IDLC Finance limited Reference IAS 7.10 IAS 7.18 IAS 7.

21 Particulars Are the cash flows during the period classified by operating, investing and financing activities? Does the entity report cash flows from operating activities using either Direct or Indirect Method? Does the entity report major classes of gross receipts and gross cash payments arising from investing and financing activities separately, except as described in IAS 7.22 Are cash flows arising from the following operating, investing or financing activities reported on a net basis: a. Cash receipts and payments on behalf of customers, if the cash flows reflect the activities of the customer rather than those of the entity b. Cash receipts and payments for items in which the turnover is quick, the amounts are large and the maturities are short Does the entity disclose the components of cash and cash equivalents? Does the entity disclose the policy for determining the composition of cash and cash equivalents? Does the entity reconcile the amounts of cash and cash equivalents in the statement of cash flows with the equivalent items in the statement of financial position Acquisitions of subsidiaries and business units Have the aggregate cash flows arising from obtaining control of subsidiaries or other businesses been presented separately and classified as investing activities in the statement of cash flows? Does the entity disclose the following, in aggregate, from obtaining control of subsidiaries or other businesses during the reporting period: a. The total consideration paid or received b. The portion of the consideration consisting of cash and cash equivalents c. The amount of cash and cash equivalents in the subsidiaries or other businesses over which control is obtained d. The amount of the assets and liabilities other than cash or cash equivalents in the subsidiaries or businesses over which control is obtained, summarized by each major category Yes Yes Both Yes

IAS 7.22

Not applicable

IAS 7.45 IAS 7.46 IAS 7.45

Yes Yes

Yes

IAS 7.39

Yes

IAS 7.40

Not Applicable

IAS 7.39

IAS 7.40

IAS 7.31

IAS 7.35 IAS 7.36 IAS 7.43

IAS 7.50

Have the aggregate cash flows arising from losing control of subsidiaries or other businesses been presented separately and classified as investing activities in the statement of cash flows Does the entity disclose the following, in aggregate, for losing control of subsidiaries or other businesses during the reporting period: a. The total consideration paid or received b. The portion of the consideration consisting of cash and cash equivalents c. The amount of cash and cash equivalents in the subsidiaries or other businesses over which control is lost d. The amount of the assets and liabilities other than cash or cash equivalents in the subsidiaries or businesses over which control is lost, summarized by each major category Other cash flow information Does the entity separately disclose the following: a. Cash inflow from interest b. Cash outflow from interest c. Cash inflow from dividends d. Cash outflow from dividends If the entity allocates tax cash flows over more than one class of activity, or all in operating activities, does the entity disclose the total amount of taxes paid? Are investing and financing transactions that do not require the use of cash or cash equivalents: a. Excluded from the statement of cash flows b. Disclosed elsewhere in the financial statements in a way that provides all the relevant information about these investing and financing activities Does the entity disclose: a. The amount of undrawn borrowing facilities that may be available in the future for the operating activities and settling capital commitments, and indicate any restrictions on the use of these facilities b. The aggregate amounts of the cash flows from each of operating, investing and financing activities related to interests in subsidiary reported using proportionate consolidation c. The aggregate amount of cash flows that represent increases in operating capacity separately from those cash flows that are required to maintain operating capacity

Not Applicable

Not Applicable

Yes

Yes

Yes

Not Applicable

Yes

No

d. Cash flows of each reportable segment arising from: Operating activities Investing activities Financing activities IDLC Finances Practice of IAS-7: Compliance Status: Name of the Accounting Standards Cash flow Statements Statement of Cash Flows: Ref. No. IAS/BAS-7

No

Status of Application Applied

IDLC Finance has disclosed in the policy about the Statement of cash flows by followings: The Statement of Cash Flow has been prepared in accordance with the requirements of IAS-7. The cash generated from operating activities has been reported using the Direct Method as prescribed by the securities and exchange rules, 1987 and as the benchmark treatment of IAS 7, whereby major classes of gross cash receipts and gross cash payment from operating activities are disclosed. Methods Followed for reporting the cash generated from Operations: IDLC Finance has claimed in their annual report that they have reported the cash generated from operations under Direct Method. But, in practice, IDLC does not directly follows any of the direct or indirect method though they are saying that they are following direct method in the presentation and preparation of the cash flow statements. They do not consider all the non cash transactions in preparing the cash flow statements. They think that it is very difficult to use either direct or indirect method because of the complexity and large number of transactions within the organization. But mostly direct method is prominent for those items which can be directly traced to the cash transaction such as interest revenue and paid, dividend receipt and paid are easier for them to identify as operating activities, and then adjust increase or decrease in operating assets and liabilities to cash generated from operating activities. They rarely consider the non-cash transaction in preparing the cash flow statements since it is very insignificant in amount Policy Regarding Cash and Cash Equivalents:

IDLC has also defined the cash or cash equivalent as per IAS-7.IDLC has no direct hand to hand cash transactions. All the transactions are conducted through cheque. They have provided information about the items included in the cash or cash equivalent with cash flow statements. The cash and cash equivalent of IDLC includes cash in hand, cash at bank, term deposits and investments in call loan that are readily convertible into known amount of cash and that are subject to insignificant risk of change in value( annual report-2011, 2.28).Disclosure about the above cash and cash equivalent transaction is also very rich. They have mainly transactions with four commercial banks with whom short term loan and bank overdraft arrangements are available. They include bank overdraft as cash and cash equivalent though this item is very rare to happen for them. Appropriate reconciliation of balances has been made in the annual report. Operating, investing and financing activities: They define the operating, investing and financing activities in the same way as in the IAS-7. The major operating activities of IDLC include interest receipt and paid, dividend received, fees and commission received, paid to employees and supplies and payment of income tax. So it very clear that they treating dividend received and income tax paid as operating activities and they are doing this in a consistent manner. But dividend paid is being treated as financing activity. The major investment activities include purchase and disposal of property, plant and equipment and investment in non marketable securities. The major financing activities include drawdown and repayment of term loans, payment against lease obligation and dividend paid. Proper reconciliation of balances and disclosure have been maintained in the notes and disclosure part of the financial statements. Gross or Net basis: IDLC does not report cash flow statements on net basis though they have scope to do so. Transactions with the same customer or party are treated differently. Any difference raised is treated as income.

Non-cash transactions Currently non cash transactions in case of IDLC is very rare, previously they had non cash transactions relating to cash flow statements where they had provided appropriate disclosure in the notes.

Investment and financing tax They have no specific financing and investment related tax. But capital gain arisen from the investment in equity share of another country is subject to 10% capital gain tax. Their merchant banking wing is also subject to tax which they incorporate it into the consolidated financial statements. They treat both types of tax as operating activity. So they have any financing or investment tax to be deducted at source. Foreign Currency Transactions Currently, IDLC has no foreign currency transactions. But during the period 2004 and 2005, they had foreign currency transactions where they incorporate the cash flow at foreign exchange rate prevailed on transaction settlement date. Exchange gains and losses arising out of the said conversion are recognized as income or expense for the year after netting off. However, they maintained proper disclosure in this respect. Subsidiary or wing operation IDLC has two subsidiary companies one is IDLC securities limited and another is IDLC investments limited. For merchant banking operation it prepares a separate cash flow statements as required under the regulations of the Securities and Exchange Commission (SEC) which is also prepared in accordance with Bangladesh Accounting Standards(BAS) and Bangladesh Financial Reporting Standards(BFRS) and results of the cash flow statements has been combined , item by item, with the financial results of the company. No acquisitions and Disposals of subsidiaries & other business units in the current year. Segments and product lines IDLC has divided their whole operation into two operating segments one is core business and another is merchant banking. The company extends lease and term financing as core business, it

expanded its activities into short term financing through factoring of accounts receivable and work order financing, Real estate finance operations in 1997, and merchant banking and corporate finance in 1999. It also provides car loan and personal loan services to individuals. They have provided sufficient information related to the cash flow from these operating segments. IDLC has not provided detailed information related to the cash flows of these transactions. In case lease, all leases are treated as finance lease. So cash flow from the leases is treated accordingly. Portfolio investors fund This represents the balance of deposits made with the company by the portfolio investors to take loan and buy marketable securities, cash movements related to this fund are recorded in its subsidiary and later it is consolidated into the consolidated financial statements named as Margin loan to portfolio investors. Headings in Italic Format: BAS-7 requires that the following heading will be reported in Italic format to comply with the standards: Cash flows from operating activities. Net cash from operating activities. Cash flows from investing activities. Net cash used in investing activities. Net cash used in financing activities Net Decrease/Increase in Cash and Cash equivalents Cash and Cash Equivalents at Beginning of Year Cash and period Cash equivalents at beginning of

Cash flows from financing activities.

Cash and Cash equivalents at end of period

IDLC Finance did not present the above factors in Italic format in the Statement of Cash Flow Other Disclosure Requirements: IDLC Finance has made the other disclosure requirement according to the IAS/BAS-7. Though some requirements were not applicable to the IDLC Finance Limited.