The Case Study - Seylan Bank

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188Seylan Bank PLC Annual Report 2009Notes to the Consolidated Financial Statements26.a.1 Movement in Temporary DifferencesDeferred Tax - Liability2009 - BANK 2008 - BANKBalance as at Recognised Balance as at Balance as at Recognised Balance as at1st January in Profit or Loss 31st December 1st January in Profit or Loss 31st DecemberRs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000Property, Plant &Equipment 1,083,333 (23,331) 1,060,002 949,568 133,765 1,083,333Lease Rentals 289,417 (46,715) 242,702 182,810 106,607 289,4171,372,750 (70,046) 1,302,704 1,132,378 240,372 1,372,750Deferred Tax - AssetsDefined BenefitObligation* 614,318 (614,318) – 635,060 (20,742) 614,318Unclaimed Bad DebtProvision - Specific 874,778 1,576,590 2,451,368 – 874,778 874,778Bad Debt Provision -General** 128,474 20,613 149,087 377,468 (248,994) 128,474Tax Losses CarriedForward 16,843 (16,843) – – 16,843 16,8431,634,413 966,042 2,600,455 1,012,528 621,885 1,634,413Net Deferred TaxAssets/Liabilities 261,663 1,036,088 1,297,751 (119,850) 381,513 261,6632009 - GROUP 2008 - GROUPTemporaryTax DifferenceRs. ‘000 Rs. ‘000TemporaryDifferenceRs. ‘000TaxRs. ‘00026.b Analysis of Deferred Tax Assets and LiabilitiesDeferred Tax - LiabilityProperty, Plant & Equipment 1,062,455 371,859 1,071,311 374,959Lease Rentals 242,702 84,946 289,417 101,2961,305,157 456,805 1,360,728 476,255Deferred Tax - AssetsDefined Benefit Obligation* 2,874 1,006 614,318 215,012Unclaimed Bad Debt Provision - Specific 2,451,368 857,979 874,778 306,172Bad Debt Provision - General 149,087 52,180 128,474 44,966Tax Losses Carried Forward – – 16,843 5,8952,603,329 911,165 1,634,413 572,045Net Deferred Tax Assets/Liabilities (Note 26.b.1) 1,298,172 454,360 273,685 95,790
Seylan Bank PLC Annual Report 2009 189Notes to the Consolidated Financial Statements26.b.1 Movement in Temporary DifferencesDeferred Tax - Liability2009 - GROUP 2008 - GROUPBalance as at Recognised Balance as at Balance as at Recognised Balance as at1st January in Profit or Loss 31st December 1st January in Profit or Loss 31st DecemberRs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000Property, Plant &Equipment 1,071,311 (8,856) 1,062,455 949,568 121,743 1,071,311Lease Rentals 289,417 (46,715) 242,702 182,810 106,607 289,4171,360,728 (55,571) 1,305,157 1,132,378 228,350 1,360,728Deferred Tax - AssetsDefined BenefitObligation* 614,318 (611,444) 2,874 635,060 (20,742) 614,318Unclaimed Bad DebtProvision - Specific 874,778 1,576,590 2,451,368 – 874,778 874,778Bad Debt Provision -General** 128,474 20,613 149,087 377,468 (248,994) 128,474Tax Losses CarriedForward 16,843 (16,843) – – 16,843 16,8431,634,413 968,916 2,603,329 1,012,528 621,885 1,634,413Net DeferredTax Assets/Liabilities 273,685 1,024,487 1,298,172 (119,850) 393,535 273,685* Defined Benefit Obligation (Gratuity Provision)The Bank has a separate Gratuity Trust Fund which was approved by the Commissioner General of Inland Revenue. As per the approval,Bank could transfer Gratuity Provision of 62.5% of the last month’s salary of the year and deduct from the tax computation. Therefore,temporary differences have not arisen.** General ProvisionRecognition of deferred tax assets arising from General Provision at Balance Sheet date was limited to non-performing ratio of thetemporary difference. In management’s view the Bank’s NPA Ratio as at Balance Sheet date is an indicator of deferred tax assets whichcould be recovered in the future periods.The Bank has recognised deferred tax assets on the General Provision of Rs. 149,086,976 (Amount not recognised - Rs. 360,089,806).Seylan Developments PlcIn accordance with the BOI agreement dated 30th March 1993, the profits and income of the Companyare exempt from taxation until the year 2011 and at the expiry of the said period the following options areavailable for the Company.(a) Income tax payable for the Year of Assessment shall be computed at 2% of the turnover of the Companyfor 15 years;(b) The provisions of the Inland Revenue Laws for the time being imposed shall apply.In the event the Company elects option (a) no Deferred Tax Liability will arise even after the expiry of thetax exemption period.The Company needs to make the election only 90 days prior to the expiration of the said tax exemptionperiod after evaluating all tax implications prevailing at that time. Therefore, no provision has been madein the Financial Statements by the Company for Deferred Tax Liability which could be arised after the taxexemption period in the event the Company elects option (b).
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The Case Study > Seylan Bank PLC An
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Copyright © 2009 Seylan Bank PLCSt
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9{ Chapter 1 }Growth and ItsChallen
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Growth and Its Challenges11Rapid, P
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Growth and Its Challenges13“Despi
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Growth and Its Challenges15The comp
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18The Case Study > Seylan Bank PLC
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25{ Chapter 3 }Swift andDecisive Ac
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Swift and Decisive Action27The sign
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29“WE HAVE HONOURED EACHAND EVERY
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3110847965. Rear Admiral (Rtd.) B.A
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35{ Chapter 4 }Reassuringthe Public
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Reassuring the Public37A Multi-Fron
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Reassuring the Public39the word tha
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49{ Chapter 6 }A Sound FutureStrate
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A Sound Future Strategy51StructureL
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The Case Study - Seylan Bank

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