confidence - Investing In Africa

Financial StatementsNotes to the Accounts for the year ended 30 June 2005 (cont’d)(d)Foreign Currency TranslationAssets, liabilities, income and expense items denominated in other currencies are translated into Mauritian Rupees inaccordance with IAS 21.(i) The assets and liabilities of the overseas branches, subsidiaries and associates denominated in foreign currencies aretranslated into Mauritian Rupees at the rates of exchange ruling at the end of the financial year. Their results for theperiod are translated into Mauritian Rupees at average rates. Any translation differences arising are taken totranslation reserve.(ii) Transactions denominated in foreign currency are converted at the rate prevailing at the date of the transactions.(iii) Monetary assets and liabilities denominated in foreign currency at the balance sheet date are translated intoMauritian Rupees at the rates of exchange ruling at that date. All resulting gains and losses are accounted for in theStatement of Income.(iv) Non-monetary assets and liabilities denominated in foreign currency are reported using the exchange rates at thedate of the transactions, if carried at cost, or the exchange rates that existed when the fair values were determined,if carried at fair value.32(e)Investment Securities(i) Investments in Gilt-edged SecuritiesInvestments in gilt-edged securities reported under Investment Securities are classified in the following categories:Originated-Loans-and-Receivables (“OLR”), Held-to-maturity (“HTM”) and Available-for-sale (“AFS”). Gilt-edgedsecurities that are purchased directly from the issuer and that are not held for trading purposes are classified as OLR.Those gilt-edged securities that are purchased on the secondary market and that are not held for trading purposesare classified as HTM where management has the intent and ability to hold the securities to their maturity, otherwisethey are classified as AFS.Investments in gilt-edged securities are recognised on a trade-date basis and are initially measured at cost. Atsubsequent reporting dates, securities classified as OLR or HTM are measured at amortised cost, less any impairmentloss. Securities classified as AFS are subsequently measured at fair value and the unrealised gains and losses onrevaluation are recognised directly in equity (Unrealised Investment Fair Value Reserve), until the security is disposedof or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity inrespect of that security is included in the Statement of Income as Other Income.The interest accrued is recorded as Interest Income in the Statement of Income and any gains or losses on disposalare recorded as Other Income.(ii) Investments in Subsidiaries and AssociatesIn the Bank’s separate accounts, the equity investments in subsidiaries and associates are accounted for using the equitymethod and reported under Investment Securities in the Balance Sheet. Dividends received from subsidiaries andassociates are accounted for as a reduction in the carrying amounts of the investments in subsidiaries and associates.(iii) Other Equity InvestmentsOther equity investments reported under Investment Securities are classified as AFS. They are recognised on a tradedatebasis and are initially measured at cost. At subsequent reporting dates, they are measured at fair value andthe unrealised gains and losses are recognised directly in equity (Unrealised Investment Fair Value Reserve), until theinvestment is disposed of or is determined to be impaired, at which time the cumulative gain or loss previouslyrecognised in equity in respect of that investment is included in the Statement of Income as Other Income.However, AFS equity investments which do not have a quoted market price and whose fair value cannot be reliablymeasured subsequently remain measured at cost.