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Goodwill and other intangible assets | 12 Months Ended
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Dec. 31, 2017
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Goodwill and other intangible assets | 13. Goodwill and other intangible assets
|  | Goodwill $m |  |  | Brands $m |  |  | Software $m |  |  | Management contracts $m |  |  | Other intangibles $m |  |  | Total $m |
Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At 1 January 2016 |  |  | 371 |  |  |  | 193 |  |  |  | 498 |  |  |  | 465 |  |  |  | 263 |  |  |  | 1,790 |
Additions |  |  | — |  |  |  | — |  |  |  | 127 |  |  |  | — |  |  |  | 53 |  |  |  | 180 |
Capitalised interest |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | — |  |  |  | — |  |  |  | 4 |
Disposals |  |  | — |  |  |  | — |  |  |  | (45 | ) |  |  | — |  |  |  | (7 | ) |  |  | (52 | )
Exchange and other adjustments |  |  | (1 | ) |  |  | — |  |  |  | (1 | ) |  |  | (21 | ) |  |  | (13 | ) |  |  | (36 | )
At 31 December 2016 |  |  | 370 |  |  |  | 193 |  |  |  | 583 |  |  |  | 444 |  |  |  | 296 |  |  |  | 1,886 |
Additions |  |  | — |  |  |  | — |  |  |  | 168 |  |  |  | — |  |  |  | 73 |  |  |  | 241 |
Capitalised interest |  |  | — |  |  |  | — |  |  |  | 6 |  |  |  | — |  |  |  | — |  |  |  | 6 |
Disposals |  |  | — |  |  |  | — |  |  |  | (14 | ) |  |  | — |  |  |  | (3 | ) |  |  | (17 | )
Exchange and other adjustments |  |  | 7 |  |  |  | — |  |  |  | 2 |  |  |  | 22 |  |  |  | 10 |  |  |  | 41 |
At 31 December 2017 |  |  | 377 |  |  |  | 193 |  |  |  | 745 |  |  |  | 466 |  |  |  | 376 |  |  |  | 2,157 |
Amortisation and impairment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At 1 January 2016 |  |  | (138 | ) |  |  | — |  |  |  | (202 | ) |  |  | (139 | ) |  |  | (85 | ) |  |  | (564 | )
Provided |  |  | — |  |  |  | — |  |  |  | (41 | ) |  |  | (11 | ) |  |  | (14 | ) |  |  | (66 | )
System Fund expense |  |  | — |  |  |  | — |  |  |  | (26 | ) |  |  | — |  |  |  | — |  |  |  | (26 | )
Disposals |  |  | — |  |  |  | — |  |  |  | 45 |  |  |  | — |  |  |  | 3 |  |  |  | 48 |
Exchange and other adjustments |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 9 |  |  |  | 4 |  |  |  | 14 |
At 31 December 2016 |  |  | (138 | ) |  |  | — |  |  |  | (223 | ) |  |  | (141 | ) |  |  | (92 | ) |  |  | (594 | )
Provided |  |  | — |  |  |  | — |  |  |  | (40 | ) |  |  | (10 | ) |  |  | (18 | ) |  |  | (68 | )
System Fund expense |  |  | — |  |  |  | — |  |  |  | (30 | ) |  |  | — |  |  |  | — |  |  |  | (30 | )
Disposals |  |  | — |  |  |  | — |  |  |  | 14 |  |  |  | — |  |  |  | 2 |  |  |  | 16 |
Exchange and other adjustments |  |  | (2 | ) |  |  | — |  |  |  | (2 | ) |  |  | (8 | ) |  |  | (2 | ) |  |  | (14 | )
At 31 December 2017 |  |  | (140 | ) |  |  | — |  |  |  | (281 | ) |  |  | (159 | ) |  |  | (110 | ) |  |  | (690 | )
Net book value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At 31 December 2017 |  |  | 237 |  |  |  | 193 |  |  |  | 464 |  |  |  | 307 |  |  |  | 266 |  |  |  | 1,467 |
At 31 December 2016 |  |  | 232 |  |  |  | 193 |  |  |  | 360 |  |  |  | 303 |  |  |  | 204 |  |  |  | 1,292 |
At 1 January 2016 |  |  | 233 |  |  |  | 193 |  |  |  | 296 |  |  |  | 326 |  |  |  | 178 |  |  |  | 1,226 |
Goodwill and brands During 2015, the Group acquired Kimpton (see note 10) resulting in the recognition of goodwill of $167m and brands of $193m, together with management contracts of $71m. The Kimpton brands are considered to have an indefinite life given their strong brand awareness and reputation in the upscale boutique hotel sector, and management’s commitment to continued investment in their growth. The brands are protected by trademarks and there are not believed to be any legal, regulatory or contractual provisions that limit the useful lives of the brands. In the hotel industry there are a number of brands that have existed for many years and IHG has brands that are over 60 years old. The Group tests goodwill and indefinite life intangible assets for impairment annually, or more frequently if there are any indicators that an impairment may have arisen. The year-end carrying value of goodwill and indefinite life brands have been allocated to cash-generating units (CGUs) for impairment testing purposes as follows:
|  | 2017 |  |  | 2016 |
|  | Goodwill $m |  |  | Brands $m |  |  | Goodwill $m |  |  | Brands $m |
CGU |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Americas Managed |  |  | 63 |  |  |  | 193 |  |  |  | 63 |  |  |  | 193 |
Americas Franchised |  |  | 37 |  |  |  | — |  |  |  | 37 |  |  |  | — |
Europe Managed |  |  | 21 |  |  |  | — |  |  |  | 21 |  |  |  | — |
Europe Franchised |  |  | 10 |  |  |  | — |  |  |  | 10 |  |  |  | — |
AMEA Managed and Franchised |  |  | 106 |  |  |  | — |  |  |  | 101 |  |  |  | — |
|  |  | 237 |  |  |  | 193 |  |  |  | 232 |  |  |  | 193 |
The recoverable amounts of the CGUs are determined from value in use calculations. These calculations include a three-year period using pre-tax cash flow forecasts derived from the most recent financial budgets approved by management, incorporating growth rates based on management’s past experience and industry growth forecasts. The key assumptions that underpin the financial budgets are RevPAR growth and net System size growth. Cash flows beyond the three-year period are extrapolated using terminal growth rates that do not exceed the average long-term growth rates for the relevant markets. A 10% contingency factor is applied to reduce all cash flow projections before being discounted using pre-tax rates that are 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. The terminal growth rates and discount rates used, which are considered to be key assumptions, are as follows:
|  | Terminal growth rate |  |  | Discount rate |
|  | 2017 % |  |  | 2016 % |  |  | 2017 % |  |  | 2016 % |
Americas Managed |  |  | 2.0 |  |  |  | 2.0 |  |  |  | 10.4 |  |  |  | 9.8 |
Americas Franchised |  |  | 2.0 |  |  |  | 2.0 |  |  |  | 9.4 |  |  |  | 8.8 |
Europe Managed |  |  | 2.0 |  |  |  | 2.0 |  |  |  | 10.8 |  |  |  | 9.3 |
Europe Franchised |  |  | 2.0 |  |  |  | 2.0 |  |  |  | 9.8 |  |  |  | 8.4 |
AMEA Managed and Franchised |  |  | 3.5 |  |  |  | 3.5 |  |  |  | 14.1 |  |  |  | 13.0 |
Impairment was not required at either 31 December 2017 or 31 December 2016. Given the contingency factor applied to the cash flow projections and the significant amounts by which the recoverable amounts of the CGUs exceed their carrying amounts, management have determined that impairment charges would not arise from reasonably possible changes in the key assumptions. Software Software includes $234m relating to the development of the next-generation Guest Reservation System with Amadeus. The asset was not amortised during the year as the roll-out to hotels is expected to commence in 2018. Substantially all software additions are internally developed. Management contracts In addition to the management contracts acquired with the Kimpton acquisition in 2015 (see note 10), management contracts relate to contract values recognised as part of the proceeds for hotels sold. At 31 December 2017, the net book value and remaining amortisation period of the principal management contracts were as follows:
|  | 2017 |  |  | 2016 |
|  | Net book value $m |  |  | Remaining amortisation period Years |  |  | Net book value $m |  |  | Remaining amortisation period Years |
Hotel |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
InterContinental Hong Kong |  |  | 61 |  |  |  | 35 |  |  |  | 62 |  |  |  | 36 |
InterContinental New York Barclay |  |  | 37 |  |  |  | 46 |  |  |  | 38 |  |  |  | 47 |
InterContinental London Park Lane |  |  | 31 |  |  |  | 45 |  |  |  | 29 |  |  |  | 46 |
InterContinental Paris – Le Grand |  |  | 34 |  |  |  | 47 |  |  |  | 31 |  |  |  | 48 |
The weighted average remaining amortisation period for all management contracts is 30 years (2016: 31 years).

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