KATHMANDU A NNUAL REPORT  2013 53 For the purposes of goodwill and brand impairment testing, the Group operates as two cash generating units, New Zealand and  Australia. The recoverable amount of the cash generating units has been determined based on value in use.  The discounted cash flow valuations were calculated using projected five year future cash flows, based on Board approved business  plans. Growth is expected to continue as the store rollout programme (approximately fifteen stores per year) continues and like for like  sales increase. Cash flows beyond five years have been extrapolated using the following key assumptions: The calculations confirmed that there was no impairment of goodwill and brand during the year (2012: nil). The Board believes that  any reasonably possible change in the key assumptions used in the calculations would not cause the carrying amount to exceed its  recoverable amount.  The expected continued promotion and marketing of the Kathmandu brand support the assumption that the brand has an indefinite life. The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the  accounting policy described in note 2: Name of entity Equity Holding 2013 2012 Milford Group Holdings Limited 100% 100% Kathmandu Limited 100% 100% Kathmandu Pty Limited 100% 100% Kathmandu (U.K.) Limited 100% 100% Country of Registration Principal Activity Milford Group Holdings Limited New Zealand Holding company Kathmandu Limited New Zealand Outdoor retailer Kathmandu Pty Limited Australia Outdoor retailer Kathmandu (U.K.) Limited United Kingdom Outdoor retailer Investment in subsidiaries 2013 2012 NZ$ NZ$ Milford Group Holdings Limited 321,233,808 321,233,808 Kathmandu Limited - - Kathmandu Pty Limited - - Kathmandu (U.K.) Limited - - 321,233,808 321,233,808 The principal activities of the subsidiaries are: All subsidiary entities have a balance date of 31 July. Kathmandu Pty Limited and Kathmandu (U.K.) Limited are incorporated in Australia  and the United Kingdom, respectively. All other subsidiary entities are incorporated in New Zealand. 2013 2012 Terminal growth rate 2.5% 2.5% New Zealand CGU pre-tax discount rate 15.0% 15.2% Australia CGU pre-tax discount rate 14.6% 14.9% Consolidated pre-tax discount rate 14.8% 15.1% 14 INVESTMENT IN SUBSIDIARIES