Annual Report 2012 - Dialog

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70 l Dialog Axiata PLC l Annual Report 2012 Notes to the Financial Statements 2 Summary of significant accounting policies contd. 2.13 Trade and other payables contd. (e) Share-based compensation contd. Non-market vesting conditions are included in the assumptions about the number of options that are expected to vest. At the date of statement of financial position, the Company and the Group revise its estimates of the number of share options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. 2.17 Deferred revenue Deferred revenue comprises of, the unutilised balance of call time, telecast time and downloadable quota in respect of prepaid cards and services sold to customers. Such revenue amounts are recognised as revenue upon subsequant utilisation of call time, telecast time and downloadable quota by the customer or when the credit expires. 2.18 Subscriber acquisition costs Subscriber acquisition costs comprise handset and other subsidies offered under usage contracts in excess of one (1) year. Subscriber acquisition costs are amortised over the contract period and reviewed annually for impairment. Other subscriber acquisition costs under usage contracts less than one (1) year are recognised as an expense in the statement of comprehensive income as incurred. 2.19 Provisions Provisions are recognised when the Company and the Group have a present legal or constructive obligation as a result of past events when it is more probable that an outflow of resources will be required to settle the obligation and when a reliable estimate of the amount can be made. Provisions are not recognised for future operating losses. Where there are number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions for asset retirement obligations are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as finance cost. 2.20 Contingent liabilities and contingent assets The Company and the Group do not recognise a contingent liability but disclose its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Company and the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Company and the Group. The Company and the Group do not recognise a contingent asset but discloses its existence where inflows of economic benefits are probable, but not virtually certain. In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.
Annual Report 2012 l Dialog Axiata PLC l 71 The Group recognises separately the contingent liabilities of the acquiree’s as part of allocating the cost of a business combination where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the resulting effect will be reflected in the goodwill arising from the acquisitions. 2.21 Government grants The Company and the Group are entitled to claim certain qualifying expenses in relation to Telecommunication Development Charge (TDC) from the Telecommunications Regulatory Commission of Sri Lanka (TRC). The TDC refund is recognised as government grant and is accounted for where there is reasonable assurance that the grant will be received and the Company and the Group will comply with all attached conditions. Government grants in respect of TDC refund is recognised in the statement of comprehensive income over the period necessary to match them with the costs they are intended to compensate. TDC refund received is deferred and credited to the statement of comprehensive income on straight line basis over the expected useful lives of the related assets. 2.22 Accounting for leases where the Company and the Group are the lessee (a) Finance leases Leases of PPE where the Company and the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant periodic rate of interest on the balance outstanding. The corresponding rental obligations, net of finance charges, are included in payables. The interest element of the finance lease is charged to the statement of comprehensive income as finance cost over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. PPE acquired under finance leases are depreciated over the estimated useful life of the asset in accordance with the annual rates stated in note 2.4 to the financial statements as mentioned above. Where there is no reasonable certainty that the ownership will be transferred to the Company and the Group, the asset is depreciated over the shorter of the lease term or its estimated useful life. (b) Operating leases Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged as an expense to the statement of comprehensive income on a straight-line basis over the period of the lease. 2.23 Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services rendered in the ordinary course of the Company’s and the Group’s activities. Revenue is stated net of all applicable taxes and levies, returns, rebates and discounts. The Group revenue is subject to elimination of sales within the Group. The Company and the Group recognise revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Company’s and the Group’s activities as described below. The Company and the Group base its estimates of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. The revenue is recognised as follows:
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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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