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Method of Valuation
The comparative method of valuation in the valuation of the asset. This method involves the analysis of recent transaction
in such asset within the same asset type and the size of the subject asset after due allowance have been made for precu-
liar attributes of the various asset concerned.
The key elements of the control framework for the valuation of financial instruments include model validation and inde-
pendent price verification. These functions are carried out by an appropriately skilled Finance team, independent of the
business area responsible for the products. The result of the valuation are reviewed quarterly by senior management.
(iii) Assessment of impairment of goodwill on acquired subsidiaries
Goodwill on acquired subsidiaries was tested for impairment using discounted cash flow valuation method.
Projected cash flows were discounted to present value using a discount rate of 19.50% (Dec. 2016: 19.5%) and a
cash flow growth rate of 5.44% (Dec. 2016: 6.62%) over a year of four years. The Group determined the appro-
priate discount rate at the end of the year by making reference to 15 years bond which is the longest tenured in
Rwanda. See note 29b for further details.
(iv) Defined benefit plan
The present value of the long term incentive plan depends on a number of factors that are determined in an ac-
tuarial basis using a number of assumptions. Any changes in these assumptions will impact the carrying amount
of obligations. The assumptions used in determining the net cost (income) for pensions include the discount
rate. The Group determines the appropriate discount rate at the end of the year. In determining the appropriate
discount rate, reference is made to the yield on Nigerian Government Bonds that have maturity dates approxi-
mating the terms of the related pension liability. Other key assumptions for pension obligations are based in part
on current market conditions. See note 37 for the sensitivity analysis.
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Annual Report & Accounts 2017
