TUI AG The table below provides an overview of the parameters versus the end of the previous financial year, underlying the determination of the fair values per CGU. Given the impact of the COVID-19 pandemic and the expected regeneration in the upcoming planning periods the growth rate for revenues and the EBIT margin are not comparative in a meaningful way. The table lists the CGUs to which goodwill has been allocated.
Parameters for calculation of the recoverable amount at 30 June 2021
Planning Growth rate EBIT-Margin Sustainable Carrying Recoverable
period in revenues in % in % Growth WACC Level amount in ? amount in ?
years p.a.*** p.a.*** rate** in % million million
in %
Northern 2.25 8.5 2.7 0.5 11.75 3 1,720.2 2,106.7
Region
Central 2.25 12.5 3.0 0.5 11.75 3 218.0 986.1
Region
Western 2.25 3.3 4.2 0.5 11.75 3 311.5 932.7
Region
RIU* 2.25 7.7 32.2 1.0 8.20 3 2,114.9 2,852.7
Marella 2.25 21.0 12.1 1.0 8.96 3 847.5 1,062.2
Cruises*
TUI Musement 2.25 20.3 4.7 1.0 8.62 3 367.6 525.9
15.1 to 8.20 540.6 to
Other 2.25 1.7 to 5.2 15.8 1.0 to 3 633.3 657.6 to 746.1
8.94
* Those are groups of CGUs
** Growth rate of expected net cash inflows
*** Planned growth rate in revenues in % and EBIT-Margin after regeneration of the upcoming business
Parameters for calculation of the recoverable amount at 30 September 2020
Planning Growth rate Sustainable Carrying Recoverable
period in revenues in % EBIT-Margin Growth WACC Level amount in ? amount in ?
years p.a. in % p.a. rate** in % million million
in %
Northern 3.00 44.1 1.0 0.5 11.75 3 1,973.2 2,516.8
Region
Central 3.00 28.3 - 0.5 11.75 3 167.7 808.7
Region
Western 3.00 34.8 2.1 0.5 11.75 3 321.5 872.6
Region
RIU* 3.00 27.9 26.9 1.0 7.74 3 2,010.3 2,778.4
Marella 3.00 32.5 1.0 1.0 9.74 3 573.6 696.4
Cruises*
TUI Musement 3.00 40.3 - 1.8 1.0 8.39 3 352.5 453.9
11,3 to 7,74 568.9 to
Other 3.00 40,3 to 42,3 12,4 1.0 to 3 666.5 662.8 to 778.1
8,80
* Those are groups of CGUs
** Growth rate of expected net cash inflows
The goodwill impairment test conducted as at 30 June 2021 based on cash generating units did not result in the recognition of impairment losses on capitalised goodwill. Neither an increase in WACC by 100 basis points nor a reduction by 50 basis points in the growth rate after the detailed planning period would have resulted in an impairment on capitalised goodwill. The same applies to a reduction of the disounted free cash flow of 10%. 10. Property, plant and equipment
Compared to 30 September 2020 property, plant and equipment declined by ?183.6m to ?3,278.9m. A decline of ?221.8m was caused by the disposal of property, plant and equipment which is mainly attributable to aircraft (?99.1m) and advance payments for future delivery of aircraft (?99.5m) and were partly due to sale and leaseback transactions. As a result of the lease transactions the new aircraft are reported as additions to right-of-use assets (for details please refer to the section 'Right-of-use-assets'). Depreciation and amortisation of ?172.1m led to a further decrease in property, plant and equipment.
The decline was partly offset by additions of ?191.1m, mainly attributable to additions in the segment Hotels & Resorts. The construction of two new hotels and the refurbishment of hotels in Spain, Jamaica and Zanzibar resulted in additions totalling ?75.8m in the Riu Group. Furthermore, additions of property, plant and equipment of ?44.0m were generated by the acquisition of Karisma (for details please refer to section 'Acquisitions in the period under review'). Other additions of ?16.1m related to assets under construction and payments on account in the Cruises segment as well as additions of ? 12.1m from advance payments for future delivery of aircraft.
The review of the carrying amounts of property, plant and equipment performed due to the ongoing travel restrictions resulted in total impairment charges of ?31.3m, of which ?28.1m were attributable to property, plant and equipment in the segment Hotels & Resorts and related to various individual items. The impairment charges of ?255.5m (of which ?236.6m related to third quarter) incurred in the first nine months of the previous year were attributable to ships of Marella Cruises within the segment Cruises (?119.7m, of which ?101.2m incurred in the third quarter). In addition, hotel assets totalling ?96.5m in the Hotels&Resorts segment as well as an aircraft totalling ?24.5m were impaired. Further impairment losses to various property, plant and equipment in the prior-year period resulted from restructuring measures. 11. Right-of-use assets
Right-of-use assets declined by ?133.6m to ?3,094.3m compared to the end of financial year. Cumulative depreciation/ amortisation amounted to ?386.4m, while additions totalled ?385.0m, of which ?336.2m were attributable to the delivery of aircraft and aircraft spare parts. Beside the six aircraft delivered in the first half of the financial year, a further five aircraft and one engine were taken into service in the third quarter. Other additions of ?20.7m relate to Right-of-use assets for hotels.
Furthermore, there were disposals of ?39.8m, of which ?36.5m is mainly attributable to expiring contracts for aircraft leases. Modifications and reassessment of existing lease contracts reduced the Right-of-use assets by ?31.3m. The decline is mainly due to amendments in the area of hotel capacity contracts.
The review of carrying amounts led to a total impairment of ?45.9m. In the third quarter, a leased office building in All other segments was impaired by ?22.4m. Further impairment losses mainly include an amount of ?9.9m (of which ?1.8m relate to the third quarter) for travel shops in the Northern Region. In addition, several Right-of-use assets were impaired due to various individual items. In the first nine months of the previous year, the review of the carrying amounts led to an impairments of Right-of-use assets totalling ?75,0m, of which all incurred in the third quarter. This mainly related to leased hotels in the segment Hotels&Resorts (?45.7m), to leased travel shops in the Northern and Western region (?17.5m) and to ship leases in the Cruises segment (?7.9m).
On the other hand, the review of the carrying amounts led to reversal of impairment losses amounting to ?12.6m, which were mainly attributable to the segment Hotels & Resorts. In the first nine months of the previous year, there were no impairment reversals on right of use assets.
The corresponding liabilities are explained in the section 'Lease Liabilities'. 12. Trade and other receivables
During the first quarter of financial year 2021 TUI sold other receivables to a third party and thus derecognized it as all criteria for derecognition were met. The sale resulted in a loss, which is presented as a financial expense in the income statement. 13. Assets held for sale
An agreement on the sale of the joint venture RIU Hotels S.A. was concluded on 27 May 2021. The transaction was completed at 31 July 2021. Accordingly, the carrying amount of the shareholding of ?379.3m, recognised in Hotels & Resorts, was classified as held for sale. The purchase price initially amounts to ?541.4m. Due to an earn-out clause, it may increase by an additional ?127.4m, payable upon RIU Hotels S.A. delivering its operating budgets for financial years 2022 and 2023. The goal of the transaction is to decouple growth in hotels from real estate investments in the context of delivering the asset-right strategy. The transaction is expected to generate a positive result. The proceeds will be used to reduce TUI Group's debt.
In addition, an aircraft engine was reclassified to assets held for sale within the Markets & Airlines segment.
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