2.28 Rabobank Certificates 2.29 Trust Preferred Securities and Capital Securities 2.30 Financial Guarantees 2.31 Segmented Information 2.32 Business Combinations 2.33 Disposal Groups Classified as Held for Sale and Discontinued Operations 2.34 Cash Flow Statement About this Report Chairman's Foreword Corporate Management Report Appendices Governance Consolidated Financial Company Financial Statements Statements Own issued debt securities that are repurchased are derecognized, with the difference between the carrying amount and the consideration paid being recognized in the income statement. The proceeds of the issue of Rabobank Certificates are available to Rabobank in perpetuity and are subordinate to all liabilities and to the Trust Preferred Securities and the Capital Securities. As the payment of distributions is wholly discretionary, the proceeds received and dividends paid on them are recognized in equity. As there is no formal obligation to (re)pay the principal or to pay a dividend, theTrust Preferred Securities and Capital Securities are recognized as 'Equity' and dividends paid on these instruments are recognized directly in equity. Financial guarantee contracts require the issuer to compensate the holder for losses incurred when the debtor fails to meet its obligations under the terms of the related debt instrument. The guarantees are initially recognized at fair value and subsequently measured at the higher of the amount of the impairment allowance and the amount initially recognized less cumulative amortization. A segment is a discrete operating component that is subject to risks and returns that differfrom those of other segments or operating components and that is viewed and managed as a separate and discrete component for Rabobank's strategic and operating management purposes. Business combinations are accounted for using the acquisition method.Thecostofan acquisition is determined as the monetary amount (orequivalent) agreed forthe acquisition ofthe business combination. Goodwill represents the difference between the cost ofthe acquisition and the acquirer's share ofthe fair value ofthe identifiable assets, liabilities and conditional assets and liabilities acquired. Goodwill is capitalized and recognized as an intangible asset. The non-controlling interest is also determined as the fair value or its share ofthe identifiable net assets ofthe company acquired. Direct acquisition costs are charged directly to the statement of income on acquisition. Assets that have been classified as held for sale are written down to their fair value, reduced by the estimated costs of sale, where this is lower than the carrying amount. An asset (or group of assets) is classified as held for sale when it is very likely that its economic value will be realized primarily through sale ratherthan through continued use, the asset (or group of assets) is fully available for sale in its current condition, management has committed itself to a plan to sell the asset, and the sale is expected to be completed within one year of its classification as held for sale. If a group of assets classified as held for sale represents a key business activity or key geographic region, it is classified as discontinued operations and recognized outside comprehensive income arising from continuing operations. Cash and cash equivalents include cash resources, money market deposits and deposits at central banks. The cash flow statement is prepared using the indirect method and provides details ofthe source ofthe cash and cash equivalents that became available during the year as well as their application during the year. The net pre-tax cash flow from operating activities is adjusted for non cash items in the statement of income and for non-cash changes in items in the statement of financial position. The consolidated statement of cash flows presents separately the cash flows from operating, investing and financing activities. Cash flows from operating activities include net changes in loans and advances, interbank deposits, deposits from customers and acquisitions, disposals and repayment of financial investments. Investment activities include acquisitions and disposals of subsidiaries, investments in associates and property and equipment. Financing activities include issues and repayments of Rabobank Certificates, Trust Preferred Securities, Capital Securities, Senior Contingent Notes, subordinated liabilities and debt securities in issue. The difference between the net change presented in the statement of cash flows and the change in cash and cash equivalents included in the statement of financial position is due to exchange differences. Annual Report 2018 - Consolidated Financial Statements 148

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Annual Reports Rabobank | 2018 | | pagina 150