Airbus 2015 Annual Report Download - page 217

AIRBUS GROUP FINANCIAL STATEMENTS 2015 l 35 l
Notes to the IFRSConsolidatedFinancialStatements
2.
2.5 Operational Assets andLiabilities
Impairment Tests
The Group assesses at each end of the reporting period whether
there is an indication that a non-financial asset or a Cash
Generating Unit (“CGU”) to which the asset belongs may be
impaired. In addition, intangible assets with an indefinite useful
life, intangible assets not yet available for use and goodwill are
tested for impairment in the fourth quarter of each financial year
irrespective of whether there is any indication for impairment.
An impairment loss is recognised in the amount by which the
asset’s carrying amount exceeds its recoverable amount. For
the purpose of impairment testing any goodwill is allocated to the
CGU or group of CGUs in a way that reflects the way goodwill
is monitored for internal management purposes.
The discounted cash flow method is used to determine the
recoverable amount of a CGU or the group of CGUs to which
goodwill is allocated. The discounted cash flow method
is particularly sensitive to the selected discount rates and
estimates of future cash flows by management. Discount rates
are based on the weighted average cost of capital (“WACC”)
for the groups of cash-generating units. The discount rates
are calculated based on a risk-free rate of interest and a
market risk premium. In addition, the discount rates reflect the
current market assessment of the risks specific to each group
of cash-generating units by taking into account specific peer
group information on beta factors, leverage and cost of debt.
Consequently, slight changes to these elements can materially
affect the resulting valuation and therefore the amount of a
potential impairment charge.
These estimates are influenced by several assumptions
including growth assumptions of CGUs, availability and
composition of future defence and institutional budgets, foreign
exchange fluctuations or implications arising from the volatility
of capital markets. Cash flow projections take into account past
experience and represent management’s best estimate about
future developments.
As of 31December 2015 and 2014, goodwill was allocated to CGUs or group of CGUs, which is summarised in the following
schedule:
(In € million) Airbus Airbus
Helicopters
Airbus
Defence and
Space Others/ HQ Consolidated
Goodwill as of 31December 2015 6,759 299 2,835 14 9,907
Goodwill as of 31December 2014 6,768 310 2,887 14 9,979
The goodwill mainly relates to the creation of the Group in 2000 and the Airbus Combination in 2001.
General Assumptions Applied in the Planning
Process
The basis for determining the recoverable amount is the value in
use of the CGUs. Generally, cash flow projections used for the
Group’s impairment testing are based on operative planning.
The operative planning, which covers a planning horizon of five
years, used for the impairment test, is based on the following
key assumptions which are relevant for all CGUs:
 increase of expected future labour expenses of 2% (in 2014:
2%);
 future interest rates projected per geographical market, for
the European Monetary Union, the UK and the US;
 future exchange rates of 1.25US$/€ (in 2014: 1.35US$/€) to
convert in euro the portion of future USdollar which are not
hedged;
 perpetuity growth rate of terminal values of 1% (in 2014: 1%).
The Group follows an active policy of foreign exchange risk
hedging. As of 31December 2015, the total hedge portfolio with
maturities up to 2023 amounts to US$ 102billion (US$ 88billion
as of 31December 2014) and covers a major portion of the
foreign exchange exposure expected over the period of the
operative planning (2016 to 2020). The average US$/€ hedge rate
of the US$/€ hedge portfolio until 2023 amounts to 1.28US$/€
(previous year: 1.33US$/€) and for the US$/£ hedge portfolio
until 2021 amounts to 1.58US$/£ (previous year: 1.59US$/£).
For the determination of the operative planning in the CGUs,
management assumed future exchange rates of 1.25US$/€
from 2016 onwards to convert ineuro the portion of future
USdollar which are not hedged.
General economic data derived from external macroeconomic
and financial studies has been used to derive the general key
assumptions.
In addition to these general planning assumptions, the following
additional CGU specific assumptions, which represent
management’s current best assessment as of the date of these
Consolidated Financial Statements, have been applied in the
individual CGUs.
Airbus
 The planning takes into account the decision to ramp-up
progressively A320 programme deliveries to 60a/c per month.
Long Range deliveries increase progressively throughout
the planning period from 64a/c in 2016 to 92a/c in 2019
incorporating the introduction of A330neo deliveries in 2017.
Furthermore A350XWB delivery rates increase significantly
throughout the plan. For A380, management believes that
the programme will remain stable in the foreseeable future.
Financial Statements 2015
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