2006 - Eastern Caribbean Securities Exchange

Notes to the Consolidated Financial Statementsfor the year ended 31st December, 2006Expressed in Thousands of Trinidad and Tobago dollars2. Significant accounting policies (continued)m) Taxation (continued)Deferred tax assets are recognised for all deductible temporary differences, carry-forward ofunused tax credits and unused tax losses, to the extent that it is probable that future taxable profitwill be available against which these deductible temporary differences, carry-forward of unusedtax credits and unused tax losses can be utilised. The carrying amount of deferred tax assets isreviewed at each balance sheet date and reduced to the extent that it is no longer probable thatsufficient future taxable profit will be available to allow all or part of the deferred tax assets tobe utilised.Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to theyear when the assets are realised or the liabilities are settled, based on tax rates and tax laws thathave been enacted or substantively enacted at the balance sheet date.n) Pension plans and post-retirement medical benefitsDefined benefit pension plans are generally funded by payments from employees and by the relevantGroup companies, taking into account the recommendations of independent actuaries.For defined benefit plans, the pension accounting costs are assessed using the projected unit creditmethod. Under this method, the annual cost of providing pensions is charged to the statement ofearnings so as to spread the regular cost over the service lives of employees in accordance withthe advice of independent actuaries who carry out a full valuation of the plans every three years.The pension obligation is measured as the present value of the estimated future cash outflowsusing interest rates of government securities which have terms to maturities approximating theterms of the related liabilities. All actuarial gains and losses to be recognised are spread forwardover the average remaining service lives of employees.Defined contribution plans are accounted for on the accrual basis, as the Group’s liabilities arelimited to its contributions.Certain subsidiaries provide post-retirement healthcare benefits to their retirees. The expectedcosts of these benefits are measured and recognised in a manner similar to that for defined benefitpension plans. Valuation of these obligations is carried out by independent actuaries.o) Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to theGroup and the revenue can be reliably measured. Revenue is presented, net of applicable taxes,returns and discounts, and is recognised upon delivery of products or performance of servicesand customer acceptance. Interest and investment income are recognised as they accrue unlesscollectibility is in doubt.12