Annual Report 2012 - The Cyprus Development Bank

annual report 2012NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123. SIGNIFICANT ACCOUNTING POLICIES (continued)The accounting policies have been consistently applied by the companies in the Group and except where there is a change inaccounting policy, are consistent with those of the previous year. Where necessary, comparative figures are adjusted to conformwith changes in presentation in the current year.Consolidated financial statementsThe consolidated financial statements comprise the financial statements of the Company, and of its subsidiary companies (note15), which together are referred to as the “Group”.All inter-company transactions and balances between the parent company and the subsidiary companies of the Group areeliminated on consolidation.Foreign currencyTransactions in foreign currencies are recorded at the rates ruling on the date of the transaction. Other assets and liabilitiesdenominated in foreign currencies are translated into Euro at the rates of exchange ruling at the end of the year. Exchangedifferences arising from the above are dealt with in the income statement.The income statement of the foreign subsidiary company is translated into Euro using the mid-rate of exchange of the year. Theassets and liabilities of the foreign subsidiary are translated into Euro at the rate of exchange ruling at the end of the year. Theexchange difference arising from the above is dealt with directly in exchange difference reserves.TurnoverThe Group’s and the Company’s turnover comprises interest income, fees and commissions, dividends and profits on disposal ofequity investments, fees from services rendered and other income.Income recognitionInterest receivable and other income is recognised on an accruals basis. Accrued interest and other income from loans witharrears of over three months and which are not fully secured with tangible collateral, as well as accrued interest and other incomefrom accounts considered doubtful, is not taken to the income statement, but is transferred to suspense account.Interest and other income credited to suspense account is transferred to the income statement when collected or when the saidloans or accounts cease to be classified as stated above.Dividends receivable from equity investments are recognised as income in the income statement in the period in which theybecome payable. Interest earned on investments in government and corporate bonds is included in interest income for the periodduring which the investments are held.Income from fees and the provision of services is recognised on the basis of the progress of execution and completion of thetransaction so as to match it with the cost of providing the service.Loans and advancesLoans and advances originated by providing money directly to the borrower are measured initially at cost, which is the fair valueof the consideration given to originate the loan. Loans and advances are subsequently measured at their amortised cost using theeffective interest rate method.21