Again On AirAsia's Deferred Tax Issue

Received the following set of comments to my posting Huh? Now AirAsia Wants To Take Over SIA??

• Maverick said...
  
  Lol .....!!!!
  
  Will TonyF ever learn?
  
  If you take the Shareholders fund and deduct the tax deferred (the tax deductions they are allowed to use when they make future profits) then what is leftover is not much more than 1 billion RM, roughly what the minority investors put in the company at the IPO.
  
  In other words, they havent made any sizeable profit at all over all these years.
  
  And TonyF announced already that we havent seen the last thing about those derivatives, more pain to come

I would have replied to Maverick on the posting itself but I wanted to focus (by showing some pictures) on the shareholders fund and the deferred tax issue.

AirAsia was listed end 2004.

Here is its 2005 Q4 quarterly earnings: Quarterly rpt on consolidated results for the financial period ended 30/6/2005

To focus on that set of earnings would be rather unfair to AirAsia. So I would focus on AirAsia 2006 Q4 earnings.

Quarterly rpt on consolidated results for the financial period ended 30/6/2006

*side note: click on all the images for a bigger view*

Total deferred tax for fy 2006 = 13.613 million.

And the following is a screen shot of AirAsia's Balance sheet.

A year later, Quarterly rpt on consolidated results for the financial period ended 30/6/2007 ( Note the change Change of Financial Year End announcement)

Now let's look at their p&l statement.

Ahem!

Deferred tax for AA is now 225.127 million BUT note their previous year, fy 2006 deferred tax has been amended to 117.703 million. I will use this figure instead of 13.613 million.

And here is a screen shot of their Balance sheet.

Side note: The deferred tax is classified under as Non Current Assets. Yes, many would argue against such accounting procedures ( see also AirAsia's deferred taxes issue and More on AirAsia's Deferred Tax Issue. And I would note from the first posting "We believe that AirAsia has a strong case for its non-provision of deferred taxes. With capital allowances and investment allowances likely to come to RM18bn in total, the company will not have to pay cash taxes for decades." )

Let's now look at their latest quarterly earnings: Quarterly rpt on consolidated results for the financial period ended 30/9/2008
And here is AirAsia latest Balance Sheet.

Right now, the total deferred tax is at a whopping 627.971 million.

And if you minus the deferred tax from AirAsia's net earnings... what do you get?

Can you see Maverick's point here?

( Maverick also gave the following link: http://sahathevan.blogspot.com/2008/12/is-airasia-in-breach-of-any-of-its-loan.html )