Home' Trinidad and Tobago Guardian : December 27th 2013 Contents B34
Guardian www.guardian.co.tt Friday, December 27, 2013
Consolidated Financial Statements
30 September 2013
Notes to the Consolidated Financial Statements (continued)
(expressed in Trinidad and Tobago dollars)
2 Summary of Significant Accounting Policies (continued)
2.2 Consolidation (continued)
(f) Investment in associates
Associates are all entities over which the Group has significant influence but not control or joint
control, generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting and are
initially recognised at cost. The Group's investment in associates includes goodwill identified on
acquisition, net of any accumulated impairment loss.
The Group's share of its associates' post-acquisition profits or losses is recognised in the consolidated
income statement, and its share of post-acquisition movements in reserves is recognised in
reserves. The cumulative post-acquisition movements are adjusted against the carrying amount
of the investment. When the Group's share of losses in an associate equals or exceeds its interest
in the associate, including any other unsecured receivables, the Group does not recognise further
losses, unless it has incurred legal or constructive obligations or made payments on behalf of the
The Group determines at each reporting date whether there is any objective evidence that an
investment in an associate is impaired. If this is the case, the Group calculates the amount of the
impairment as the difference between the recoverable amount of the asociate and its carrying
Unrealised gains on transactions between the Group and its associates are eliminated to the
extent of the Group's interest in the associates. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the policies adopted
by the Group. Dilution gains and losses in associates are recognised in the consolidated income
2.3 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using
the currency of the primary economic environment in which the entity operates (the functional
currency). The consolidated financial statements are presented in Trinidad and Tobago dollars,
which is the Group's presentation currency. The exchange rate between the TT dollar and the
US dollar as at the date of these statements was TT$ 6.3506 = US$1.00 (2012: TT$6.3503 =
US$1.00), which represent the Group's mid-rate.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency at the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the consolidated income statement.
Changes in the fair value of monetary securities denominated in foreign currency classified as
available-for-sale are analysed between translation differences resulting from changes in the
amortised cost of the security and other changes in the carrying amount of security. Translation
differences related to changes in the amortised cost are recognised in profit or loss and other
changes in carrying amount are recognised in other comprehensive income. Translation differences
on non-monetary items such as equities classified as available-for-sale financial assets are included
in other comprehensive income.
(c) Group companies
The results and financial position of all the Group entities (none of which has the currency of
a hyperinflationary economy) that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
(i) assets and liabilities for each statement of financial position presented are translated at the
closing rate at the date of that statement of financial position; income and expenses for
each income statement are translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates of the transactions); and
(ii) all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in
foreign operations and of borrowings are recognised in other comprehensive income. When
a foreign operation is disposed of or partially disposed of, such exchange differences are
recognised in the consolidated income statement as part of the gain or loss on sale. Goodwill
and fair value adjustments arising on the acquisition of a foreign entity are treated as assets
and liabilities of the foreign entity and translated at the closing rate.
2.4 Derivative financial instruments
Derivative financial instruments including swaps are initially recognised in the consolidated statement
of financial position at fair value and are subsequently re-measured at their fair values. Fair values
are obtained from quoted market prices, discounted cash flow models and options pricing models as
appropriate. All derivatives are carried as assets when their fair value is positive and as liabilities when
The carrying values of the interest rate swap, which will vary in response to changes in market
conditions, are recorded as assets or liabilities with the corresponding resultant charge or credit in the
consolidated income statement
2.5 Financial assets and financial liabilities
2.5.1 Financial assets
The Group classifies its financial assets in the following categories: financial assets designated as at
fair value through profit or loss, loans and receivables, held to maturity and available-for-sale. The
classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial recognition and re-evaluates this designation
at every reporting date.
(a) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market, other than:
(i) those that the Group intends to sell immediately or in the short term, which are classified as
held for trading;
(ii) those that the group upon initial recognition designates at fair value through profit or loss or
(iii) those for which the holder may not recover substantially all its initial investment, other than
because of credit deterioration.
cost using the effective interest method. Loans and receivables are reported in the consolidated
statement of financial position as loans and advances to banks or customers or as loan notes.
Interest on loans is included in the consolidated income statement under interest income. In the
case of impairment, the impairment loss is reported as a deduction from the carrying value of
the loan and recognised in the consolidated income statement under impaired loss on loans and
receivables net of recoveries.
(b) Available-for-sale financial assets
Available-for-sale financial assets are those intended to be held for an indefinite period of time,
which may be sold in response to needs for liquidity or changes in interest rates, exchange rates
or equity prices or that are not classified as loans and receivables, held to maturity investments or
financial assets at fair value through profit or loss.
Available-for-sale financial assets are initially recognised at fair value and subsequently carried at
fair value with gains and losses being recognised in the consolidated statement of comprehensive
income except for impairment losses and foreign exchange gains and losses, until the financial
asset is derecognised.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value
adjustments recognised in other comprehensive income are included in the consolidated income
calculated using the effective interest method is recognised in the consolidated income statement.
Dividends on available-for-sale equity instruments are recognised in the consolidated income
statement when the Group's right to receive payments are established.
(c) Financial assets at fair value through profit or loss
This category comprises two sub-categories: financial assets held for trading and financial assets
designated by the Group as fair value through profit or loss upon initial recognition.
A financial asset is classified as held for trading if it is acquired or incurred principally for the
purpose of selling or repurchasing it in the near term or if it is part of a portfolio of identified
financial instruments that are managed together and for which there is evidence of a recent actual
pattern of short-term profit taking. Derivatives are also categorized as held for trading.
The Group also designates certain financial assets upon initial recognition as at fair value through
profit or loss (fair value option). This designation cannot be subsequently changed. According to
IAS 39, the fair value option is only applied when the following conditions are met:
(i) The application of the fair value option reduces or eliminates an accounting mismatch that
would otherwise arise; or
(ii) The financial assets are part of a portfolio of financial instruments which is risk managed and
reported to senior management on a fair value basis.
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