Bahamas - FirstCaribbean International Bank

Notes to the Consolidated Financial Statements
October 31, 2007
(expressed in thousands of Bahamian dollars)
70
2. Summary of significant accounting policies (continued)
2.18 Retirement benefit obligations (continued)
The liability recognised in the balance sheet in respect of defined benefit
sections of the plan is the present value of the defined benefit obligation
at the balance sheet date minus the fair value of plan assets, together with
adjustments for unrecognised actuarial gains/losses and past service costs.
The defined benefit obligation is calculated periodically by independent
actuaries using the projected unit credit method. The present value of
the defined benefit obligation is determined by the estimated future cash
outflows using interest rates of government securities that have terms to
maturity approximating the terms of the related liability. The pension plan is
a final salary plan and the charge for such pension plan, representing the net
periodic pension cost less employee contributions is included in staff costs.
Actuarial gains and losses arising from experience adjustments and changes
in actuarial assumptions are charged or credited to income over the expected
average service lives of the related employees. Past service costs are
recognised immediately in income, unless the changes to the pension plan
are conditional on the employees remaining in service for a specified period
of time (the vesting period). In this case, past service costs are amortised on
a straight-line basis over the vesting period.
For the defined contribution section of the plan, the Bank makes contributions
to a private trustee-administered fund. Once the contributions have been
paid, the Bank has no further payment obligations. The regular contributions
constitute net periodic costs for the year in which they are due and as such
are included in staff costs. The Bank’s contributions in respect of the defined
contribution section of the plan are charged to the consolidated statement of
income in the year to which they relate.
(ii) Other post retirement obligations
See Auditors’ Report Page 56.
The Bank provides post-retirement healthcare benefits to its retirees.
The entitlement to these benefits is usually based on the employee
remaining in service up to retirement age and the completion of
a minimum service period. The expected costs of these benefits are
accrued over the period of employment, using a methodology similar to
that for defined benefit pension plans. Actuarial gains and losses arising
from experience adjustments and changes in actuarial assumptions are
charged or credited to income over the expected average service lives
of the related employees. These obligations are valued periodically by
independent qualified actuaries.
2.19 Borrowings
Borrowings are recognised initially at fair value and are subsequently stated at
amortised cost, and any difference between net proceeds and the redemption
value is recognised in the consolidated statement of income over the period
of the borrowings, using the effective interest yield method.
2.20 Share capital and dividends
(i)
Share issue costs
Shares issued for cash are accounted for at the issue price less any
transaction costs associated with the issue. Shares issued as consideration
for the purchase of assets, or a business, are recorded at the market price
on the date of the issue.
(ii) Dividends on ordinary shares
Dividends on ordinary shares are recognised in equity in the period in
which they are declared. Accordingly, dividends in respect of the current
year’s net income that are declared after the balance sheet date are not
reflected in the financial statements.
2.21 Earnings per share
Basic earnings per share is calculated by dividing the net profit attributable
to shareholders by the weighted average number of ordinary shares in issue
during the year.
2.22 Fiduciary activities
The Bank commonly acts as trustee and in other fiduciary capacities that result
in the holding or placing of assets on behalf of individuals, trusts, retirement
benefit plans and other institutions. These assets and income arising thereon
are excluded from these financial statements, as they are not assets of the
Bank.
2.23 Income taxes
The Bank is not subject to income taxes in The Bahamas and the Turks and
Caicos Islands.