Impairment test for goodwill Goodwill is allocated to the Group’s cash-generating units (CGUs), which are defined as the Taste & Wellbeing Division and the Fragrance & Beauty Division, which itself includes two lower levels of cash-generating units related to Expressions Parfumées and Fragrance Oils. Goodwill allocated to these CGUs was CHF 2,370 million (2020: CHF 2,298 million) to the Taste & Wellbeing Division, CHF  889  million (2020: CHF  756 million) to the Fragrance & Beauty Division, CHF  129  million (2020: CHF  135 million) to Expressions Parfumées, and CHF 108 million (2020: CHF 105 million) to Fragrance Oils. The recoverable amount of each CGU has been determined based on value in use calculations. These calculations use pre-tax cash flow projections based on financial business plans and budgets approved by management covering a five year period, as well as a terminal value. The basis of the key assumptions is market growth adjusted for estimated market share gains. The terminal value assumes the long-term inflation rate for growth beyond the five year period. The discount rate used to discount the estimated future cash flows has a number of components which are derived from capital market information where the cost of equity corresponds to the return expected by the shareholders by benchmarking with comparable companies in the fragrance & beauty and taste & wellbeing industry, and where the cost of debt is based on the conditions on which companies with similar credit rating can obtain financing. A discount rate of 9.9% (2020: 9.1%) was applied to cash flow projections of the Fragrance & Beauty Division, 9.6% (2020: 9.2%) was applied to cash flow projections of the Taste & Wellbeing Division, 10.2% (2020: 9.1%) was applied to cash flow projections of Expressions Parfumées and 12.7% (2020: 10.6%) was applied to cash flow projections of Fragrance Oils. These discount rates are pre-tax. No impairment loss in any of the CGUs resulted from the impairment tests for goodwill. The Group has conducted an analysis of the sensitivity of the impairment test to changes in the cash flows and in the discount rate in the periods presented. Management believes that any reasonable change in the assumptions would not cause the carrying amount to exceed the recoverable amount of each CGU. Process-oriented technology and other This consists mainly of process-oriented technology, formulas, molecules, delivery systems as well as process knowledge and research expertise in innovative cosmetic solutions, acquired when the Group purchased Food Ingredients Specialties (FIS), International Bioflavors (IBF), Quest International, Soliance, Induchem, Spicetec, Activ International, Vika, Centroflora Nutra, Expressions Parfumées, Naturex, Albert Vieille, AMSilk, Golden Frog, drom, Fragrance Oils, Ungerer, Indena, Alderys, Myrissi, Custom Essence and DDW. Client relationships As part of the acquisition of Quest International, Induchem, Spicetec, Activ International, Vika, Centroflora Nutra, Expressions Parfumées, Naturex, Albert Vieille, Golden Frog, drom, Fragrance Oils, Ungerer, Indena, Custom Essence and DDW the Group acquired client relationships in the Taste & Wellbeing and Fragrance & Beauty Divisions, mainly consisting of client relationships with key customers. Supplier relationships As part of the acquisition of Naturex and Albert Vieille, the Group acquired supplier relationships in the Taste & Wellbeing and Fragrance & Beauty Divisions, mainly consisting of relationships with key suppliers. Name and product brands In connection with the acquisition of Induchem, Spicetec, Activ International, Vika, Centroflora Nutra, Expressions Parfumées, Naturex, Albert Vieille, Golden Frog, drom, Fragrance Oils, Ungerer, Indena, Custom Essence and DDW the Group acquired name and product brands in active beauty and in natural flavour businesses. Software/ERP system This consists of internally generated intangible assets associated with the development of identifiable software products and ERP systems. The residual useful lives of the acquired intangible assets carried at cost, being their fair value at acquisition date, are determined in accordance with the principles set out in Note 2.17. Remaining useful lives of major classes of amortisable intangible assets are as follows: – Process-oriented technology and other 7.0 years – Client relationships 15.8 years – Supplier relationships 0.3 years – Name and product brands 11.4 years – Software 2.8 years. Governance Report Compensation Report Consolidated Financial Report Statutory Financial Report Appendix 84 Givaudan — 2021 Governance, Compensation and Financial Report Notes to the consolidated financial statements