SCOTIA INVESTMENTS TRINIDAD AND TOBAGO LIMITED FINANCIAL RESULTS AS AT 31 OCTOBER 2015

FINANCIAL RESULTS AS AT 31 OCTOBER Independent Auditors' Report to the Shareholder of Scotia Investments Trinidad and Tobago Limited Statement of Profit or Loss Year ended October 31, Notes We have audited the accompanying financial statements of Scotia Investments Trinidad and Tobago Limited (the Company) which comprise the statement of financial position as at October 31,, the statements of profit or loss, other comprehensive income, changes in shareholder s equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. NET INTEREST AND OTHER INCOME interest income Commission income Net interest and other income 461,819 9,204,885 9,666,704 953,903 3,029,241 3,983,144 Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. EXPENSES Salaries and staff benefits Premises and technology Communications and marketing expenses 2,914,805 1,083,489 50,819 3,382,011 7,431,124 3,619,968 863,951 66,848 447,057 4,997,824 Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at October 31,, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. PROVISION FOR TAXATION NET PROFIT (LOSS) FOR THE YEAR Statement of Comprehensive Income Year ended October 31, NET PROFIT (LOSS) FOR THE YEAR, ATTRIBUTABLE TO EQUITY HOLDER OTHER COMPREHENSIVE INCOME Items that are or may be reclassified to profit or loss Revaluation of availableforsale investments: Realised gain on disposal of availableforsale investments TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO EQUITY HOLDER 12 () 1,098,895 (1,094,731) Chartered Accountants November 30, Port of Spain Trinidad and Tobago Statement of Changes in Year ended October 31, Stated Capital Statutory Reserve Investment Revaluation Reserve Retained Earnings Balance as at October 31, 2013 (6,876) 2,153,544 31,525,668 Statement of Financial Position October 31, ASSETS Notes Net loss for the year comprehensive income Revaluation of availableforsale investments: CASH RESOURCES INVESTMENT SECURITIES DEFERRED TAX OTHER ASSETS assets LIABILITIES AND SHAREHOLDER S EQUITY OTHER LIABILITIES 5 12 6 7 11 1,566,147 comprehensive income (loss) for the year Balance as at October 31, Net profit for the year comprehensive income Revaluation of availableforsale investments: Realised gain on disposal of availableforsale investments comprehensive income (loss) for the year Transactions with owners, recorded directly into equity (586,301) (1,094,731) 1,098,895 13,365,216 Transfer to statutory reserve () SHAREHOLDER S EQUITY Stated capital Statutory reserve fund Investment revaluation reserve Retained earnings 8 9 Balance as at October 31, and shareholder s equity These financial statements have been approved for issue by the Board of Directors on November 30, and signed on its behalf: Anya M. Schnoor Chairperson George Janoura Director

FINANCIAL RESULTS AS AT 31 OCTOBER Statement of Cash Flows Year ended October 31, Receivables Receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when SITTL provides money or services directly to a debtor with no intention of trading the receivable. CASH FLOWS FROM OPERATING ACTIVITIES Adjustments to reconcile loss before taxation to net cash from operating activities: Depreciation Amortisation of bond discount Change in other receivables Change in other Taxation paid Net cash (used in) from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from redemption of securities Purchase of fixed assets Net cash from investing activities Net increase in cash and cash equivalents CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR Notes to Financial Statements October 31, 1. Incorporation and Business Activities Scotia Investments Trinidad and Tobago Limited (SITTL) was incorporated in the Republic of Trinidad and Tobago, on August 23, 2007. On October 1, 2008 it became a whollyowned subsidiary of Scotiatrust and Merchant Bank Trinidad and Tobago Limited (Scotiatrust), also incorporated in the Republic of Trinidad and Tobago, and began trading on September 9, 2008. Scotiatrust was amalgamated with Scotiabank Trinidad and Tobago Limited (SBTT) on May as a result of which SITTL became a wholly owned subsidiary of SBTT. SITTL is licensed under the Financial Institutions Act, 2008 (FIA). SITTL s principal activity is the provision of asset management services. The address of its registered office is 5658 Richmond Street, Port of Spain. SITTL s ultimate parent company is The Bank of Nova Scotia, which is incorporated and domiciled in Canada. 2. Basis of Preparation 38,282 (6,977) 1,563,067 (11,997,457) (303,344) (8,470,849) 8,599,284 8,599,284 128,435 41,456 (16,156) (1,066,741) 6,597,973 (5,076) 4,536,776 6,375,088 (31,570) 6,343,518 10,880,294 13,608,519 (iv) Heldtomaturity Heldtomaturity investments are nonderivative financial assets with fixed or determinable payments and fixed maturities that SITTL s management has the positive intention and ability to hold to maturity. Were SITTL to sell other than an insignificant amount of heldtomaturity assets, the entire category would be compromised and reclassified as availableforsale and would prevent SITTL from classifying investment securities as heldtomaturity for the current and the following two financial years. However, the following circumstances would not trigger a reclassification: Sales or reclassifications that are so close to maturity that changes in interest rates would not have a significant effect on the financial asset s fair value. Sales or reclassifications that occur after SITTL has collected substantially all of the original principal. Sales or reclassifications that are attributable to nonrecurring isolated events beyond SITTL s control that could not have been reasonably anticipated. Availableforsale Availableforsale investments are those intended to be held for an indefinite period of time, and may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices. Financial SITTL classifies its financial, other than financial guarantees and loan commitments, as measured at amortised cost or fair value through profit or loss. Measurement Financial instruments are measured initially at cost, including transaction costs. Subsequent to initial recognition all financial assets at fair value through profit or loss and availableforsale assets are measured at fair value, based on their quoted market price at the reporting date without any deduction for transaction costs. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which SITTL has access at that date. Where the instrument is not actively traded or quoted on recognised exchanges, fair value is determined using discounted cash flow analysis. Where discounted cash flow techniques are used, estimated future cash flows are based on management s best estimates and the discount rate is a market related rate at the reporting date for an instrument with similar terms and conditions. Any availableforsale asset that does not have a quoted market price in an active market and where fair value cannot be reliably measured, is stated at cost, including transaction costs, less impairment losses. Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board. Gains and losses arising from the change in the fair value of availableforsale investments subsequent to initial recognition are accounted for as changes in the investment revaluation reserve and recognized in other comprehensive income (OCI). (c) 3. Significant Accounting Policies Basis of measurement The financial statements are prepared on the historical cost basis modified for the inclusion of availableforsale investments at fair value. Functional and reporting currency Items included in the financial statements of SITTL are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The financial statements are presented in Trinidad and Tobago dollars which is SITTL s functional and presentation currency. (v) Gains and losses, both realized and unrealized, arising from the change in the financial assets at fair value through profit or loss are recognized in profit or loss. All nontrading financial are measured at amortised cost and receivables and heldtomaturity assets are measured at amortised cost less impairment losses. Amortised cost measurement Amortised cost is calculated on the effective interest rate method. Premiums and discounts, including initial transaction costs, are included in the carrying amount of the related instrument and amortised based on the effective interest rate of the instrument. The significant accounting policies adopted in the preparation of these financial statements are set out below. (c) Revenue recognition i) Investments Interest income is accounted for on the accrual basis for all investments using the effective interest method. ii) Foreign currency Transactions in foreign currencies are translated at the rate of exchange ruling at the transaction date. Foreign currency monetary assets and are translated at the rate of exchange ruling at the reporting date. Resulting translation differences and profits and losses from trading activities are included in profit or loss. Financial assets and Financial instruments carried on the statement of financial position include cash resources, investment securities and accounts payable. The standard treatment for recognition, derecognition, classification and measurement of SITTL s financial instruments are noted below in notes (iv), whilst, additional information on specific categories of SITTL s financial instruments are discussed in Notes 3(d) 3(e): Fees and commissions Fees and commissions are recognised in income when a binding obligation has been established. Where such obligations are continuing, income is recognised over the term of the facility. Recognition SITTL initially recognises financial assets and (including assets and designated at fair value through profit or loss) on the trade date at which SITTL becomes a party to the contractual provisions of the instrument. (d) (e) (vi) (vii) Offsetting Financial assets and financial are offset and the net amount presented in the statement of financial position only when SITTL has a legally enforceable right to set off the amounts and it intends to either settle them on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis when permitted under IFRS, or for gains and losses arising from a group of similar transactions. Designation at fair value through profit or loss Management designates financial assets and financial at fair value through profit or loss when the assets or are managed and reported internally on a fair value basis, or the designation eliminates or significantly reduces an accounting mismatch that would otherwise arise. Cash and cash equivalents Cash and cash equivalents comprise cash in hand, deposits with banks and related companies and shortterm highly liquid investments with maturities of three months or less when purchased, including treasury bills and other bills eligible for rediscounting with the Central Bank of Trinidad and Tobago. The carrying value approximates the fair value due to its highly liquid nature and the fact that it is readily converted to known amounts of cash in hand and is subject to insignificant risk of change in value. Debt investments that SITTL has the intent and ability to hold to maturity are classified as heldtomaturity assets. All other investments are classified as availableforsale. On disposal or on maturity of an investment, the difference between the net proceeds and the carrying amount is included in profit or loss. When availableforsale assets are sold, converted or otherwise disposed of, the cumulative gain or loss recognized in equity is transferred to profit or loss. (ii) Derecognition SITTL derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by SITTL is recognized as a separate asset or liability. SITTL derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. SITTL enters into transactions whereby it transfers assets recognized on its statement of financial position, but retains either all risks or rewards of the transferred assets or a portion of them. If all or substantially all risks and rewards are retained, then the transferred assets are not derecognised from the statement of financial position. Transfers of assets with retention of all or substantially all risks and rewards include, for example, securities lending and repurchase transactions. (f) (g) are carried at cost less accumulated depreciation, amortisation and impairment losses (see 3(g)). Depreciation and amortisation are calculated using the declining balance method at the following rates: Equipment and furniture 10% to 25% Leasehold improvements over the term of the respective leases. Impairment The carrying amounts of SITTL assets, other than deferred tax assets (see Note 3(h)) are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. (iii) Classification SITTL classifies its financial assets into the following categories: financial assets at fair value through profit or loss; receivables; heldtomaturity; and availableforsale financial assets. Management determines the classification of its investments at initial recognition. Financial assets at fair value through profit or loss This category includes financial assets held for trading or financial assets designated at fair value through profit or loss. A financial asset is classified in this category if acquired principally for the purpose of selling in the shortterm or is so designated by management. The recoverable amount of other assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

FINANCIAL RESULTS AS AT 31 OCTOBER (h) Taxation Income tax expense for the year comprises current tax and the change in deferred tax. It is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in OCI. Current tax comprises tax payable calculated on the basis of the expected taxable income for the year, using the tax rate enacted by the reporting date, green fund levy, and any adjustment of tax payable for previous years. 7. Property, Plant and Equipment Leasehold Improvements Equipment & Furniture is provided using the balance sheet liability method on all temporary differences between the carrying amounts for financial reporting purposes and the amounts used for taxation purposes, except differences relating to the initial recognition of assets or which affect neither accounting nor taxable income (loss). Net deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. is calculated on the basis of the tax rate that is expected to apply to the period when the asset is realised or the liability is settled. The effect on deferred tax of any changes in the tax rate is charged to the statement of income, except to the extent that it relates to items previously charged or credited directly to equity. Cost At beginning and end of the year Accumulated depreciation and amortisation Charge for year 119,183 12,816 131,999 313,538 155,896 25,466 181,362 560,884 5,079 38,282 313,361 In determining the amount of current and deferred tax, SITTL considers the impact of tax exposures, including whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes SITTL to change its judgement regarding the adequacy of existing tax ; such changes to tax would impact income tax expense in the period in which such a determination is made. Pension plan SITTL s parent company, Scotiabank Trinidad and Tobago Limited (Scotiabank), has, for all eligible staff, accounted for the effects of adopting International Accounting Standard (IAS) 19 (Revised 2007) Employee Benefits. As such no financial effect of IAS 19 is included in these financial statements. Net book value October 31, Cost Additions 115,347 132,176 281,968 31,570 313,538 529,314 31,570 560,884 (j) (k) (l) (m) under administration that are not beneficially owned by SITTL but are under its administration have been excluded from these financial statements. under administration as at October 31, totalled 5,894,851,114 (: 1,708,332,375). under management that are not beneficially owned by SITTL but are under its management have been excluded from these financial statements. under management as at October 31, totalled 2,549,986,864 (: NIL). New standards, amendments and interpretations adopted SITTL has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, which are effective for annual periods beginning on or after January 1, : Offsetting Financial and Financial (amendments to IAS 32) and IFRIC 21 Levies. The adoption of these amendments did not have any material effect on SITTL s financial statements. New standards, amendments and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning on or after January 1,, but are not mandatory and have not been applied in preparing these financial statements. The new standards and amendments are not expected to have a significant effect on the financial statements with the exception of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers. Accumulated depreciation and amortisation Charge for year Net book value October 31, 8. Stated Capital 104,942 14,241 119,183 128,163 128,681,215 155,896 157,642 There were no capitalised borrowing costs related to the acquisition of property, plant and equipment during the year (: NIL). Authorised Authorised capital consists of an unlimited number of ordinary shares Issued and fully paid Ordinary shares of no par value 233,623 41,456 5,079 IFRS 9 will replace IAS 39 Financial Instruments: Recognition and Measurement. The new standard will include revised guidance on the classification and measurement of financial instruments. IFRS 9 will be effective for annual reporting periods beginning on or after 1 January 2018. SITTL is assessing the potential impact on its financial statements resulting from the application of IFRS 9. IFRS 15 will establish a comprehensive framework for revenue recognition. The new standard will replace existing guidance in various standards, including IAS 18 Revenue and IFRIC 13 Customer Loyalty Programmes. IFRS 15 will be effective for annual reporting periods beginning on or after January 1 2017. SITTL is assessing the potential impact on its financial statements resulting from the application of IFRS 15. 4. Use of Accounting Estimates and Judgments The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amount of assets,, contingent assets and contingent at the date of the financial statements and income and expenses during the reporting period. Actual results could differ from these estimates. Judgments made by management in the application of IFRS that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next financial year are discussed below: 5. Investment Securities Determining fair values The determination of fair value for financial assets and for which there is no observable market price requires the use of valuation techniques as described in accounting policy 3(c)(iv). For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity, concentration, on uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. Financial asset and liability classification SITTL s accounting policies provide scope for assets and to be designated on inception into different accounting categories in certain circumstances. In designating financial assets or at fair value through profit or loss, SITTL has determined that it has met one of the criteria for this designation set out in accounting policy 3(c)(iii). In designating financial assets or as availableforsale, SITTL has determined that it has met one of the criteria for this designation set out in accounting policy 3(c)(iii). In classifying financial assets as heldtomaturity, SITTL has determined that it has both the positive intention and ability to hold the assets until maturity date as required by accounting policy 3(c)(iii). Availableforsale securities Government and state owned debt securities investment securities 6. Receivables Accrued interest 4,360 1,002,556 4,824,480 9,451,409 210,365 2,359,618 9. Statutory Reserve Fund In accordance with the Financial Institutions Act, 2008, SITTL is required to transfer at the end of each financial year no less than ten percent of its net income after taxation to a Statutory Reserve Fund until the amount standing to the credit of the Statutory Reserve Fund is not less than its paidup capital. The balance shown for the statutory reserve fund is as follows: 10. Related Party Balances and Transactions Outstanding Balances Balance, beginning of year Amount transferred Balance, end of year A party is related to SITTL if: Directly or indirectly the party controls, is controlled by, or is under common control with SITTL; has an interest in SITTL that gives it significant influence over SITTL; or has joint control over SITTL. (ii) (iii) (iv) The party is a member of the key management personnel of SITTL. The party is a close member of the family of any individual referred to in or (ii) above. Loans, investments and other assets interest and other income expenses Directors 24,575,867 2,904,214 54,956 293 The party is a postemployment benefit plan for the benefit of employees of SITTL, or any company that is a related party of SITTL. A number of banking transactions have been entered into with related parties in the normal course of business. These transactions were conducted at market rates, on commercial terms and condition, except for certain loans made available to officers. Loans deemed to be below market rates in accordance with personal income tax legislation are taxed as dictated for in law. Related party transactions include but are not limited to the following: Data processing and information technology support Technical and management services Operations support Transaction processing support under administration under management 12,469,658 6,846 33,000 172 Key management comprises individuals responsible for planning, directing and controlling the activities of SITTL 55,249 33,172 Key management compensation Shortterm benefits 331,6 1,071,220 11. Accounts Payable and Accrued These balances primarily include amounts related to the restructuring of SITTL.

FINANCIAL RESULTS AS AT 31 OCTOBER 12. Taxation 12.1 Provision for taxation provision Green Fund levy Business levy provision for taxation 534,334 8,347 7,703 12.2 Reconciliation of provision for taxation The following is a reconciliation of the application of the effective tax rate with the provision for taxation Computed tax using applicable corporation tax rate 25% Tax effect of nondeductible cost and nontaxable income Green Fund levy Business levy 558,895 (24,561) 8,347 7,703 (289,497) 3,144 1,932 2,014 (253,670) (35,765) 3,144 1,932 (62) Concentration of and SITTL has the following currency positions: assets and accrued Net balance sheet position TT 24,562,504 32,842,847 1,367,402 31,475,445 US 54,744 54,744 357 54,387 Tax provision 12.3 ation The net deferred tax (asset) liability is attributable to the following items: Availableforsale securities fair value remeasurement Tax losses carried forward 13. Financial Risk Management The movement in the deferred tax (asset) liability balance comprises: Balance, beginning of year Availableforsale securities fair value remeasurement Charge for the year Balance, end of year SITTL has exposure to the following risks from its use of financial instruments: Credit risk Market risk Liquidity risk Operational risk SITTL s maximum exposure to credit risk is detailed below: (excluding equities) availableforsale credit risk exposure (524,564) 10,150 (1,304,646) () () (193,781) () (330,783) 8,645 (1,853,525) () (1,764,648) (121,518) (289,497) () This note presents information about SITTL s exposure to each of the above risk, SITTL s objectives, policies and processes for measuring and managing risk, and SITTL s management of capital. Risk management framework SITTL utilises the risk management framework used by Scotiabank Trinidad and Tobago Limited which is as follows: The Board of Directors has overall responsibility for the establishment and oversight of SITTL s risk management framework. The Scotiabank Group has established the Group Asset Liability Committee (ALCO), Credit and Operational Risk committees, which are responsible for developing and monitoring SITTL s risk management policies in their specified areas. SITTL s risk management policies are established to identify and analyse the risks faced by SITTL, to set appropriate risk limits and controls, and to monitor risk and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions, products and services offered. Scotiabank, through its training and management standards and procedures, aim to develop a disciplined and constructive control environment, in which all employees understand their roles and obligations. The Scotiabank Group Audit Committee is responsible for monitoring compliance with SITTL s risk management policies and procedures, and for reviewing the adequacy of the risk management framework in relation to the risks faced by SITTL. The Scotiabank Audit Committee is assisted in these functions by the Internal Audit function. Internal Audit undertakes both regular and adhoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. 13.1 Credit risk Credit risk is the risk of loss resulting from the failure of a borrower or counterparty to honour its financial or contractual obligations to SITTL. Credit risk is created in SITTL s investment activities where counterparties have repayment, or other obligations to SITTL. 13.2 Market risk Credit risk is managed through strategies, policies, and limits that are approved by the Board of Directors, which routinely reviews the quality of the major portfolios and all the larger credits. SITTL s credit policies and limits are structured to ensure broad diversification across various types of credits. Limits are set for individual borrowers, particular industries and certain types of lending. These various limits are determined by taking into account the relative risk of the borrower or industry. SITTL s credit processes include: A centralised credit review system that is independent of the customer relationship function. Senior management which considers all major risk exposures; and An independent review by the Internal Audit Department. Furthermore, SITTL s management conducts a full financial review for each investment at least annually, so that they remain fully aware of investments risk profiles. Market risk refers to the risk of loss resulting from changes in market prices such as interest rates, foreign exchange market prices and other price risks. 9,451,409 The Scotiabank Group Asset Liability Committee (ALCO) provides senior management oversight of the various activities that expose SITTL to market risk. This includes, asset liability management, while also approving limits for funding and investment activities, and reviewing SITTL s interest rate strategies and performance against established limits. The key sources of SITTL s market risk are as follows: 13.2.1 Currency risk SITTL has no significant foreign exchange exposure since assets are funded by in the same currency. Foreign currency transactions have not required the use of interest rate swaps, foreign currency options and other derivative instruments which all carry inherent risks. assets and accrued Net balance sheet position 13.2.2 Interest rate risk TT 12,497,267 31,804,607 2,489,357 2,489,384 29,315,223 US 11,991,546 11,991,546 10,875,832 10,875,832 1,115,714 13,365,216 SITTL is exposed to interest rate risk where, due to changes in market interest rates, fluctuations arise in the value and the future cash flows of SITTL s financial instruments. Interest rate risk is managed through the matching of financial with investment activities, regular review of structural gaps and monitoring market conditions. Interest Sensitivity of, and The following table summarises carrying amounts of assets, and equity in order to arrive at SITTL s interest rate gap on the earlier of contractual repricing or maturity dates: Noninterest two to Over five years five years bearing assets assets and and accrued Shareholder's equity assets assets and and accrued Shareholder's equity two to Over five years five years 1,254,439 8,280,343 () Noninterest bearing 4,824,480 9,855,931 (33,940,422) 1,254,439 29,690,158

FINANCIAL RESULTS AS AT 31 OCTOBER 13.3 Liquidity risk Liquidity risk is the risk that SITTL is unable to meet its financial obligations in a timely manner at reasonable prices. Financial obligations include payments due under contractual arrangements, settlement of securities, borrowing and repurchase transactions and lending and investing commitments. Liquidity risk arises from fluctuations in cash flows. The objective of the liquidity management process is to ensure that SITTL honours all of its financial commitments as they fall due. SITTL through Scotiabank s Treasury function measures and forecast its cash flow commitments and ensures that sufficient liquidity is available to meet its needs. The ALCO monitors SITTL s liquidity management process, policies and strategies. To fulfill this objective, SITTL maintains diversified sources of funding, sets prudent limits and ensures immediate access to liquid assets. SITTL relies on a broad range of funding sources and applies prudent limits to avoid undue concentration. The principal source of funding is capital. The table below shows a maturity analysis of financial instruments using undiscounted cash flow of financial assets and financial based on their contractual maturity dates as at October 31. Tier 1 capital Share capital Statutory reserve fund Retained earnings qualifying Tier 1 capital Tier 2 capital Investment revaluation reserve qualifying Tier 2 capital Risk weighted assets: On balance sheet assets assets The following table summarises the net worth as at October 31. SITTL complied with all the externally imposed capital requirements to which it is subject. risk weighted assets regulatory capital to risk weighted assets 13.4 Capital management SITTL s capital management policies seek to achieve several objectives: 33,108,481 15,545,828 15,545,828 212.97% 3 13.5 Operational risk Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with SITTL s processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risk arises from all of SITTL s operations. 4,824,479 Up to SITTL s compliance with stock exchange rules as set by the Trinidad and Tobago Stock Exchange (TTSE) Ensure SITTL s ability to continue as a going concern To maintain a strong capital base to support the development of its business. Capital adequacy and the use of regulatory capital are monitored daily by SITTL s management. SITTL employs techniques in accordance with the Rules and Regulations of the TTSE which includes maintaining at all times a minimum net worth of one million dollars or such other amount as the Exchange may from time to time prescribe. SITTL s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to SITTL s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity. The primary responsibility for the development and implementation of controls to address operational risk is assigned to the Scotiabank Operational Risk Committee. This responsibility is supported by the development of overall Scotiabank standards for the management of operational risk in the following areas: Requirements for appropriate segregation of duties, including the independent authorization of transactions Reconciliation and monitoring of transactions Compliance with regulatory and other legal requirements Documentation of controls and procedures Periodic assessment of operational risks, the adequacy of controls and procedures to address the risks identified Reporting of operational losses and proposed remedial action Development of contingency plans Training and professional development Ethical and business standards Risk mitigation, including insurance where this is effective () () Up to () (8,163,844) 21,149,448 Two to five years Two to five years Over five years Over five years () 38,764,702 () 14. Fair Value of Financial and The fair value of on and offbalance sheet financial instruments are based on the valuation methods and assumptions set out in the significant accounting policies Note 3(c). SITTL measure fair value using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: Quoted market price (unadjusted) in an active market for an identical instrument. Valuation techniques based on observable inputs either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets that are considered less active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data. Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique included inputs not based on observable data and the unobservable inputs have a significant effect on the instrument s valuation. This category includes instruments that are based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments. Valuation techniques include net present value and discounted cash flow models, comparison with similar instruments for which observable market prices exist and other valuation models. Assumptions and inputs used in valuation techniques include riskfree and benchmark interest rates, credit spreads and other inputs used in estimating discount rates, bond and equity prices, foreign currency exchange rates, equity and equity index prices and expected price volatilities and correlations. Availability of observable market prices and model inputs reduces the need for management judgment and estimation and also reduces the uncertainty associated with determining fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets. Due to the judgment used in applying a wide range of acceptable valuation techniques and estimations in the calculation of fair value amounts, fair values are not necessarily comparable among financial institutions. Due to the judgement used in applying a wide range of acceptable valuation techniques and estimations in the calculation of fair value amounts, fair values are not necessarily comparable among financial institutions. The calculation of estimated fair values is based upon market conditions at a specific point in time and may not be reflective of future fair values. The table below analyses financial instruments measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised: The table below summarises the carrying amounts and fair values of those financial assets and that are not presented on SITTL s statement of financial position at fair value: Financial Financial and accrued Carrying Value Fair Value The fair values of these financial assets and have been determined to approximate their carrying value on the following basis: These amounts are shortterm in nature and are taken to be equivalent to fair value. These amounts are short term in nature and are taken to be equivalent to fair value. The table below is an analysis of financial instruments that are not presented on SITTL s statement of financial position at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised: Compliance with the Scotiabank standards is supported by a programme of periodic review undertaken by Scotiabank s Internal Audit. The results of Internal Audit reviews are discussed with management of the business unit to which they relate, with summaries submitted to the Audit Committee and senior management of SITTL.