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Consolidated Financial Statements for the year ended September 2013
First Citizens Holdings Limited and its Subsidiaries
2 Summary Of Significant Accounting Policies (continued)
(a) Principles of consolidation
The consolidated financial statements include the accounts of the Bank and its wholly owned
subsidiaries as outlined in Note 1. The financial statements of the consolidated subsidiaries used to
prepare the consolidated financial statements were prepared as of the parent company's reporting
date. The consolidation principles are unchanged as against the previous years.
Inter-company transactions, balances and unrealised gains on transactions between group
companies are eliminated on consolidation. Unrealised losses are also eliminated unless the
transaction provides evidence of impairment of the asset transferred. The accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
(b) Investment in subsidiaries
Subsidiaries are all entities, (including special purpose entities) over which the Group has the
power to govern the financial and operating policies generally accompanying a shareholding of
more than one half the voting rights. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the Group controls
another entity. The Group also assesses existence of control where it does not have more than
50% of the voting power but is able to govern the financial and operating policies by virtue of
De-facto control may arise in circumstances where the size of the Group's voting rights relative to
the size and dispersion of holdings of other shareholders give the Group the power to govern the
financial and operating policies, etc.
Subsidiaries are fully consolidated from the date on which effective control is transferred to the
Group. They are de-consolidated from the date on which control ceases.
The Group applies the acquisition method to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities
incurred to the former owners of the acquiree and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date.
The Group recognises any non controlling interest in the acquiree on an acquisition-by-acquisition
basis, either at fair value or at the non controlling interest's proportionate share of the recognised
amounts of the acquiree's identifiable net assets.
c) Business combinations and goodwill
Accounting for business combinations under IFRS 3 only applies if it is considered that a business
has been acquired. A business combination is a transaction or other event in which the acquirer
obtains control of one or more businesses. Under IFRS 3 a business is defined as an integrated
set of activities and assets that is capable of being conducted and managed for the purpose of
providing a return in the form of dividends, lower cost or economic benefits directly to investors
or other owners, members or participants.
Business combinations are accounted for using the purchase method of accounting. The cost
of the acquisition is the consideration given in exchange for control over the identifiable assets,
liabilities and contingent liabilities of the acquired company. The consideration includes the cash
paid plus the fair value at the date of exchange of assets given, liabilities incurred or assumed and
equity instruments issued by the Group. Contingent consideration arrangements are included
in the cost of acquisition at fair value. Directly attributable transaction costs are expensed in the
current period and are reported in administrative expenses.
The acquired net assets, being the assets, liabilities and contingent liabilities, are initially recognised
at fair value. Where the group does not acquire 100% ownership of the acquired company non-
controlling interests are recorded as the proportion of the fair value of the acquired net assets
attributable to the non-controlling interest. Goodwill is recorded as the surplus of the cost of
acquisition over the Group's interest in the fair value of the acquired net assets. Any goodwill
and fair value adjustments are recorded as assets and liabilities of the acquired company in the
functional currency of that company. Goodwill is not amortised, but is assessed for possible
impairment at the year end following an acquisition, and is additionally tested annually for
Goodwill may also arise upon investments in associates, being the surplus of the cost of the
investment over the Group's share of the fair value of the net identifiable assets. Such goodwill is
recorded within investment in associates.
d) Transactions and non-controlling interests
Changes in ownership interest in subsidiaries are accounted for as equity transactions if they occur
after control has already been obtained and if they do not result in a loss of control.
For purchases from non-controlling interests, the difference between any consideration paid and
the relevant share acquired of the carrying value of the net assets of the subsidiary is recorded in
equity. Gain or losses on disposal to non-controlling interest are also recorded in equity.
Interests in the equity of subsidiaries not attributable to the parent are reported in consolidated
equity as non-controlling interest. Profits or losses attributable to non-controlling interests are
reported in the consolidated statement of comprehensive income as profit or loss attributable to
e) Investment in joint ventures
A joint venture exists where the Group has a contractual arrangement with one or more parties to
undertake activities through entities that are subject to joint control.
Investments in joint ventures are accounted for using the equity method of accounting. These
investments are initially recorded at cost and the carrying amount is increased or decreased to
recognise the Group's share of profits or losses.
(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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
(expressed in Trinidad and Tobago dollars)
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