Financial Statements - Hemas Holdings, Ltd

DRIVING PERFORMANCE ● ENRICHING LIVES073 Hemas Holdings PLC Annual Report 2012/13monetary items that forms part of a netinvestment in a foreign operation. These arerecognised in other comprehensive incomeuntil the disposal of the net investment,at which time they are reclassified to theincome statements. Tax charges andcredits attributable to exchange differenceson those monetary items are also recordedin other comprehensive income.Non-monetary items that are measured interms of historical cost in a foreign currencyare translated using the exchange rates asat the dates of the initial transactions. Nonmonetaryitems measured at fair value ina foreign currency are translated using theexchange rates at the date when the fairvalue is determined.The gain or loss arising on translation ofnon-monetary items is recognised in linewith the gain or loss of the item that gaverise to the translation difference (translationdifferences on items whose gain or loss isrecognised in other comprehensive incomeor profit or loss is also recognised in othercomprehensive income or profit or lossrespectively).(b) Foreign OperationsThe assets and liabilities of foreignoperations are translated into Sri LankanRupees at the rate of exchange prevailingat the reporting date and their incomestatements are translated at exchange ratesprevailing at the dates of the transactions.The exchange differences arising onthe translation are recognised in othercomprehensive income. On disposal of aforeign operation, the component of othercomprehensive income relating to thatparticular foreign operation is recognised inthe income statement.2.2.3 Taxationa) Current TaxCurrent income tax assets and liabilities forthe current and prior periods are measuredat the amount expected to be recoveredfrom or paid to the Commissioner Generalof Inland Revenue. The tax rates and taxlaws used to compute the amount arethose that are enacted or substantivelyenacted on the reporting date in thecountry where the Company operates andgenerates taxable income. Current incometax relating to items recognised directly inequity is recognised in equity and not in theincome statement.The provision for income tax is based onthe elements of income and expenditureas reported in the financial statementsand computed in accordance with theprovisions of the Inland Revenue Act No 10of 2006 and the amendments thereto.b) Deferred TaxationDeferred tax is provided, using the liabilitymethod, on all temporary differences atthe reporting date between the tax basesof assets and liabilities and their carryingamounts for financial reporting purposes.Deferred income tax liabilities arerecognised for all taxable temporarydifferences except;i) Where the deferred income tax liabilityarises from the initial recognition of anasset or liability in a transaction that isnot a business combination and, at thetime of the transaction, affects neitherthe accounting profit nor taxable profitor loss; andii) In respect of taxable temporarydifferences associated with investmentsin subsidiaries, associates and interestsin joint ventures, except where thetiming of the reversal of the temporarydifferences can be controlled and it isprobable that the temporary differenceswill not reverse in the foreseeablefuture.Deferred income tax assets are recognisedfor all deductible temporary differences,carry-forward of unused tax credits andunused tax losses, to the extent that it isprobable that taxable profit will be availableagainst which the deductible temporarydifferences, and the carry-forward ofunused tax credits and unused tax lossescan be utilised except:i) Where the deferred income tax assetrelating to the deductible temporarydifference arises from the initialrecognition of an asset or liability ina transaction that is not a businesscombination and, at the time ofthe transaction, affects neither theaccounting profit nor taxable profit orloss; andii) In respect of deductible temporarydifferences associated with investmentsin subsidiaries, associates and interestsin joint ventures, deferred tax assets areonly recognised to the extent that it isprobable that the temporary differenceswill reverse in the foreseeable future andtaxable profit will be available againstwhich the temporary differences can beutilised.The carrying amount of deferred incometax assets is reviewed at each reportingdate and reduced to the extent that it is nolonger probable that sufficient taxable profitwill be available to allow all or part of thedeferred income tax asset to be utilised.Unrecognised deferred tax assets arereassessed at each reporting date and arerecognised to the extent that it has becomeprobable that future taxable profits will allowthe deferred tax assets to be recovered.Deferred income tax assets and liabilitiesare measured at the tax rates that areexpected to apply to the year when theasset is realised or the liability is settled,based on tax rates (and tax laws) that havebeen enacted or substantively enacted asat the reporting date.Deferred tax relating to items recognisedoutside the income statement is recognisedoutside the income stement. Deferred taxrelating to items recognised in correlationto the underlying transaction either in othercomprehensive income or directly in equity.Deferred tax assets and deferred taxliabilities are offset, if a legally enforceableright exists to set off current tax assetsagainst current tax liabilities and when thedeferred taxes relate to the same taxableentity and the same taxation authority.