17) Goodwill and intangible assets
with an indefinite useful life


 

in €m

Goodwill from consolidation

Intangible assets with an indefinite useful life

Total

*

Rounded below EUR 1m.

Cost as of 1.1.2010

899

912

1,811

Accumulated impairment losses

–300

–300

Carrying amount 1.1.2010

599

912

1,511

 

 

 

 

Currency translation differences

6

65

71

Additions due to changes in consolidation

Additions

0*

0*

Reclassifications

Disposals due to changes in consolidation

Disposals

Reclassifications to assets held for sale

Impairment losses

Reversal of impairment losses

Carrying amount 31.12.2010

605

977

1,582

Cost as of 1.1.2011

906

977

1,883

Accumulated impairment losses

–301

–301

Carrying amount 1.1.2011

605

977

1,582

 

 

 

 

Currency translation differences

0*

18

18

Additions due to changes in consolidation

8

8

Additions

0*

0*

Reclassifications

Disposals due to changes in consolidation

Disposals

–35

–35

Reclassifications to assets held for sale

–382

–382

Impairment losses

Reversal of impairment losses

Carrying amount 31.12.2011

613

578

1,191

Cost as of 31.12.2011

914

578

1,492

Accumulated impairment losses

–301

–301

Apart from goodwill of EUR 8m for Constance Food Group, Inc. acquired by the sales contract signed on 1 November 2011, all goodwill and intangible assets with an indefinite useful life were subjected to a regular impairment test in accordance with IAS 36 in the 2011 financial year. Acquired brands and slots have an indefinite useful life due to their sustainably legal and economic significance. The tests were performed at the level of the smallest cash generating unit (CGU) on the basis of value in use. Goodwill originating from the acquisition of Air Dolomiti S.A. and the Eurowings group was tested at the level of Deutsche Lufthansa AG and its regional partners as the smallest independent cash generating unit.

The following table provides an overview of the goodwill tested and the assumptions made in the respective impairment tests:

Name of the CGU

 

Deutsche
Lufthansa AG
and regional partners

SWISS Aviation Training Ltd.

LSG Sky Chefs USA Group

LSG Sky Chefs Korea

LSG Sky Chefs
Havacilik
Hizmetleri A.S.

ZAO AeroMEAL

Various LSG companies*

Segment

Passenger Airline Group

Passenger Airline Group

Catering

Catering

Catering

Catering

Catering

*

Goodwill of less than EUR 5m in any individual instance.

Carrying amount of goodwill

EUR 249m

EUR 3m

EUR 277m

EUR 52m

EUR 6m

EUR 6m

EUR 12m

Impairment losses

Revenue growth p. a. over planning period

4.9 % to 9.1%

–2.3% to 1.0%

1.4% to 2.4%

3.0% to 4.5%

4.0% to 7.0%

0.9% to 5.0%

–6.9% to 6.0%

EBITDA margin over planning period

8.7% to 10.2%

23.4% to 26.7%

7.0% to 8.4%

28.0% to 29.5%

16.4%

11.2% to14.0%

1.4% to 30.0%

Investment ratio over planning period

7.6% to 10.2%

7.4% to 42.0%

2.4% to 5.0%

1.7%

1.5% to 2.0%

1.0% to 1.4%

0.0% to 4.4%

Duration of planning period

3 years

3 years

5 years

5 years

5 years

5 years

5 years

Revenue growth p. a. after end of planning period

4.1%

1.0%

2.0%

3.0%

4.0%

4.0%

1.0% to 4.0%

EBITDA margin after end of planning period

10.2%

26.7%

8.4%

29.5%

16.4%

14.0%

2.5% to 20.5%

Investment ratio after end of planning period

9.4%

7.4%

2.4%

1.7%

1.5%

1.0%

1.0% to 4.0%

Discount rate

7.2%

8.0%

7.7%

7.5%

7.2%

7.2%

7.2% to 8.0%

The assumptions on revenue growth used for the impairment tests are based on external sources for the planning period. In some cases reductions were made for risk to allow for special regional features and market share trends specific to the respective companies. Assuming sustained revenue growth of 4.1 per cent at the end of the planning period by Lufthansa AG and its regional partners as described in the table, the recoverable amount would exceed the carrying amount by a considerable figure. Even if the assumptions for revenue growth and/or the discount rate were to be reduced substantially, which is not likely, the recoverable amount would exceed the carrying amount.

Assuming sustained revenue growth of 2.0 per cent at the end of the planning period by the LSG Sky Chefs USA Group as described in the table, the recoverable amount would exceed the carrying amount by a considerable sum. Even if the assumptions for revenue growth and/or the discount rate were to be reduced substantially, which is not likely, the recoverable amount would exceed the carrying amount.

The EBITDA margins used are based on past experience or were developed on the basis of cost-cutting measures initiated. The investment rates are based on past experience and take account of the replacement of any means of production envisaged during the planning period.

The intangible assets with indefinite useful lives consist of slots purchased as part of company acquisitions and brand names acquired.

The following table shows the assumptions made for regular impairment testing of the smallest cash-generating unit (CGU) in each case. The assumptions made for the CGU Deutsche Lufthansa AG and regional partners are the same as those made for the acquired goodwill.

 

Name of the CGU

SWISS

AUA

 

Passenger Airline Group

Passenger Airline Group

Carrying amount for slots

EUR 118m

EUR 25m

Impairment losses

Revenue growth p. a. in planning period

3.8% to 4.4%

10.1% to 11.3%

EBITDA margin over planning period

14.7% to 15.7%

6.5% to 7.4 %

Investment ratio over planning period

4.7% to 12.1%

2.7% to 4.2%

Duration of planning period

3 years

3 years

Revenue growth p. a. after end of planning period

2.0%

4.1%

EBITDA margin after end of planning period

15.7%

7.4%

Investment ratio after end of planning period

9.0%

5.6%

Discount rate

7.7%

7.2%

Assuming sustained revenue growth by Swiss of 2.0 per cent at the end of the planning period as described in the table, the recoverable amount would be well in excess of the carrying amount. Even if the assumptions for revenue growth and/or the discount rate were to be reduced substantially, which is not likely, the recoverable amount would exceed the carrying amount.

Assuming sustained revenue growth by AUA of 4.1 per cent at the end of the planning period as described in the table, the recoverable amount would exceed the carrying amount by a considerable sum. Only if revenue declines by 1.7 per cent or the discount rate is increased to 11.5 per cent does the recoverable amount match the carrying amount.

The carrying amount of EUR 255m for the acquired slots was tested for impairment on the basis of the value in use at the level of the smallest cash generating unit (CGU). There were no impairment charges to be made in the Passenger Airline Group segment.

The regular impairment test for the brands acquired was carried out for the fair value less costs to sell or the value in use. Testing was based in particular on the revenue generated with the individual brands.

The following assumptions were used in the impairment test for the acquired brands:

 

 

 

Group company

SWISS

AUA

*

After-tax rate

Carrying amount for brand

EUR 213m

EUR 109m

Impairment losses

Revenue growth for brand p. a. in planning period

3.9% to 4.8%

13.2% to 15.2%

Duration of planning period

3 years

3 years

Revenue growth p. a. after end of planning period

1.8%

2.0%

Savings in hypothetical leasing payments before taxes (royalty rate)

0.6%

0.35%

Discount rate *

6.5%

6.5%

Assuming sustained revenue growth associated with the brand after the end of the planning period of 1.8 per cent, the recoverable amount for the SWISS brand exceeds the carrying amount by EUR 315m. Even if the assumptions for brand-related revenue growth were to be reduced substantially, which is not likely, the recoverable amount would exceed the carrying amount.

Assuming sustained revenue growth associated with the brand after the end of the planning period of 2.0 per cent, the recoverable amount for the AUA brands exceeds the carrying amount by EUR 17m. Only if revenue declines by 1.2 per cent or the discount rate is increased to 7.2 per cent does the recoverable amount match the carrying amount.

The bmi slots and the bmi brand presented in this item in the previous year are shown in the reporting year under assets held for sale.