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NOTES TO THE FINANCIAL STATEMENTS (Continued)<br />

ANNUAL <strong>REPORT</strong> AND FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 31 DECEMBER 2015<br />

2 ACCOUNTING POLICIES (Continued)<br />

Adoption of new and revised International Financial Reporting Standards (IFRSs) (Continued)<br />

iii)<br />

Impact of new and amended standards and interpretations on the financial statements for the year ended 31 December<br />

2015 and future annual periods (Continued)<br />

IFRS 11 Accounting for Acquisitions of Interests in Joint Operations<br />

The amendments to IFRS 11 provide guidance on how to account for the acquisition of an interest in a joint<br />

operation in which the activities constitute a business as defined in IFRS 3 Business Combinations Specifically,<br />

the amendments state that the relevant principles on accounting for business combinations in IFRS 3 and other<br />

standards (e.g. IAS 12 Income Taxes regarding recognition of deferred taxes at the time of acquisition and IAS<br />

36 Impairment of Assets regarding impairment testing of a cash-generating unit to which goodwill on acquisition<br />

of a joint operation has been allocated) should be applied. The same requirements should be applied to<br />

the formation of a joint operation if and only if an existing business is contributed to the joint operation by one<br />

of the parties that participate in the joint operation. A joint operator is also required to disclose the relevant<br />

information required by IFRS 3 and other standards for business combinations.<br />

Entities should apply the amendments prospectively to acquisitions of interests in joint operations (in which<br />

the activities of the joint operations constitute businesses as defined in IFRS 3) occurring from the beginning<br />

of annual periods beginning on or after 1 January 2016<br />

The directors of the Company do not anticipate that the application of the standard will have a significant<br />

impact on the group’s financial statements<br />

iv)<br />

Early adoption of standards<br />

The group did not early-adopt any new or amended standards in 2015<br />

The principal accounting policies applied in the preparation of the financial statements are set out below. These policies<br />

have been applied consistently.<br />

Basis of preparation<br />

The financial statements have been prepared on the historical cost basis of accounting as modified to include the valuation<br />

of property and certain financial assets.<br />

Basis of consolidation<br />

The consolidated financial statements incorporate the financial statements of the bank and its subsidiary for the year ended<br />

31 December, 2015. The bank’s subsidiary is shown in note 20.<br />

Subsidiaries are those entities in which the group has power to exercise control over their operations. The group controls an<br />

entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to<br />

affect those returns through its power over the entity. Subsidiaries are included in the consolidated financial statements from<br />

the date the group gains effective control. The acquisition method of accounting is used when subsidiaries are acquired by the<br />

group. The cost of an acquisition in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date<br />

fair values of the consideration transferred by the group, liabilities incurred by the group to the former owners<br />

of the acquiree and the equity interests issued by the group in exchange for control of the acquiree. Acquisition-related costs<br />

are recognised in profit or loss as incurred. Entities controlled by the group are consolidated until the date that control ceases.<br />

48

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