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Revenue receivable from foreign operators is recognised solely on the basis of their statements.

Connection fees are treated as deferred income and credited to the income statement over 15 years, being an estimate of the period over which the related assets are depreciated. The element of deferred income credited to profit annually is included in the revenue. The accounting records do not provide details of the connection charges received in previous years. Hence estimates have been made, on the basis of the best information available, of the appropriate amounts of connection fees to defer and credit to income.

18. Comparatives
Where necessary, comparative figures have been adjusted to conform with a change in accounting policy on goodwill and with changes in presentation in the current year.

The policy followed by the Company in accounting for goodwill, which represents the excess of share capital of SLTL over the aggregate of the values of the separable net assets of SLT (Corporation) on 25 September 1996 when SLT was converted to SLTL, was changed during the year. The Share Capital, specified in the Memorandum of Association of SLTL in accordance with the Government Gazette No. 942/7 of 25 September 1996, was based on retained earnings shown in the unaudited accounts of SLT (Corporation) as at 31 December 1995. However, on the completion

 

 

of the audit for the year ended 31 December 1995 the retained earnings reflected in those financial statements were adjusted to reduce the said figure by approximately Rs. 4,747 million. After the year end (31 December 1995), Rs. 392 million of those adjustments were reversed as the income taxes up to 1994 had been since agreed and settled. Accordingly, the goodwill figure of Rs. 3,441 million at 1 January 1997 is net of these adjustments.

Goodwill, which was previously amortised over 5 years commencing from 1 January 1997, has now been set-off against Advances toward Share Capital, which, as explained in note 22 to the financial statements, represents the custom duty waivers of Rs. 3,010 million on equipment imported for the 150,000 line project. Since the value of goodwill, Rs. 3,441 million at the time of conversion, exceeded the value of Advances toward Share Capital by Rs. 431 million, the excess has been charged to the income statement during the year ended 31 December 1997. The Directors are of the view that the proposed treatment gives a fairer picture of the results for the year and the assets and liabilities at the balance sheet date.

 

 

 
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