Annual Report 2019

185 ANNUAL REPORT 2019 16. GOODWILL AND INTANGIBLE ASSETS (CONTINUED) Notes: (continued) (b) (continued) Notes: (i) Weighted average growth rates are used to extrapolate cash flows beyond the five-year budget 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. (iii) The recoverable amount of this CGU as at 31 December 2019 has been determined based on its fair value less costs of disposal of a recent transaction of the same operating entity comprising the CGU as set out in note 21(b), which was higher than the carrying amount of the CGU. The fair value measurement is categorised as level 2 (see note 2.1). As at 31 December 2019 and 2018, no impairment of any of the CGUs or group of CGUs containing goodwill with indefinite useful live has been identified. Management believes that any reasonably possible change in any of the above assumptions would not cause the aggregate carrying amount of any of the above CGUs to exceed the respective aggregate recoverable amounts. (c) Included in port operating rights as at 31 December 2019 is an amount of HK$4,147 million (2018: HK$4,376 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. The relevant entity recognises both construction revenue and cost in the amount of HK$3 million (2018: HK$21 million) for the year ended 31 December 2019 by reference to the stage of completion of the construction of the terminal at the end of the reporting period and based on the proportion that contract costs incurred for work performed at the end of the reporting period relative to the estimated total contract costs. Included in port operating rights as at 31 December 2019 is also an amount of HK$4,548 million (2018: HK$5,076 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$1,064 million (2018: HK$1,096 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. Further details are set out in note 35(c). (d) Balance as at 31 December 2019 and 2018 mainly represents trademark acquired in a business combination during the year ended 31 December 2018 and is considered by the management of the Group as having an indefinite useful live because it is expected to contribute to the generation of net cash inflows to the Group indefinitely. It is tested for impairment annually and whenever there is an indication that it may have been impaired. No impairment loss of the trademark is recognised for the current year.