Annual Report 2012 - Dialog

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94 l Dialog Axiata PLC l Annual Report 2012 Notes to the Financial Statements 9 Intangible assets contd. (c) Impairment tests for goodwill The Group undertakes an annual test for impairment of its Cash-Generating Units (‘CGUs’). The following CGUs, being the lowest level of assets for which there are separately identifiable cash flows, have carrying amounts of goodwill that are considered for the impairment test. 2012 2011 1 Jan 2011 Television operations 1,504,455 1,504,455 1,504,455 Fixed telephony, data & infrastructure 6,743,248 389,857 389,857 8,247,703 1,894,312 1,894,312 The recoverable amount of the CGU is determined based on the Value In Use (VIU) calculations. The VIU calculations apply Discounted Cash Flow Model using cash flow projections based on the forecasts and projections approved by the management covering a ten year period. Cash flows beyond the ten year period are extrapolated using the estimated growth rates as stated below. The growth rate does not exceed the long-term average growth rate for the business in which the CGUs operates. In the Discounted Cash Flow (DCF) model, the free cash flows have been discounted by the pre-tax discount rate. These forecasts and projections reflect management expectations of revenue growth, operating costs and margins for each CGU based on past experience and future plans and strategies. The following assumptions were applied in the value in use computation. 1 EBIDTA margin Projected EBIDTA margin is determined based on expected growth potential in fixed telephony/broadband and pay TV business tapping further in to developing markets. 2 Free cash flow (FCF) growth rate FCF growth projections are based on expected growth in EBITDA coupled with stabilizing capex to revenue. 3 Pre-tax discount rate Pre-tax discount rate of the Group is used as the discount rate for cash flow projections. 4 Terminal growth rate Terminal growth reflects the management expectations on the fixed telephony, data & infrastructure and television operations segments’ growth potential in Sri Lanka for the foreseeable future.
Given below are the projected variables used for the impairment test for 2012 and 2011: Annual Report 2012 l Dialog Axiata PLC l 95 Fixed telephony, data & infrastructure Television operations 2012 2011 2012 2011 EBIDTA margin (1) 27% 28% 28% 24% Free cash flow growth rate (2) 20% 2% 23% 121% Pre-tax discount rate (3) 15% 12% 15% 12% Terminal growth rate (4) 3% 2% 3% 2% Based on the impairment test performed, the recoverable amounts exceed the carrying value, hence no provision for impairment of goodwill was recognised as of 31 December 2012. Impact of possible changes in key assumptions The Group’s review includes an impact assessment of change in key assumptions. Sensitivity analysis shows that no impairment loss is required for the carrying value of the goodwill, including where realistic variances are applied to key assumptions. 10 Investment in subsidiaries % Holding 2012 2011 1 Jan 2011 Dialog Television (Private) Limited 100 3,864,746 3,864,746 3,864,746 Dialog Broadband Networks (Private) Limited 100 13,961,264 6,461,264 6,461,264 17,826,010 10,326,010 10,326,010 2012 2011 At 1 January 10,326,010 10,326,010 Issuance of shares against shareholder’s loan 7,500,000 Nil Acquisition of Firstsource-Dialog Solutions (Private) Limited (formerly known as Dialog Business Services (Private) Limited) 100 Nil 62,700 Disposal of Firstsource-Dialog Solutions (Private) Limited (formerly known as Dialog Business Services (Private) Limited) 100 Nil (62,700) At 31 December 17,826,010 10,326,010 On 11 May 2012, DBN converted advances from the Company amounting to Rs. 7,500,000,000 in to ordinary shares at the price of Rs. 10 each.
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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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Annual Report 2012 - Dialog

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