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Notes to the consolidated fnancial statements (continued)

for the year ended 30 June 2011

18. Goodwill and intangible assets (continued)

18.1 Impairment tests for cash generating units containing goodwill (continued)

(b) Life CGU

The recoverable amount of the Life CGU has been determined by reference to an appraisal value which comprises the traditional embedded value of the Life portfolios and other relevant businesses and adds a component for the value of future new business. The embedded value of the Life companies and the value of one year’s new business were assessed as at 30 June 2011 using discounted cash fow techniques. The value of the businesses other than the Life companies within the Life CGU was also assessed as at 30 June 2011. Key assumptions in the value in use calculations include the effective risk-adjusted discount rates and the multiple applied to the value of one year’s sales.

The following table summarises the key economic assumptions used for valuing in-force business and the value of one year’s new business which are based on long-term best estimate assumptions.

2011 2010

Australia New Zealand Australia New Zealand % % % %

Investment return for underlying asset classes

Risk-free rate (at 10 years) 5.3 6.4 5.2 5.4 Cash 6.0 5.3 5.7 5.5 Fixed interest 6.1 5.7 5.8 5.8 Australian equities (includes allowance

for franking credits) 10.4 9.8 10.3 10.0 International equities 9.4 8.8 9.2 9.9 Property 7.8 7.8 7.7 8.0 Investment returns (net of tax) 4.2 4.6 5.2 5.2 Infation

Beneft indexation 2.5 2.5 3.0 2.5 Expenses infation 3.0 2.5 3.0 2.5 Risk discount rate 9.3 9.1 9.2 9.4

Applying the value in use amount and a multiple of seven times one year’s new sales exceeds the current carrying value of the Life CGU.

The following key assumption changes would result in the carrying value of the Life CGU exceeding the recoverable value (appraisal value):

–– an increase in interest rates by 0.8% (impacts the discount rate and investment returns assumptions) –– an increase in the discontinuance rates assumptions by 3.5%; or –– an increase in claims expense assumptions by 2.5%.