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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: 

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## 14 INVESTMENT IN SuBSIdIARIES 

the consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2: 

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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: 

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