Annual Report 2021

ANNUAL REPORT 2021 141 15. GOODWILL AND INTANGIBLE ASSETS (CONTINUED) Notes: (continued) (b) (continued) The key assumptions used for value in use calculations are as follows: Growth rate Discount rate (Note (i)) (Note (ii)) 2021 2020 2021 2020 Ports operation – Mainland China, Hong Kong and Taiwan – Pearl River Delta 2.24% - 2.36% 2.70% - 3.00% 7.43% - 12.86% 6.50% - 12.74% – Others 2.24% 2.70% 11.45% - 11.53% 11.19% - 11.97% – Brazil 3.00% 3.00% 17.45% 16.78% Notes: (i) Weighted average growth rates are used to extrapolate cash flows beyond the budgeted period which do not exceed the historical trend of the respective CGUs nor the industry growth rate. (ii) Pre-tax discount rate has been applied to the cash flow projections. The discount rates used are pre-tax and reflect specific risks relating to the relevant CGUs. In prior year, an impairment loss of goodwill allocated to ports operation in Mainland China amounted to HK$621 million has been recognised. In addition to impairment testing using the base case assumption, separate sensitivity analyses were performed. The sensitivity analysis using a higher/lower discount rate of 0.3% (2020: 0.3%) indicated that the recoverable amount of ports operation in Mainland China, Hong Kong and Taiwan, and Brazil would have been decreased/increased by approximately HK$662 million (2020: HK$706 million) and HK$290 million (2020: HK$309 million) respectively. The sensitivity analysis using a higher/lower growth rate of 0.1% (2020: 0.1%) indicated that the recoverable amount of ports operation in Mainland China, Hong Kong and Taiwan, and Brazil would have been increased/decreased by approximately HK$161 million (2020: HK$288 million) and HK$33 million (2020: HK$4 million) respectively. (c) Included in port operating rights as at 31 December 2021 is an amount of HK$4,097 million (2020: HK$4,517 million) related to the concession for operation of a terminal in the Port of Lomé in Togo for a concession period of 35 years commencing from 2011 granted by the government of Togolese Republic. The carrying amount of the concession represents the aggregate of the fair value as at the date of the business combination under which the Group acquired the concession and the fair value of the construction services carried out to-date less their accumulated amortisation. Amortisation is provided for over the period in which the Group operates the relevant terminals on a straight-line basis. Included in port operating rights as at 31 December 2021 is also an amount of HK$3,128 million (2020: HK$3,423 million) related to the concession for operation of a terminal in Brazil for an concession period of 50 years commencing from 1998 granted by the Brazilian Federal Government. The carrying amount of the concession represents the fair value as at the date of the business combination under which the Group acquired the concession less its accumulated amortisation. Amortisation is provided for over the period in which the Group operates the relevant terminals on an economic usage basis. The remaining amount of port operating rights amounting to HK$1,005 million (2020: HK$1,034 million) relates to the concession for operation of a terminal built in Colombo of Sri Lanka for a concession period of 35 years commencing from 2011 granted by the government of the Republic of Sri Lanka. The carrying amount of the concession represents the fair value as at the date of the acquisition of the relevant business by the Group less its accumulated amortisation, which is calculated using the economic usage basis. (d) Balance mainly represents trademark used in Brazil port operation having an indefinite useful live.