Annual Report 2009/10 - Colombo Stock Exchange

More documents

Recommendations

Info

24 Sierra Cables PLC - Annual Report 2009/10 Connecting Sri Lanka to Progress Significant Accounting Policies amounts over the estimated useful economic life of such assets. The leased assets are depreciated over the shorter of the lease term and their useful lives. The depreciation rates of the assets are as follows: Assets Depreciation % Buildings on Freehold Land 5 Plant and Machinery 7.5 Motor Vehicles 20 Furniture and Fittings 20 Office/Factory Equipment 20 Computer Equipment 20 The useful life, residual values and depreciation methods of assets are reviewed, and adjusted if required, at the end of each financial year. Leased Assets Where assets are financed under an agreement under which substantially all the risks and rewards of ownership are transferred to the lessee, such assets are recorded in the Balance Sheet as Property, Plant & Equipment at their cash price. The total interest payable is accounted as interest in suspense, and the corresponding credit is recorded as a payable to the lessor. The instalments paid are used to reduce this liability. An amount equal to the interest charge is transferred from the interest in suspense account to the Income Statement. Investments All quoted and unquoted securities, which are held as non-current investments, are valued at cost. The cost of the investment is the cost of acquisition inclusive of brokerage and costs of transaction. The carrying amounts of long term investments are reduced to recognise a decline which is considered other than temporary, in the value of investments, determined on an individual investment basis. In the Company’s Financial Statements, investments in subsidiaries and associate have been accounted for at cost, net of any impairment losses which are charged to the Income Statement. Income from these investments is recognised only to the extent of dividends received. Investment in Treasury Bills/Commercial Papers reflected at the cost and interest accrued as to the Balance Sheet date. Impairment of Assets The identifiable assets of the Company are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any, such indication of impairment. If any, such indication exists the recoverable amount of the asset is estimated and shown in the Balance Sheet. The impairment loss is taken to the Income Statement. Inventories Inventories are measured at the lower of cost and net realizable value. Net realisable value is the estimated selling price less estimated costs of completion and the estimated costs necessary to make the sale. The costs incurred in bringing inventories to its present location and condition, are accounted for as follows: Raw Materials - On actual cost, on first-in-first-out basis Finished Goods and Work in Progress - At actual cost, on first-in-first-out basis Trade and Other Receivables Trade and other receivable are stated at the amounts they are estimated to realise, net of provisions for bad and doubtful receivables. Specific provision is made as provision for bad and doubtful debts. Short-Term Investments Treasury Bills and other interest bearing securities held for resale in the near future to benefit from short-term market movements are accounted for at cost plus the relevant proportion of the discounts or premiums. Cash and Cash Equivalents Cash and cash equivalents in the Cash Flow Statement comprise cash at bank and in hand and, net of outstanding bank overdrafts. 6. LIABILITIES AND PROVISIONS Liabilities classified as current liabilities in the Balance Sheet are those obligations payable on demand or within one year from the Balance Sheet date. Liabilities classified, as non-current liabilities are those obligations, which expire beyond a period of one year from the Balance Sheet date. Trade & Other Payables Trade & Other Payables are stated at their cost. Defined Benefit Plan - Gratuity As required by the Sri Lanka Accounting Standard No. 16 (revised 2006) - “ Employee Benefits” which became effective from 1 July 2007, the group has provided for gratuity liability based on the Gratuity Formula Method (Principal assumptions used are disclosed in Note 15 to the Financial Statements). However, according to the payment of Gratuity Act No. 12 of 1983, the liability for gratuity to an employee arises only on completion of five years continued service with the Company. The liability is not externally funded nor actuarially valued. The item is grouped under Non-Current Liabilities in the Balance Sheet. Being a listed company, Sierra Cables PLC has not adopted actuarial valuation as there are no employees in the company. However, other companies in the group have used the Gratuity Formula Method as recommended by the Sri Lanka Accounting
Connecting Sri Lanka to Progress Sierra Cables PLC - Annual Report 2009/10 25 Significant Accounting Policies Standard 16 (revised 2006) Employee Benefits in determining their Retiring Gratuity Obligations. Defined Contribution Plan - Employees’ Provident Fund and Employees’ Trust Fund Employees are eligible for Employees’ Provident Fund contributions and Employees’ Trust Fund contributions in line with respective statutes and regulations. The Company contributes the defined percentages of gross emoluments of employees to an approved Employees’ Provident Fund and to the Employees’ Trust Fund respectively which are externally funded. Provisions, Contingent Assets and Contingent Liabilities A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. All contingent liabilities are disclosed as a note to the Financial Statements unless the outflow of resources is remote. Contingent assets are disclosed, where inflow of economic benefit is probable. 7. INCOME STATEMENT Revenue Recognition Revenue from rendering services or sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is provable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods or services rendered. The following specific criteria are used for recognition of revenue: Sale of Goods Revenue from the sale of goods is recognised when the significant risk and rewards of ownership of the goods have passed to the buyer with the Company retaining neither a continuing managerial involvement to the degree usually associated with ownership, nor an effective control over the goods sold. Rendering of Services Revenue from rendering of services is recognised in the accounting period in which the services are rendered or performed. Turnover Based Taxes Turnover based taxes include value added tax, economic service charge and turnover tax (TT), which is payable to the Provincial Council in respect of trading activities. Companies in the Group pay such taxes in accordance with the respective statutes. Dividend Dividend income is recognized on a cash basis. Interest Income Interest income is recognized on an accrual basis unless collectibles is in doubt. Gains and Losses Net gains and losses of a revenue nature arising from the disposal of property, plant & equipment and other non-current assets, including investments, are accounted for in the Income Statement, after deducting from the proceeds on disposal, the carrying amount of such assets and the related selling expenses. Gains and losses arising from activities incidental to the main revenue generating activities and those arising from a Company of similar transactions which are not material, are aggregated, reported and presented on a net basis. Any losses arising from guaranteed rentals are accounted for in the year of incurring the same. A provision is recognised if the best estimate indicates a loss. Other Income Other income is recognized on an accrual basis. Expenditure Recognition Expenses are recognized in the Income Statement on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the property, plant & equipment in a state of efficiency has been charged to the Income Statement. For the purpose of presentation of the Income Statement, the “function of expenses” method has been adopted, on the basis that it presents fairly the elements of the Company and Company’s performance. Borrowing Costs Borrowing costs are recognized as an expense in the period in which they are incurred unless they are incurred in respect of qualifying assets in which case it is capitalized. 8. SEGEMENT INFORMATION Reporting Segments A segment is a distinguishable component of an enterprise that is engaged in either providing products or services (Business Segments) or in providing products or services within a particular economic environment (Geographic Segment) which is subject to risks & rewards that are different from those of other segments. However, there are no distinguishable components to be identified as segments for the Company.
Page 1: Annual Report 2009/10
Page 4 and 5: 2 Sierra Cables PLC - Annual Report
Page 12 and 13: 10 Sierra Cables PLC - Annual Repor
Page 19 and 20: Connecting Sri Lanka to Progress Si
Page 25: Connecting Sri Lanka to Progress Si
Page 45 and 46: Form of Proxy I/We ……………
Page 47: Designed & Printed by Printel (Pvt)

Annual Report 2009/10 - Colombo Stock Exchange

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?