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## Cardno Limited and its Controlled Entities for the year ended 30 June 2010 

14. INTANGIBLE ASSETS CONTINUED 

The recoverable amount of each cash-generating unit above is determined based on value-in-use calculations. Value-in-use is calculated based on the present value of cash flow projections over a 5 year period including a terminal value at the end of year five. The cash flows are discounted using a pre-tax discount rate of 11.7% (2009: 12.8%) based on an estimate of the Group’s weighted average cost of capital. This is a blended rate based on Cardno’s debt to equity profile. Sensitivity analysis at higher rates shows no impairment. 

The value-in-use calculations are based on budget forecasts for each cash generating unit for the 2010 year and longer term year-on-year growth rates as assessed by operational management of the businesses. The growth rate is calculated as the average growth rate over the forecast period based upon 2010 baseline performance. These forecasts are based on underlying economic conditions and historical growth of project revenue. Costs are calculated taking into account historical gross margins as well as estimated cost inflation over the period. 

The following assumptions were used in the value-in-use calculations: 

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