Annual Report 2012 - The Cyprus Development Bank

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annual report 2012NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123. SIGNIFICANT ACCOUNTING POLICIES (continued)Investments (continued)Investments in government securities and other debt securitiesInvestments in government securities and other debt securities with fixed maturity, which the Group has both the intention and theability to hold to maturity, are classified as held-to-maturity.Held-to-maturity investments are carried at their amortised cost, which is calculated taking into account the cost of acquisition, anyunamortised premium or discount and deducting any impairment loss.The amount of the impairment loss on investments held-to-maturity, which represents the difference between the carrying amountof the investment and the present value of future expected cash flows, discounted at the original effective interest rate of theinvestment, is taken to the income statement. The carrying amount of the investment is reduced accordingly.If, in a subsequent period, the amount of the estimated impairment loss decreases because of an event occurring after theimpairment was recognised, the impairment loss previously recognised is reversed and the reversal is credited to the incomestatement.Subsidiary companiesThe subsidiary companies are consolidated using the acquisition method of accounting. Any excess of the cost of acquisition overthe Group’s share of the fair values of the identifiable net assets acquired, is recognised as goodwill on the consolidated balancesheet. The investments in the subsidiary companies are fully eliminated on consolidation in the consolidated financial statementsof the Group.Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with ownersin their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of thesubsidiary. No adjustments are made to goodwill and no gain or loss is recognised in the income statement.The investments in the subsidiary companies are stated in the Company’s separate financial statements at their assessed fairvalue. Adjustments to the assessed fair value of subsidiary companies are transferred to the revaluation reserve.On the disposal or partial disposal of an investment in a subsidiary company, the difference between the sale proceeds and thebook value of the shareholding disposed is transferred to the income statement. Any related balance in the revaluation reserve istaken to the income statement.Premises and equipmentFreehold premises are used in the operations of the Group and are stated at valuation on the basis of open market value forexisting use as assessed by independent professional valuers less accumulated depreciation. Revaluation surpluses or deficitsare credited or debited to the revaluation reserve. Any deficit not covered by accumulated revaluation surpluses in the revaluationreserve for the specific asset, is written off to the income statement.23
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123. SIGNIFICANT ACCOUNTING POLICIES (continued)Premises and equipment (continued)Equipment is measured at cost less accumulated depreciation. Material expenses which add future economic benefit arecapitalised whereas other expenses are written off to the income statement.Depreciation on premises is provided on the straight line method in equal annual instalments over a period of 33 years. Nodepreciation is provided on land.Depreciation on equipment is provided on the straight line method in equal annual instalments over their estimated useful life,which ranges from five to ten years.On disposal of premises and equipment, the difference between the net proceeds and the net book value is transferred to theincome statement. Any related balance in the revaluation reserve is taken to revenue reserve.Intangible assetsIntangible assets include computer software and goodwill.Computer software is stated at cost less accumulated depreciation. Depreciation on computer software is provided on the straightline method in equal annual instalments over their estimated useful life, which ranges from three to five years.Maintenance expenses of computer software are written off to the income statement in the year in which they are incurred.Goodwill represents the excess of the cost of the acquisition over the fair value of the Group’s share of identifiable assets, liabiltiesand contingent liabilities of the acquired entity at the date of acquisition. After initial recognition, goodwill is measured at cost lessany impairment loss. Goodwill is reviewed for impairment annually as at 31 December or more frequently if events or changes incircumstances indicate thet the carrying amount may be impaired.Cash and cash equivalentsCash and cash equivalents consist of cash and other securities which are highly liquid or repayable within three months from thedate of their acquisition.Repurchase agreementsSecurities sold under agreements to repurchase at a specific future date (repos) are not derecognised from the balance sheet.Cash received is recognised on the balance sheet as “Repurchase agreements”, reflecting the economic substance as a loan tothe Company and to the Group. The difference between the sale price and the repurchase price is treated as interest expense andis accrued over the life of the agreement using the effective interest rate method. Repos outstanding at the balance sheet daterelate to agreements with the European Central Bank.Client depositsClient deposits are initially measured at the fair value of the consideration received, which equals the amount deposited by theclient. Subsequently, client deposits are measured at their amortised cost using the effective interest rate method.Loan capitalBonds issued by the Company are initially recorded at fair value, which equals the amount received, and subsequently aremeasured at their amortised cost using the effective interest rate method.24
Page 2 and 3: C O N T E N T SPageAdvisers 2Board
Page 4: Board of DirectorsRena Rouvitha Pan
Page 8 and 9: annual report 2012INDEPENDENT AUDIT
Page 10 and 11: annual report 2012INCOME STATEMENTF
Page 12 and 13: annual report 2012STATEMENT OF COMP
Page 14 and 15: annual report 2012BALANCE SHEETAs a
Page 16 and 17: annual report 2012CONSOLIDATED STAT
Page 18 and 19: annual report 2012CONSOLIDATED CASH
Page 20 and 21: annual report 2012NOTES TO THE FINA
Page 64: THE CYPRUS DEVELOPMENT BANK PUBLIC

Annual Report 2012 - The Cyprus Development Bank

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