Notes to the Consolidated Financial Statements - Seylan Bank

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318 North Bound > Seylan Bank Annual Report 2011 Notes to the Consolidated Financial Statements 28.2 Analysis of Deferred Assets and Liabilities Deferred Tax - Liability 2011 - GROUP 2010 - GROUP Temporary Tax Difference Rs. ‘000 Rs. ‘000 Temporary Difference Rs. ‘000 Tax Rs. ‘000 Property, Plant & Equipment 996,434 279,001 1,030,744 360,760 Lease Rentals 1,103,000 308,840 590,651 206,728 Revaluation Gain B/F 33,466 9,371 32,863 11,502 Deferred Tax - Assets 2,132,900 597,212 1,654,258 578,990 Defined Benefit Obligation* – – 888 311 Unclaimed Bad Debt Provision - Specific 2,174,281 608,799 2,174,377 761,032 Bad Debt Provision - General** 54,546 15,273 112,020 39,207 Tax Losses from Leasing Business 522,903 146,413 – – Impact on Devaluation 131,069 36,699 131,069 45,874 Gain on Revaluation 6,080 1,703 6,080 2,128 2,888,879 808,887 2,424,434 848,552 Net Deferred Tax Assets/Liabilities (Note 28.2.1) 755,979 211,675 770,176 269,562 28.2.1 Movement in Temporary Differences Deferred Tax - Liability 2011 - GROUP 2010 - GROUP Recognised Recognised Balance as at 1st January in Profit or Loss Recognised in Reserves Balance as at 31st December Balance as at 1st January in Profit or Loss Recognised in Reserves Balance as at 31st December Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Property, Plant & Equipment 1,030,744 (34,310) – 996,434 1,062,455 (31,711) – 1,030,744 Lease Rentals 590,651 512,349 – 1,103,000 242,702 347,949 – 590,651 Revaluation Gain B/F 32,863 – 603 33,466 32,863 – – 32,863 Deferred Tax - Assets 1,654,258 478,039 603 2,132,900 1,338,020 316,238 – 1,654,258 Defined Benefit Obligation* 888 (888) – – 2,874 (1,986) – 888 Unclaimed Bad Debt Provision - Specific 2,174,377 (96) – 2,174,281 2,451,368 (276,991) – 2,174,377 Bad Debt Provision - General** 112,020 (57,474) – 54,546 149,087 (37,067) – 112,020 Tax Losses from Leasing Business – 522,903 – 522,903 – – – – Impact on Devaluation 131,069 – – 131,069 – 131,069 – 131,069 Gain on Revaluation 6,080 – – 6,080 – – 6,080 6,080 2,424,434 464,445 – 2,888,879 2,603,329 (184,975) 6,080 2,424,434 Net Tax Assets/Liabilities 770,176 (13,594) (603) 755,979 1,265,309 (501,213) 6,080 770,176
North Bound > Seylan Bank Annual Report 2011 319 * 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 Provision Recognition of deferred tax assets arising from General Provision at Balance Sheet date was limited to non-performing ratio of the temporary difference. In management’s view the Bank’s NPA Ratio as at Balance Sheet date is an indicator of deferred tax assets which could be recovered in the future periods. The Bank has recognised deferred tax assets on the General Provision of Rs. 54,545,624/- (Amount not recognised - Rs. 327,694,208/-). Seylan Developments PLC No provision has been made in respect of deferred taxation as the Company has incurred tax losses and the temporary differences are not expected to reverse due to the effect of tax losses and it is not probable that future taxable profits will be available against which the Company can utilise the benefits therefrom. The amount of taxable temporary differences and the resultant tax effects are as follows: 2011 2010 Rs. ‘000 Rs. ‘000 Unrecognised Deferred Tax Assets Tax Losses Carried Forward 827,681 777,827 Total Taxable Temporary Difference 827,681 777,827 Unrecognised Deferred Tax Assets 231,751 272,239 Unrecognised Deferred Tax Liability Property, Plant & Equipment and Investment Property (433,164) (362,290) Total Taxable Temporary Difference (433,164) (362,290) Unrecognised Deferred Tax Liability (121,286) (126,801) Unrecognised Deferred Tax Assets 110,465 145,438
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Notes to the Consolidated Financial Statements - Seylan Bank

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