enl commercial limited annual report 2011 - Investing In Africa

Notes to the Financial Statements
Year ended June 30, 2011
3.3 Capital risk management (continued)
The net debt-to-adjusted capital ratios at June 30, 2011 and at June 30, 2010 were as follows:
THE GROUP
THE COMPANY
2011 2010 2011 2010
Rs’000 Rs’000 Rs’000 Rs’000
Total debt 764,191 470,721 234,719 179,578
Less: cash and bank balances (47,325) (11,189) (119) (489)
Net debt 716,866 459,532 234,600 179,089
Total equity 1,068,510 1,104,528 1,369,762 1,478,419
Debt-to-adjusted capital ratio 0.67 0.42 0.17 0.12
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continuously evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances.
4.1 Critical accounting estimates and assumptions
The group makes estimates and assumptions concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
(a)
(b)
(c)
(d)
Estimated impairment of goodwill
The group tests annually whether goodwill has suffered any impairment in accordance with the
accounting policy stated in Note2 (e) (i). These calculations require the use of estimates.
Impairment of available-for-sale financial assets
The group follows the guidance of IAS 39 on determining when an investment is other-than-temporarily
impaired. This determination requires significant judgement. In making this judgement the group
evaluates, among other factors, the duration and extent to which the fair value of an investment is
less than its cost and the financial health of and near-term business outlook for the investee, including
factors such as industry and sector performance, changes in technology and operational and financing
cash flows.
Pension benefits
The present value of the pension obligations depend on a number of factors that are determined on
an actuarial basis using a number of assumptions. The assumptions used in determining the net cost/
(income) for pensions include the discount rate. Any changes in these assumptions will impact the
carrying amount of pension obligations.
The group determines the appropriate discount rate at the end of each year. This is the interest rate
used to determine the present value of estimated future cash outflows expected to be required to settle
the pension obligations. In determining the appropriate discount rate, the group considers the interest
rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be
paid and that have terms to maturity approximating the terms of the related pension liability.
Revaluation of plant, property and equipment
The group measures land and buildings at revalued amounts with changes in fair value being recognised
in other comprehensive income. The group appointed independent valuation specialists to determine
fair value of property as at 30 June 2011. Valuation was made on the basis of open market value.
ENL Commercial Limited
Annual Report 2011
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