Engineering

3.6 Consolidated financial statements Notes Notes to to the the consolidated financial financial statements
Impairment of goodwill
Goodwill impairment losses are included in other operating expenses.
Based on business expectations in 2009/2010 the annual impairment
test did not indicate that goodwill might be impaired because the
recoverable amounts of all cash generating units (CGUs) exceeded the
respective carrying amounts.
In the annual impairment test in 2010/2011, a more negative
assessment of the economic situation and the connected surrounding
conditions indicated that goodwill of the CGUs of the Stainless Global
business area has to be impaired in the amount of €290 million
because the recoverable amounts of the respective CGU were less than
the respective carrying amounts. In the ThyssenKrupp Nirosta CGU
which is a producer of stainless flat products, the impairment loss
amounted to €166 million. The determination of the recoverable
amount was derived from the value in use based on a discount rate of
8.1%. Moreover, in the ThyssenKrupp Mexinox CGU which is bundling
the Mexico business of stainless flat products, an impairment loss of
€72 million had to be recognized. The determination of the recoverable
amount was derived from the value in use based on a discount rate of
9.3%. In the ThyssenKrupp Acciai Speciali Terni CGU which is also a
producer of stainless flat products, the impairment loss amounted to
€39 million. The determination of the recoverable amount was derived
from the value in use based on a discount rate of 9.9%. The remaining
impairment loss almost solely applies to the ThyssenKrupp Stainless
International CGU. Additional adjustments are disclosed in Note 03.
Impairment of other intangible assets
Impairment losses of intangible assets other than goodwill are included
in cost of sales.
In 2009/2010 the Components Technology business area impaired in
the Presta Steering and Camshafts operating units capitalized
development costs of €5 million because the recognition criteria of IAS
38 were no longer met.
Goodwill
Goodwill (excluding goodwill of equity method investments) has been
allocated to cash generating units within all business areas. The
recoverable amount of each cash generating unit is determined based
on a value in use calculation using after-tax cash flow projections
based on bottom-up prepared financial budgets approved by
ThyssenKrupp AG’s management covering a four-year period. The
budgeted last year is generally used to determine the cash flows
beyond the budgeted period. No growth rate is taken into account to
extrapolate the budgeted last year. The weighted average cost of
capital discount rate is based on a risk-free interest rate of 3.25% and
a market risk premium of 5%. Moreover for each CGU an individual
beta derived from the relevant peer group, a debt capital spread and
an individual capital structure is used. In addition CGU specific tax
rates are used. The following after-tax discount rate ranges have been
applied to the cash flow projections by business area:
%
154
After tax discount rate ranges
Year ended
Sept. 30,
2010
Year ended
Sept. 30,
2011
Steel Europe 9.4 8.1
Materials Services 8.1 – 9.2 7.0 – 9.0
Elevator Technolgy 8.7 7.8
Plant Technology 8.8 – 10.6 7.7 – 9.0
Components Technology 6.6 – 8.7 7.7 – 8.0
Marine Systems 7.1 6.3
Stainless Global 8.6 – 10.0 7.7 – 9.9
Corporate 7.5 6.6