89 AGL Energy Limited Annual Report 2011 Amortisation expense Impairment testing for goodwill and intangibles with indefinite useful lives Amortisation expense of $21.0 million (2010: $21.4 million) is included in the line item ‘depreciation and amortisation’ in the income  statement. Goodwill and other intangible assets deemed to have indefinite lives, that are significant in comparison to the consolidated entity’s  total carrying amount of intangible assets with indefinite lives, have been allocated to cash-generating units (CGUs) for the  purpose of impairment testing as follows: The licences $301.2 million (2010: $301.2 million) to operate hydro-electric power stations within the Merchant Energy CGU have been  assessed as having indefinite lives. The factors considered in determining the useful lives of these licences are the long-term nature of the  initial licences, the expectation that the licences will be renewed, the insignificant cost of renewal, and compliance with licensing obligations. The recoverable amounts for the Retail Energy and Merchant Energy CGUs have been determined using value in use models. The key  assumptions in the calculation of value in use are customer numbers, energy procurement costs and regulatory outcomes. The estimate of regulatory outcomes is based on actual regulatory decisions for the current price reset period, which are publicly available,  together with the consolidated entity’s expectations of regulatory decisions beyond the current reset period. Customer numbers are  estimated based on historical experience in various segments, together with marketing strategies for the retention and winning of  customers. Energy procurement costs are estimated based on the actual hedge portfolio, together with an estimate of future hedging  prices and volumes beyond the period of the actual hedge portfolio. The recoverable amounts for the Retail Energy and Merchant Energy CGUs have been determined using value in use models, including an  appropriate terminal value. Cash flow forecasts are based on Board approved budgets and the most recent three-year plan extrapolated out  to 10 years using forecast CPI. The terminal value is based on final year free cash flow capitalised in perpetuity. Discount rates used are the  pre-tax weighted average cost of capital of 13.4% (2010: 13.4%). No impairment loss has been recognised for the Retail Energy or the Merchant Energy CGUs for the year ended 30 June 2011 (2010: $nil). For terms and conditions relating to loans to associates and jointly controlled entities, refer to Note 49. Total intangible assets with indefi nite Goodwill Licences lives $m $m $m Year ended 30 June 2011 Cash-generating unit Retail Energy  2,053.8 – 2,053.8 Merchant Energy  571.0 301.2 872.2 2,624.8 301.2 2,926.0 Year ended 30 June 2010 Cash-generating unit Retail Energy  2,053.8 – 2,053.8 Merchant Energy  571.0 301.2 872.2 2,624.8 301.2 2,926.0 2011 2010 $m $m Note 22 – Other financial assets (non-current) Derivative financial instruments – at fair value (Note 52) – Interest rate swap contracts – cash flow hedges  0.5 – – Energy derivatives – cash flow hedges  51.2 3.6 51.7 3.6 Available-for-sale financial assets – at fair value – Shares in listed entities  0.3 0.5 Loans to associates and jointly controlled entities – at amortised cost  112.5 102.4 164.5 106.5 Impairment testing for Retail Energy and Merchant Energy