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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
3.6 Consolidated financial statements Notes to the consolidated financial statements The values in use for the CGUs are determined based on both historical data and expected forecast market performance. The values assigned to the key assumptions are generally consistent with external information sources. Significant goodwill CGU (Business Area) Steel Europe (Steel Europe) Americas (Elevator Technology) Uhde (Plant Technology) Marine Systems (Marine Systems) Carrying amount of goodwill allocated to CGU (million €) 314 832 236 1,040 Proportion of total goodwill (in %) 9% 25% 7% 31% Consolidated financial statements 154 | 155 31 CGUs were identified in the ThyssenKrupp Group, of which 25 report goodwill. Total goodwill, e.g. including goodwill of disposal groups and discontinued operations, amounts to €3,378 million as of September 30, 2011. 72% of this goodwill relates to the CGUs Steel Europe, Americas, Uhde and Marine Systems, as shown in the following table: Description of key assumptions of budgeting Procedure used to determine key assumptions - Selling prices - Procurement prices - Business cycles - Procurement prices - Exchange rates and interest rates - Market growth rates - Business cycles - Market growth rates Internal estimates of sales and purchasing departments concerned and consideration of economic assumptions set by ThyssenKrupp AG and external market studies Consideration of economic assumptions set by ThyssenKrupp AG and external market studies Consideration of economic assumptions set by ThyssenKrupp AG and external market studies as well as deduction of future demand and propensity to invest from the current development of end-product prices Naval shipbuilding: Consideration of long-term budget plans of potential customers and if appropriate concrete negotiations with customers, tightened competitive situation and at the same time decreased budgets of the customer countries The annual impairment test resulted in an impairment in the CGUs of the Stainless Global business area because the recoverable amount was less than the respective carrying amount of the CGU. The change in the carrying amount of goodwill (excluding goodwill of investments accounted for using the equity method) is as follows: million € Steel Europe Steel Americas Materials Services Elevator Technology Plant Technology Components Technology Marine Systems Stainless Global Corporate Total* Balance as of Sept. 30, 2009 313 0 383 1,196 297 224 1,043 331 15 3,802 Currency differences 1 0 21 82 8 14 1 6 0 133 Acquisitions/(divestitures) 0 0 (15) 5 5 0 0 0 0 (5) Additions Reclassification due to the presentation 0 0 0 1 2 0 0 0 0 3 as assets held for sale 0 0 0 0 0 0 (120) 0 0 (120) Impairment Balance as of 0 0 (2) (3) 0 0 0 0 0 (5) Sept. 30, 2010 314 0 387 1,281 312 238 924 337 15 3,808 Currency differences (1) 0 (4) 0 (2) 4 (1) (2) 0 (6) Acquisitions/(divestitures) 0 0 5 22 0 0 (1) 0 0 26 Additions Reclassification due to the presentation as 0 0 0 9 0 0 0 0 0 9 assets held for sale/ disposal 0 0 (64) 0 0 0 (60) (45) 0 (169) Impairment Balance as of 0 0 0 0 0 0 0 (290) 0 (290) Sept. 30, 2011 313 0 324 1,312 310 242 862 0 15 3,378 * excluding goodwill of investments accounted for using the equity method
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Annual Report 2010/2011 At the cent
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Our mission statement We are Thysse
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Our capabilities Material We combin
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Making tomorrow possible Our engine
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Letter to shareholders Dr.-Ing. Hei
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