growth rates 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 businessmodel and territory
of the CGU being tested.
Impairment was not required at either 31 December 2014 or 31 December 2013 and management have determined that the carrying value
of the CGU would only exceed its recoverable amount in the event of highly unlikely changes in the key assumptions.
continuedNotes to the Group Financial Statements
IHG Annual Report and Form 20-F 2014
128