Annual Report 2012 - Dialog

76 l Dialog Axiata PLC l Annual Report 2012
Notes to the Financial Statements
4 Capital management risk contd.
The gearing ratio as at 31 December were as follows:
Group Company
2012 2011 1 Jan 2011 2012 2011 1 Jan 2011
Borrowings (Note 22) 24,926,896 23,072,630 25,535,437 24,633,608 22,997,353 25,334,922
Total equity 37,181,545 33,193,921 29,902,474 46,393,240 42,199,496 37,955,732
Gearing ratio 0.67 0.70 0.85 0.53 0.54 0.67
5 Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
5.1 Critical accounting estimates and assumptions
The Company and the Group make estimates and assumptions concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed
below.
(a) Impairment assessment of goodwill
The Group tests goodwill for impairment annually in accordance with its accounting policy stated in note 2.5 and whenever
events or change in circumstances indicate that this is necessary within the financial year. The recoverable amounts of
cash-generating units have been determined based on value-in-use (VIU) calculations. These calculations require the use of
estimates and are disclosed in note 9.
(b) Estimated useful lives of PPE
The Company and the Group reviews annually the estimated useful lives of PPE based on factors such as business plan and
strategies, expected level of usage and future technological developments. Future results of operations could be materially
affected by changes in these estimates brought about by changes in the factors mentioned. A reduction in the estimated
useful lives of PPE would increase the recorded depreciation charge and decrease the PPE carrying value.
(c) Taxation
(i) Income taxes
Judgment is involved in determining the Company and the Group provision for income taxes. There are certain transactions
and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The
Company and the Group recognise liabilities for tax matters based on estimates of whether additional taxes will be due. If the
final outcome of these tax matters result in a difference in the amounts initially recognised, such differences will impact the
income tax and/or deferred tax provisions in the period in which such determination is made.
(ii) Deferred tax
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which
temporary differences can be utilised. This involves judgment regarding future financial performance of a particular entity in
which the deferred tax asset has been recognised.