AB InBev Financial Results
The carrying amount of goodwill was allocated to the different cash-generating units as follows:
Million US dollar
31 December 2022
31 December 2021
United States
Rest of North America
Mexico
Colombia
Rest of Middle Americas
Brazil
Rest of South America
Europe
South Africa
33 578
33 607
1 981
2 114
12 823
12 062
12 692
15 344
23 242
22 769
3 508
3 280
1 249
1 173
2 081
2 244
9 551
10 231
Rest of Africa
China
Rest of Asia Pacific
5 131
5 287
3 119
3 387
3 505
3 717
549
582
113 010
115 796
Global Export and Holding Companies
Total carrying amount of goodwill
Goodwill, which accounted for approximately 53% of AB InBev total assets as at 31 December 2022, is tested for
impairment at the cash-generating unit level (that is one level below the operating segments). The cash-generating unit
level is the lowest level at which goodwill is monitored for internal management purposes. Except in cases where the initial
allocation of goodwill has not been concluded by the end of the initial reporting period following the business combination,
goodwill is allocated as from the acquisition date to each of AB InBev's cash-generating units that are expected to benefit
from the synergies of the combination whenever a business combination occurs.
2022 impairment testing
AB InBev completed its annual impairment test for goodwill and concluded that, based on the assumptions described
below, no impairment charge was warranted.
The company cannot predict whether an event that triggers impairment will occur, when it will occur or how it will affect the
value of the asset reported. Goodwill impairment testing relies on a number of critical judgments, estimates and
assumptions. AB InBev believes that all of its estimates are reasonable: they are consistent with the company's internal
reporting and reflect management's best estimates. However, inherent uncertainties exist, including the rate of recovery of
the countries following the COVID-19 pandemic, that management may not be able to control. If the company's current
assumptions and estimates, including projected revenues growth rates, competitive and consumer trends, weighted
average cost of capital, terminal growth rates, and other market factors, are not met, or if valuation factors outside of the
company's control change unfavorably, the estimated fair value of goodwill could be adversely affected, leading to a
potential impairment in the future.
The company performed its annual goodwill impairment test at cash-generating unit level, which is the lowest level at which
goodwill is monitored for internal management purposes.
The company's impairment testing methodology is in accordance with IAS 36 Impairment of Assets, in which fair-value-
less-cost-to-sell and value in use approaches are taken into consideration. This consists in applying a discounted cash
flow approach based on acquisition valuation models for the cash-generating units showing an invested capital to EBITDA
multiple above 9x and valuation multiples for the other cash-generating units. The discounted cash flow approach was
applied for the Colombia, Rest of Middle Americas, South Africa, Rest of Africa and Rest of Asia Pacific cash-generating
units.
Key assumptions
The key judgments, estimates and assumptions used in the discounted cash flow calculations were generally as follows:
.
Cash flows are based on AB InBev's 1-year and 10-year plan as approved by key management. The plan is
prepared per cash-generating unit and is based on external sources in respect of macro-economic assumptions,
industry, inflation and foreign exchange rates, past experience and identified initiatives in terms of market share,
revenue, variable and fixed cost, capital expenditure and working capital assumptions;
Cash flows after the first 10-year plan are extrapolated generally using expected annual long-term GDP growth
rates, based on external sources, in order to calculate the terminal value, considering sensitivities on this metric;
Projections are discounted at the unit's weighted average cost of capital (WACC), considering sensitivities on this
metric;
Cost to sell is assumed to reach 2% of the entity value based on historical precedents.
For the main cash generating units, the terminal growth rate applied generally ranged between 2% and 6%.
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