Amortization is allocated to the line in the income statement, which represents the function to which the intangible asset pertains.

In 2019 and 2018 no impairment losses were recognized.

As per end of 2019, other intangible assets include the carrying value in the amount of CHF 36 million (2018: CHF 57 million) capitalized in connection with the REACH regulation and CHF 18 million (2018: CHF 37 million) of capitalized internally generated intangibles.

Disposals of 2019 include CHF 146 million of assets (net book value) which are part of the sale of the Healthcare Packaging Business (see note 25).

Impairment test for goodwill. Goodwill is allocated to the Group’s cash generating units (CGU). Cash generating units consist of Business Units which are for external reporting purposes reported under the corresponding Business Areas (reportable segments, see note 1.25).

Goodwill is allocated to the following CGUs:

Continuing operations

The recoverable amount for CGUs reported as continued operations is determined based on their value-in-use. The value-in-use calculations use cash flow projections based on financial plans approved by the Board of Directors covering a period up to 2021. Beyond this period, growth assumptions of the CGU management are applied for 2022 to 2024. For the terminal value market growth (2.25%) is assumed. The main assumptions used for cash flow projections are EBITDA in percent of sales and sales growth. The assumptions regarding these two variables are based on Management’s past experience and future expectations of business performance. The pre-tax discount rates used are based on the Group’s weighted average cost of capital. The assumed pre-tax discount rate was 11.59% for all cash generating units (2018: 11.57%). As all CGUs operate in similar geographic areas, have the same source of funds and a similar risk pattern a uniform discount rate is applied to all of them.

For all CGUs it was assumed that they achieve sales growth in line with or higher than market growth, based on the specific strategic plans for the respective CGUs. It was also assumed that the EBITDA in percent of sales will improve over present performance as a result of the continuous improvement measures implemented. The conclusion was that the net present value of the expected cash flows exceeds the carrying amount of the net assets allocated on a value-in-use basis of all CGU’s.

Discontinued operations

The estimated recoverable amount of the CGU’s classified as discontinued operations was determined on a fair value less cost to sell basis. For the Business Unit Masterbatches the signed sale and purchase contract was used to determine this value. The fair value of the Business Unit Pigments was determined estimating an EBITDA multiple based on the business plan for the Business Unit and also comparing this value with the prices achieved in similar transactions in recent years. Costs to sell were estimated based on past experience. Based on these calculations, the fair value less cost to sell of these two CGUs exceed their book values. For further details on discontinued operations, see note 25.