Annual Report - Ahli United Bank

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Annual Report - Ahli United Bank

15 GOODWILL AND OTHER INTANGIBLE ASSETS2009 2008GoodwillIntangibleassets Total GoodwillIntangibleassets TotalUS$’000 US$’000 US$’000 US$’000 US$’000 US$’000At 1 January 514,517 120,053 634,570 448,883 46,474 495,357Restatement of provisional goodwill - - - (74,105) 74,105 -Acquisitions during the year 151 - 151 144,479 - 144,479Exchange rate and other adjustments (9,417) (1,018) (10,435) (4,740) (526) (5,266)At 31 December 505,251 119,035 624,286 514,517 120,053 634,570Goodwill:-Additions to goodwill during the year relates to additional stake acquired in a subsidiary.Goodwill acquired through business combinations has been allocated to the cash-generating units of the acquired entities forimpairment testing purposes.The carrying amount of goodwill allocated to each of the cash-generating units is as follows:2009 2008US$’000US$’000Retail banking 177,912 181,287Corporate banking, treasury and investments 215,392 218,144Private banking and wealth management 111,947 115,086505,251 514,517Key assumptions used in estimating recoverable amounts of cash-generating unitsThe recoverable amount of each cash-generating unit’s goodwill is based on value-in-use calculations using cash flow projectionsfrom financial budgets approved by senior management, extrapolated for five year projections using nominal Gross Domestic Productgrowth rate in the respective GCC countries in which they operate. The discount rate applied to cash flow projections represent the costof capital adjusted for an appropriate risk premium for these business segments. The discount rate used in relation to the significantportion of the goodwill requiring impairment testing was 10.9% (2008: 9.8%). The key assumptions used in estimating recoverableamounts of cash generating units were sensitised to test the resilience of value-in-use calculations. On this basis, managementbelieves that reasonable changes in the key assumptions used to determine the recoverable amount of the Group’s cash-generatingunits will not result in an impairment.Other Intangible Assets:-Intangible assets mainly relate to stock exchange brokerage licenses and banking license which have an indefinite life. Based on anannual impairment assessment of the intangible assets, no indication of impairment was identified.AUB Annual Report 200971

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