Notes to the Consolidated Financial Statements - Seylan Bank
Notes to the Consolidated Financial Statements - Seylan Bank
Notes to the Consolidated Financial Statements - Seylan Bank
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286 North Bound > <strong>Seylan</strong> <strong>Bank</strong> Annual Report 2011<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>Consolidated</strong> <strong>Financial</strong> <strong>Statements</strong><br />
3.5.8 VAT on <strong>Financial</strong> Services<br />
The value base for value added tax for <strong>the</strong> <strong>Bank</strong> is <strong>the</strong> adjusted accounting profit before tax and emoluments<br />
of employees. The adjustment <strong>to</strong> <strong>the</strong> accounting profit before tax is for economic depreciation computed<br />
on prescribed rates instead of <strong>the</strong> rates adopted in <strong>the</strong> <strong>Financial</strong> <strong>Statements</strong>. The rate of VAT on financial<br />
services changed from 20% <strong>to</strong> 12% with effect from 1st January 2011 as it was announced by <strong>the</strong> 'fiscal<br />
proposal' for <strong>the</strong> year 2011.<br />
3.5.9 Fee and Commission Income<br />
All fee and commission income have been recorded when a trade takes place.<br />
3.5.10 Profit or Loss on sale of Property, Plant & Equipment/Investments<br />
Gains or losses of a revenue nature on <strong>the</strong> disposal of Property Plant & Equipment and share portfolio are<br />
accounted for in profit or loss.<br />
3.5.11 Lease Payments<br />
Lease payments made under operating leases are recognised in profit or loss of each period during <strong>the</strong><br />
lease term.<br />
Minimum lease payments made under finance leases are apportioned between <strong>the</strong> finance expense and<br />
<strong>the</strong> reduction of <strong>the</strong> outstanding liability. The finance expense is allocated <strong>to</strong> each period during <strong>the</strong> lease<br />
term so as <strong>to</strong> produce a constant periodic rate of interest on <strong>the</strong> remaining balance of <strong>the</strong> liability.<br />
3.5.12 Interest Expenses<br />
Interest payable is recognised on an accrual basis. O<strong>the</strong>r expenses have been recognised in <strong>the</strong> accounts as<br />
<strong>the</strong>y are incurred in <strong>the</strong> period <strong>to</strong> which <strong>the</strong>y relate.<br />
3.5.13 Earnings Per Share<br />
The <strong>Bank</strong> presents Basic Earnings per Share (EPS) data for its ordinary shares. Basic EPS is calculated by<br />
dividing <strong>the</strong> profit after taxation, minority interest and preference dividends by <strong>the</strong> weighted average number<br />
of ordinary shares in issue (both voting and non-voting) during <strong>the</strong> year ended 31st December. Weighted<br />
average number of ordinary shares has been calculated as per SLAS 34 considering <strong>the</strong> <strong>the</strong>oretical ex-rights<br />
value per share and <strong>the</strong> adjustment fac<strong>to</strong>r applicable for Rights Issue.<br />
3.5.14 Segment Reporting<br />
A segment is a distinguishable component of <strong>the</strong> Group that is engaged ei<strong>the</strong>r in providing related products<br />
or services (business segment), or in providing products and services within a particular economic<br />
environment (geographical segment), which is subject <strong>to</strong> risks and returns different from those of o<strong>the</strong>r<br />
business segments. For <strong>the</strong> purposes of segment reporting disclosures, <strong>the</strong> information is presented<br />
in respect of <strong>the</strong> Group’s business segments, which is based on <strong>the</strong> Group’s management and internal<br />
reporting structure. The Group comprises <strong>the</strong> following major business segments - <strong>Bank</strong>ing, Consumer<br />
Financing (Leasing), Treasury and Property/Investments.<br />
Inter-segment pricing is determined on an arm’s length basis.