Investor Presentaiton
77
A.P. Moller-Maersk Annual Report 2020
Financials
Consolidated financial statements
Notes index
Amounts in USD million =
Note 6 Intangible assets
continued
Discount rates used in impairment tests of intangible assets and impairment losses recognised are specified as follows:
Table 6.2
Operating segment
Goodwill
Ocean
Terminals & Towage
Logistics & Services
Applied discount rate p.a.after tax
2020
2019
2020
Impairment losses
2019
7.0%
6.2% -12.7%
7.7%
5.9% 13%
7.2%
8.7%
6
29
Terminal and service concession rights
6.2% -12.7%
5.9% -13%
13
6
Terminals & Towage
Other
Terminals & Towage
Logistics & Services
Total
6.2% -12.7%
5.9% -13%
3
7.2%
8.7%
3
13
47
Table 6.3
Operating segment
Ocean
Logistics & Services
Terminal & Towage
Cash-generating unit
Ocean (Hamburg Süd acquisition)
Logistics & Services (KGH Customs Services,
Performance Team and Vandergrift acquisitions)
Multiple terminals (Grup Maritim TCB acquisition)
Other
Total
2020
2019
316
316
350
72
301
248
1
1
968
637
Table 6.2 and Table 6.3
Impairment analysis
The recoverable amount of each cash-generating unit is
determined based on the higher of its value in use or fair
value less cost to sell. The value in use is calculated us-
ing certain key assumptions for the expected future cash
flows and applied discount factor.
The cash flow projections are based on financial budgets
and business plans approved by management. In nature,
these projections are subject to judgement and estimates
that are uncertain, though based on experience and ex-
ternal sources where available. The discount rates applied
reflect the time value of money as well as the specific
risks related to the underlying cash flows, i.e. project and/
or country-specific risk premium. Further, any uncertain-
ties reflecting past performance and possible variations
in the amount or timing of the projected cash flows are
generally reflected in the discount rates.
Goodwill impairment test
The carrying amount of goodwill has been allocated to
the following operating segments and cash-generating
units based on the management structure.
The most significant goodwill amount relates to the
Logistics & Services segment, where the impairment test
is based on the estimated value in use from five-year busi-
ness plans where the volume and margin growth assump-
tions reflect current market expectations for the relevant
period. A discount rate of 7.2% (8.7%) has been applied.
The impairment test for the Ocean segment is based on
the estimated value in use from five-year business plans
and a calculated terminal value with growth equal to the
expected economic growth of 2% p.a. in both 2020 and
2019. A discount rate of 7.0 (7.7%) has been applied.
The key assumptions for Terminals & Towage's value cal-
culations are container moves, revenue and cost per move
and discount rate. The cash flow projections cover the con-
cession period and extension options where deemed likely
that they will be exercised. The growth rates assumed re-
flect current market expectations for the relevant period.View entire presentation