Download TPS, East Africa 2008 Annual Report - Serena Hotels

Notes to the Financial Statements (cont’d)
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
experience of future events that are believed to be reasonable under the circumstances.
(i) Critical accounting estimates and assumptions
Fair value estimation
The fair value of financial instruments that are not traded in an active market is determined by using valuation
techniques. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based
on market conditions existing at the balance sheet date.
Impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy
stated in Note 2(g). The recoverable amounts of cash-generating units have been determined based on value-in-use
calculations. These calculations require the use of estimates (Note 20).
Income taxes
The Group is subject to income taxes in various jurisdictions. Significant judgment is required in determining the
Group's provision for income taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax
audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters
is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made.
(ii) Critical judgements in applying the entity's accounting policies
In the process of applying the Group's accounting policies, management has made judgements in determining
impairment of assets, goodwill, gratuity provisions.
5 Segment information
Primary reporting format - geographical segments
The Group has two geographical segments - Kenya and Tanzania. The group subsidiary in South Africa operates as a sales
agency and does not constitute a separately reportable segment. The information has therefore been consolidated with
the results of the parent company.
Sales (allocated based on the country of subsidiary) 2008 2007
Shs'000 Shs'000
Kenya 1,899,844 2,362,597
Tanzania 1,343,359 1,305,063
3,243,203 3,667,660
42 TPS EASTERN AFRICA LIMITED | ANNUAL REPORT AND FINANCIAL STATEMENTS 2008