kAThMANdu  annual report 2012 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 the fair value less cost to sell.  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 consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with  the accounting policy described in note 2: all subsidiary entities have a balance date of 31 July. Kathmandu pty limited and Kathmandu (u.K.) limited are incorporated in  australia and united Kingdom, respectively. all other subsidiary entities are incorporated in new Zealand. the principal activities of the subsidiaries are: Investment in subsidiaries 2012 nZ$ 2011 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 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 name of entity equity holding 2012 2011 Milford Group Holdings Limited 100% 100% Kathmandu Limited 100% 100% Kathmandu Pty Limited 100% 100% Kathmandu (U.K.) Limited 100% 100% 14 INVESTMENT IN SuBSIdIARIES 2012 2011 Terminal growth rate 2.5% 2.5% New Zealand CGU pre-tax discount rate 15.2% 15.7% Australia CGU pre-tax discount rate 14.9% 15.4% Consolidated pre-tax discount rate 15.1% 15.6% the calculations confirmed that there was no impairment  of goodwill and brand during the year (2011: 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.