• Faysal Bank Limited: value
in use based on discounted
cash flows
• BBK: average of residual
income and price to book
value multiple
• Ithmaar Bank residual assets:
investments measured at their
carrying value adjusted for
fair value changes.
In its assessment of the Ithmaar
Bank B.S.C. CGU the value based
on the sum-of-the parts approach
exceeded its carrying value and as
such no impairment charge was
taken. The key assumptions used in
this sum-of-the parts computation
were the following:
• Formerly Shamil Bank:
long-term growth rate of 5%
(2011: 2%), discount rate of
11.5% (2011: 14.85%)
• Faysal Bank Limited:
long-term growth rate of 3%
(2011: 2%), discount rate of
23.6% (2011: 25.84%)
• BBK: long-term growth rate
of 4% (2011: 4%), cost of
the equity of 11.3% (2011:
11.5%), control premium of
15%
• Ithmaar Bank residual assets:
investments measured at their
carrying value adjusted for
fair value changes
A shift in either the growth or
discount rates of 1% would also not
have resulted in any impairment.
On the basis that the Group used a
discounted cash flowmodel to arrive at
a value in use of the Islamic Investment
Company of the Gulf (Bahamas)
Limited CGU which ultimately was
higher than the carrying amount no
impairment charge was recorded in
the consolidated financial statements
(2011: $Nil million). Management’s
assessment of the value in use of
Islamic Investment Company of the
Gulf (Bahamas) Limited exceeds
its carrying value, therefore any
significant changes to assumptions
used in management’s assessment
will not result in impairment.
Pension obligations
The assumptions the Group has to
make in connection with the actuarial
calculation of pension obligations
and pension expenses affect the
discount rate, the expected annual
rate of compensation increase, the
expected employee turnover rate, the
expected average remaining working
life, the expected annual adjustments
to pensions and the expected
annual return on plan assets. These
assumptions are subject to review
by the Group. A change in any of
these key assumptions may have
an impact on the projected benefit
obligations, funding requirements
and periodic pension cost.
Notes to the Consolidated Financial Statements
29
Dar Al-Maal Al-Islami Trust
Annual Report 2012
3. Critical accounting
estimates and
judgements in applying
accounting policies
(continued)
