(i) Income tax expense
for the year ended
| 31 December 2012 | 31 December 2011 | |
|---|---|---|
| Current tax expense | 61,099 | 54,326 |
| Change in deferred tax | 35,980 | (21,633) |
| Correction of income tax returns of previous years | 270 | (817) |
| Income tax expense in the income statement | 97,349 | 31,876 |
for the year ended
| Change in deferred income tax | 31 December 2012 | 31 December 2011 |
|---|---|---|
| Tax losses carried forward | 7,307 | (26,728) |
| Receivables and other assets | 22,223 | 4,691 |
| Liabilities | 23,642 | (41,190) |
| Hedge valuation | (322) | 218 |
| Deferred distribution fees | (412) | (1,184) |
| Tangible and intangible assets | (19,284) | 43,043 |
| Programming assets | 2,826 | (483) |
| Change in deferred tax recognized in income statement – total | 35,980 | (21,633) |
(ii) Income tax recognized in other comprehensive income
for the year ended
| 31 December 2012 | 31 December 2011 | |
|---|---|---|
| Change in deferred income tax on hedge valuation | (5,955) | 1,116 |
| Change in deferred income tax recognized on currency translation adjustment – foreign operations | (155) | 155 |
| Acquisition of subsidiary | - | 1,010 |
| Income tax expense recognized in other comprehensive income – Total | (6,110) | 2,281 |
(iii) Effective tax rate reconciliation
for the year ended
| 31 December 2012 | 31 December 2011 | |
|---|---|---|
| Gross profit for the year | 695,647 | 192,066 |
| Income tax at applicable statutory tax rate in Poland of 19% | 132,173 | 36,492 |
| Tax amortization of trade mark | (29,165) | (14,582) |
| Receivables written off | (2,665) | 3,797 |
| Effect of tax rates in foreign jurisdictions (*) | 107 | 5,363 |
| Unrecognized deferred tax asset on tax losses | - | 1,261 |
| Deferred tax unrecognized in previous periods | (3,462) | (3,168) |
| Deferred tax recognized on temporary differences on investment in subsidiaries | - | 1,442 |
| Other non-taxable revenue and non-tax deductible costs, net, at 19% tax | 361 | 1,271 |
| Tax expense for the year | 97,349 | 31,876 |
| Effective tax rate | 14.0% | 16.6% |
(*) The Group’s entities measure current and deferred income tax applying tax rates enacted in countries in which they are domiciled:
- 9.56% for entities domiciled in Switzerland,
- 19% for entities domiciled in the Republic of Poland,
- 26% for entities domiciled in Sweden,
- 26% in the period of January – March 2012 and 24% in the period of April – December 2012 for entities domiciled in the United Kingdom,
- 28% for entities domiciled in Norway.
(iv) Deferred tax assets
| 31 December 2012 | 31 December 2011 | |
|---|---|---|
| Tax losses carried forward | 19,779 | 27,086 |
| Liabilities | 50,036 | 75,095 |
| Hedge valuation | 5,035 | 1,320 |
| Tangible assets | 21,052 | 2,681 |
| Programming assets | 981 | 4,942 |
| Receivables and other assets | 26,558 | 36,386 |
| Total deferred tax assets | 123,441 | 147,510 |
| Set off of deferred tax assets and liabilities | (92,085) | (91,784) |
| Deferred tax assets in the balance sheet | 31,356 | 55,726 |
(v) Tax loss
| 31 December 2012 | 31 December 2011 | |
|---|---|---|
| 2012 tax loss carried forward | 11,769 | - |
| 2011 tax loss carried forward | 105,624 | 173,341 |
| 2010 tax loss carried forward | 34,879 | 37,042 |
| 2009 tax loss carried forward | 7,183 | 7,183 |
| 2008 tax loss carried forward | 5,335 | 5,335 |
| 2007 tax loss carried forward | - | 7,050 |
| Tax losses carried forward – total | 164,790 | 229,951 |
(vi) Tax losses recognized
| 31 December 2012 | 31 December 2011 | |
|---|---|---|
| 2012 tax loss carried forward | 11,553 | - |
| 2011 tax loss carried forward | 91,631 | 165,476 |
| 2010 tax loss carried forward | - | - |
| Tax losses carried forward – total | 103,184 | 165,476 |
As at 31 December 2012 the Group recognized deferred tax asset on tax losses to the extent that it was probable that they would be utilised in the future.
According to Art. 7 of the Polish Corporate Income Tax Act dated 15 February 1992, tax losses incurred in a given financial year can be utilised in the subsequent five fiscal years. However, no more than 50% of a tax loss for any given year can be utilised in a single subsequent fiscal year.
(vii) Deferred tax liabilities
| 31 December 2012 | 31 December 2011 | |
|---|---|---|
| Receivables and other assets | 67,761 | 55,366 |
| Hedge valuation | 91 | 2,654 |
| Liabilities | 3,517 | 4,934 |
| Deferred distribution fees | 17,522 | 17,934 |
| Tangible and intangible assets | 91,906 | 91,337 |
| Programming assets | 5,546 | 6,681 |
| Total deferred tax liabilities | 186,343 | 178,906 |
| Set off of deferred tax assets and liabilities | (92,085) | (91,784) |
| Deferred tax liabilities in the balance sheet | 94,258 | 87,122 |
