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NORDEN
Interim Financial Report
Third Quarter 2023
15
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
sition involves the optional concentration test, which is met if substantially all of
the fair value of the gross assets acquired is concentrated in a single identifiable
asset or group of similar identifiable assets. If met, the transaction is accounted
for as an asset acquisition. If not met, an assessment is made if the acquired
company comprises a business, and should be accounted for as a business com-
bination.
Other intangible assets
Thorco
Projects
Amounts in USD million
Customer relationships, contracts and similar intangible assets with a limited
useful life acquired from third parties, either separately or as part of the business
combination, are capitalised and amortised over 5 years.
Customer contracts and relationships
Prepaid hire, asset
21.9
2.0
Acquisition of Thorco Projects
Prepaid hire, liability
-0.8
-1.5
21.6
On 26 June 2023, NORDEN acquired the shipping business of Thorco Projects,
incorporated in Denmark. Thorco Projects offers transport solutions across
multiple cargo segments such as break bulk, steels and wind energy.
Other liabilities
The application of the acquisition method involves the use of significant esti-
mates, as the identifiable net assets of the acquiree are recognised at their fair
value for which observable market prices are typically not available. This is par-
ticularly relevant for intangible assets, which require use of valuation techniques
typically based on estimates of present value of future uncertain cash flows.
Total identifiable net assets
Goodwill
Total
35.3
56.9
The considerations paid equals USD 56.9 million, on a debt and cash-free basis
and has been paid in cash from readily available sources. Final settlement of
certain working capital-related items may alter the purchase price slightly.
Goodwill
Goodwill is initially recognised in the balance sheet as the difference between
the fair value of net assets acquired and the consideration transferred.
The objective of the acquisition is to further grow its customer offering, as
Thorco Projects operates within specialist general cargo segments such as
break bulk, steel and wind energy-related cargoes, where multiple cargo
parcels from different customers typically are combined into single shipments
on Multipurpose and Handysize vessels. The acquisition is in alignment with
NORDEN’s strategy for 2023-2025 to explore market opportunities for large
deals.
The fair value of the acquired identifiable net assets of USD 21.6 million
(including customer relationships) is provisional pending final valuation for those
assets.
Subsequently, goodwill is measured at this value less accumulated impairment
losses. Goodwill is not amortised.
The revenue included in the consolidated income statement from 26 June 2023
to 30 June 2023 contributed by the acquired business is USD 2.4 million. Over
the same period it also contributed a profit after tax of USD 0.3 million.
The carrying amount of goodwill is allocated to each of NORDEN’s cash-
generating units (or groups of cash-generating units) expected to benefit from
the synergies of the combination.
The goodwill of USD 35.3 million arising from the acquisition can be attributed
to the synergies expected to be derived from the combination and the value of
the workforce of Thorco Projects. Goodwill has been provisionally allocated to
the Dry Cargo cash-generating unit at 26 June 2023.
Had the transaction closed on 1 January 2023, the acquired business would
have contributed with revenues of USD 111.8 million and a profit after tax of
USD 9.2 million, reflecting the contract backlog built by Thorco Projects during
the stronger market in 2022.
The carrying amount of goodwill is tested at least annually for impairment,
together with the other non-current assets of the operating segment of which
goodwill has been allocated. If the recoverable amount of the cash-generating
unit is less than the carrying amount of the unit, the impairment loss is allocated
first to reduce the carrying amount of any goodwill allocated to the unit and then
to the other assets of the unit pro-rata on the basis of the carrying amount of
each asset in the unit.
Acquisition-related costs amounting to USD 0.6 million have been recognised as
an expense in the consolidated income statement as part of administration costs.
The revenue, costs, and profits from the new business are allocated to the
Freight Services & Trading segment.
The following table summarises the recognised amounts of identifiable assets
acquired and liabilities assumed.
Valuation technique
Income-based method: Estimate of future economic benefits derived from the
customer by identifying, separating and qualifying cash flows attributable to the
customers and capitalising these cash flows.
Impairment losses on goodwill are recognised in the income statement.
Impairment losses on goodwill are not reversed.
