NIG Prospectus - London Stock Exchange

Level: 8 – From: 8 – Thursday, August 9, 2007 – 2:20 pm – mac5 – 3776 Section 10c : 3776 Section 10cValuation of unquoted equity investmentsValuation of unquoted equity investments is normally based on one of the following:• recent arm’s length market transactions;• current fair value of another instruments that is substantially the same; or• the expected cash flow discounted at current rates applicable for items with similar termsand risk characteristics;• other valuation models.The determination of the cash flows and discount factors for unquoted equity investmentsrequires significant estimation. There are certain investments where this estimation cannot bereliably determined and as a result available for sale investments with a carrying amount ofKD26,261 thousand (2004: KD5,718 thousand) are carried at cost.Impairment of goodwillThe group determines whether goodwill is impaired at least on an annual basis. This requires anestimation of the value in use of the cash generating units to which the goodwill is allocated.Estimating the value in use requires the group to make an estimate of the expected future cashflows from the cash generating unit and also to choose a suitable discount rate in order tocalculate the present value of those cash flows. Note 9 contain the information about theassumptions and their risk factors relating to goodwill impairment.Pension liabilities/assetPension assumptions are detailed in note 31 and the pension expense for the year is sensitive tosuch assumptions and to the basis and period of spreading the actuarial deficit.Cash and cash equivalentsCash and cash equivalents included in the consolidated statement of cash flows consist of bankbalances and cash, due to banks and short-term deposits maturing within three months from thedate of inception.F-63