10 Impairment testing of goodwill and intangible assets

Goodwill and intangible assets with indefinite useful lives have been allocated to the following cash-generating units for impairment testing purposes:

CHF million Discount rate at 31 Dec 2008 31 Dec 2008 Discount rate at 31 Dec 2009 31 Dec 2009
Energy segment        
Power Generation Switzerland 6.9 % 17 5.4 % 398
Power Generation Central Europe 9.2 % 121 9.3 % 122
Power Generation Western Europe 8.3 % 16 8.3 % 16
Sales Western Europe 8.3 % 17 8.3 % 19
Sales Central Europe 10.3 % 41 13.0 % 59
Grid Switzerland 8.7 % 45 4.5 % 45
Energy Services segment        
AIT Region 7.6 % 42 6.2 % 48
AAT Region 8.6 % 17 7.1 % 19
Total   316   726
         

In impairment testing of goodwill and intangible assets with indefinite useful lives, the recoverable amount of all the units above was based on their value in use in 2008 and 2009. This represents the present value of the estimated future cash flows for each cash-generating unit. The following assumptions used in the value in use calculations are subject to estimation uncertainty: discount rate, cash flows and growth rates. The cash flow projections and growth rates are based on the most recent financial budgets approved by management based on past experience and covering a five-year period. Cash flows for the sixth year and beyond were extrapolated using a zero growth rate. Discount rates reflect current market assessments of the risks specific to each cash-generating unit.

For all the units listed above, an analysis of sensitivity to changes in the material parameters has shown that the values in use of the individual cash-generating units considerably exceed the current carrying amounts.