Annual Report 2023

147 ANNUAL REPORT 2023 15. GOODWILL AND INTANGIBLE ASSETS (CONTINUED) Notes: (continued) (b) (continued) The key assumptions used for value in use calculations are as follows: Terminal growth rate Discount rate (Note (i)) (Note (ii)) 2023 2022 2023 2022 Ports operation – Mainland China, Hong Kong and Taiwan – Pearl River Delta 2.20% - 2.50% 2.00% - 2.50% 8.93% - 12.23% 9.43% - 12.53% – Others 2.20% 2.00% 11.91% 11.20% - 12.08% – Brazil 3.02% 2.62% 21.99% 20.45% Notes: (i) Weighted average terminal growth rates are used to extrapolate cash flows beyond the forecasted period which do not exceed the historical trend of the respective CGUs nor the industry terminal 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 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% (2022: 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$391 million (2022: HK$565 million) and HK$197 million (2022: HK$256 million) respectively. The sensitivity analysis using a higher/lower terminal growth rate of 0.1% (2022: 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$131 million (2022: HK$135 million) and HK$5 million (2022: HK$6 million) respectively. (c) Included in port operating rights as at 31 December 2023 is an amount of HK$3,844 million (2022: HK$3,757 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 2023 is also an amount of HK$3,410 million (2022: HK$3,261 million) related to the concession for operation of a terminal in Brazil for a 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$939 million (2022: HK$971 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) Included in others as at 31 December 2023 is an amount of HK$110 million (2022: nil) relates to the concession for development and operation of a logistics centre in the Port of Colombo for a concession period of 50 years commencing from 2023 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 under which the Group acquired the concession less its accumulated amortisation, which is calculated using the economic usage basis. The remaining amount of others mainly represents trademark used in Brazil port operation having an indefinite useful life.