Qantas 2011 Annual Report Download - page 79
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77 ANNUAL REPORT 2011
for the year ended 30 June 2011
Notes to the Financial Statements continued
IMPAIRMENT TESTS FOR CASH GENERATING UNITS CGUs CONTAINING GOODWILL
AND OTHER INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES
The following CGUs have goodwill and other intangible assets with indenite useful lives:
Qantas Group
$M
$M
Goodwill
Qantas
Jetstar
Jetset Travelworld Group –
Airport landing slots
Qantas
Brand names and trademarks
Jetstar
Jetset Travelworld Group –
. The Qantas CGU includes Qantas, Qantas Freight and Qantas Frequent Flyer. As all of these businesses are largely dependent on the Qantas Fleet to generate their revenue,
the Qantas Fleet assets are tested at the Qantas CGU level including the cash ows and assets of these segments.
The recoverable amounts of CGUs were based on their value in use calculations. Those calculations were determined by discounting the future
cash ows generated from the continuing use of the units and were based on the following assumptions:
Assumption How determined
Cash Flows Cash ows were projected based on the Financial Plan covering a three-year period. Cash ows after
the third year or terminal year were extrapolated using a constant growth rate of . per cent per annum,
which does not exceed the long-term average growth rate for the industry.
Cash outows include capital expenditure for the purchase of aircraft and other property, plant and
equipment. These do not include capital expenditure that enhances the current performance of assets
and related cash ows have been treated consistently.
Discount Rate A pre-tax discount rate of . per cent per annum has been used in discounting the projected cash ows
of Qantas and Jetstar CGUs, reecting a market estimate of the weighted average cost of capital of the
Qantas Group (: . per cent per annum for Qantas and Jetstar and . per cent per annum for
Jetset Travelworld Group). The discount rates are based on the risk-free rate for the ten-year Australian
Government bonds adjusted for a risk premium to reect both the increased risk of investing in equities
and the risk of the specic CGU.
Market Share Qantas Group’s domestic market share is expected to remain between and per cent
(: and per cent) and international market share remains between and per cent
(: and per cent). These ranges were estimated having regard to the Qantas Group’s committed
eet plans and those of its existing competitors.
Fuel The fuel into-plane price is assumed to be between US$ and US$ per barrel (: US$ and
US$) and was set with regard to the forward fuel curve and commodity analyst expectations.
Currency The US$ : A$ exchange rate is assumed to be between $. and $. (: and cents).
Fleet Age The average eet age is forecast to be between . and . years (: between . and . years) and
is estimated having regard to the existing contractually committed long-term eet plan for the Qantas Group.
17. Intangible Assets continued