Annual Report 2012 - Dialog

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116 l Dialog Axiata PLC l Annual Report 2012 Notes to the Financial Statements 28 Finance income and costs Group Company 2012 2011 2012 2011 Interest income on deposits 307,022 424,927 270,214 409,932 Finance income 307,022 424,927 270,214 409,932 Interest expenses on: - bank overdrafts (137) (59) (41) (106) - term loans (247,865) (469,174) (247,865) (469,171) - loans from parent company (241,892) (224,016) (241,892) (224,016) - finance cost on asset retirement obligations (ARO) (Note 25) (64,272) 213,560 (62,866) 214,084 - finance lease (3,670) (328) Nil Nil - dividend on cumulative redeemable preference shares Net foreign exchange loss on foreign currency (53,904) (207,063) (53,904) (207,063) transactions / balances (2,422,394) (506,402) (2,376,597) (502,203) Finance costs (3,034,134) (1,193,482) (2,983,165) (1,188,475) Finance costs – net (2,727,112) (768,555) (2,712,951) (778,543) 29 Income tax (a) Group Company 2012 2011 2012 2011 Current tax 5,956 51,393 (2,892) 49,770 Economic service charge 2,316 125,181 2,316 114,385 Deferred tax charged to statement of comprehensive income (Note 23) 304,084 402,083 304,084 402,083 Deferred tax credited to statement of comprehensive income (Note 23) (2,277,017) Nil (2,277,017) Nil (1,964,661) 578,657 (1,973,509) 566,238 (b) Under the agreement entered into between the Company and the Board of Investment of Sri Lanka (BOI), the main source of income of the Company is exempt from income tax for fifteen years (initial tax exemption period of seven years was extended to fifteen years as per the amendment made to BOI agreement on 17 April 2003) commencing either from the year in which it first makes a profit, or in the fifth year subsequent to the start of commercial operations, whichever is earlier. The Company commenced commercial operations during 1995 and profits were first recorded during the year ended 31 December 1998. Accordingly, the tax exemption period commenced from 1 January 1998 and ended on 31 December 2012. The Company is currently liable to pay income tax at standard rates on interest income earned in Sri Lankan rupees.
Annual Report 2012 l Dialog Axiata PLC l 117 In accordance with terms of the investment agreement with BOI, the Company opted for 2% revenue based tax with effect from the year 2013 at the expiration of 15 year tax holiday period. Subsequent to the approval of the BOI on 20 March 2012, selection of revenue based tax option has been notified to and acknowledged by the Department of Inland Revenue on 7 August 2012. Accordingly, the deferred tax liability of Rs. 2,277,016,844 has been reversed to the statement of comprehensive income. (c) Under the agreement entered into between DBN and BOI of Sri Lanka and in accordance with Section 17 of BOI Law No. 4 of 1978, DBN has been granted a seven-year tax holiday period commencing from the year of assessment 1999/2000 and ended in the year of assessment 2005/2006. Further the additional tax exemption period of 5 years was granted subsequently, which commenced from year of assessment 2005/ 2006 and ended in 2010/2011. After the expiration of the additional tax exemption period, the profits and income of DBN shall, for any year of assessment, be charged at the rate of fifteen per centum (15%). (d) Under the agreement entered into between DTV and the BOI, the main source of income of the DTV is exempt from income tax for a period of three years from the year of assessment, commencing either from the year in which it first makes a profit, or any year of assessment no later than two years from the date of commencement of commercial operations whichever is earlier. DTV commenced commercial operations during the year 2007. Upon expiry of the exemption period, DTV’s profits and income will be subject to a corporate tax of 10 per cent for a period of two years immediately succeeding the last date of the exemption period. After the expiration of the aforesaid concessionary tax rate of 10%, the profits and income of the enterprise shall be charged at the rate of 20% for any year of assessment. (e) The tax on the profit before tax differs from the theoretical amount that would arise using the applicable tax rate to profits is as follows: Group Company 2012 2011 2012 2011 Profit before tax Add: 4,065,526 5,448,219 4,216,755 6,389,296 Amortisation of increase in fair value of licenses 50,286 50,286 Nil Nil Other consolidation adjustments 9,640 (8,794) Nil Nil 4,125,452 5,489,711 4,216,755 6,389,296 Tax at the applicable rate Tax effects of: 1,155,127 1,537,119 1,180,691 1,789,003 - Income not subject to tax (850,359) (802,004) (624,650) (1,279,833) - Associates results reported net of tax 2,391 (2,711) Nil Nil - Expenses not deductible for tax purposes 581,162 1,093,447 512,601 416,487 - Unrecognised differed tax (835,656) (1,343,921) (1,011,545) (447,925) - ESC write off 4,311 125,181 (41,653) 114,385 - Utilisation of previously unrecognised tax losses (38,229) (16,210) (18,336) (15,072) - Over provision of tax (10,475) (12,244) 2,316 (10,807) - Net reversal of deferred tax (1,972,933) Nil (1,972,933) Nil (1,964,661) 578,657 (1,973,509) 566,238 The applicable tax rate for the Group and the Company was 28% (2011 - 28%).
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Dialog Axiata PLC l Annual Report 2
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Introduction to the Company Dialog
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Annual Report 2012 l Dialog Axiata
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Mr. Moksevi Prelis Independent, Non
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Mr. James Maclaurin Non-Independent
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Group NPAT Rs. Mn +23% 7,000 6,000
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Gross Debt to Equity 2.0 1.5 1.0 0.
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Dialog Axiata PLC - Financial Revie
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EBITDA Annual Report 2012 l Dialog
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Table 1: Market information on DIAL
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Figure 4: Trend in Composition of S
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Financial Reports Annual Report of
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