Singapore Airlines 2015 Annual Report Download - page 163
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22 Intangible Assets (in $ million) (continued)
Impairment testing of deferred engine development costs
This relates to the Group’s share of engine development payments made in connection with its participation in aircra
engine development projects with other companies. As the intangible asset is not yet available for use, an impairment test
has been performed.
The recoverable amount of the CGU (the aircra engine development project) has been determined based on value-in-use
calculations using cash flow projections from business plan approved by the Management for the next 47 years (2014: 48 years).
The pre-tax discount rate applied to cash flow projections is 7% (2014: 8%).
The calculation of value-in-use for the CGU is most sensitive to the following assumptions:
Pre-tax discount rates – Discount rates represent the current market assessment of the risks specific to the cash-generating
unit, regarding the time value of money and individual risks of the underlying assets which have not been incorporated in the
cash flow estimates.
Number and timing of engine sales – Number and timing of engine sales represent the projected number of aircra engines
expected to be sold each year upon completion of the engine development. Projected engine sale is based on current aircra
orders and expectation of market development.
The recoverable amount is still expected to exceed its carrying amount if the discount rate or growth rate increases by 1.0% or
if engine sales are delayed by 1 year.
Impairment testing of landing slots
The carrying value of the landing slots classified under “others” is assessed for impairment annually as the landing slots have
indefinite useful life. The recoverable amount of the landing slots has been determined based on value-in-use calculations using
eight-year cash flow projection approved by Management. The pre-tax discount rate applied to cash flow projections is 7%
(2014: 6%) and the forecasted long-term growth rate used to extrapolate the cash flow projections beyond the five-year period
is 2.5% (2014: 2.5%). A reasonable change to the assumptions used by Management to determine the impairment required,
particularly the discount rate and long-term growth rate, would not significantly aect the results.
Singapore Airlines | Annual Report FY2014/15 |161