REPUBLIC BANK LIMITED
76
Notes to theConsolidatedFinancial Statements
For the year ended September 30, 2014. Expressed in thousands of Trinidad and Tobago dollars ($’000), except where otherwise stated
7 Premises and equipment
(continued)
Capital commitments
2014
2013
Contracts for outstanding capital expenditure not provided
for in the consolidated financial statements
437,591
119,448
Other capital expenditure authorised by the Directors but not yet contracted for
93,432
23,736
8 Goodwill
2014
2013
Goodwill on acquisition brought forward
485,971
485,971
Goodwill written off during the year
(185,000)
–
300,971
485,971
Impairment testing of goodwill
In accordance with IFRS 3, all assets that gave rise to goodwill were reviewed for impairment at September 30, 2014 by assessing the recoverable
amount of the cash generating unit to which the goodwill relates. In each case, the cash flow projections are based on financial budgets approved
by senior management and the values assigned to key assumptions reflect past performance.
In conducting this review, consideration was made for the recent downturn in the Barbados economy and the resultant impact on the cash-
generating unit, Republic Bank (Barbados) Limited. Key assumptions were therefore adjusted as follows:
Assumption
Change
Reason for change
Discount rate
Increase from 10% to 12%
Increase in risk profile of the country
Terminal Growth Rate
Decrease from 5% to 1.75%
Decline in economic outlook and long-term future GDP
growth for the country
Cash flow projection term
Increase from 3 years to 10 years
More extensive review of future cash flows of the cash
generating unit due to change in economic conditions
As a result of these changes in key assumptions, the value in use of the cash generating unit was determined to be lower than the carrying value
of the company. A Goodwill impairment expense of $185 million was therefore calculated as follows for the Group’s investment in Republic Bank
(Barbados) Limited:
TT$ Million
Carrying Value of Republic Bank (Barbados) Limited
1,551
Recoverable amount
1,366
Impairment
185
