EAPCC_Annual_Report_.. - Investing In Africa

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2010/2011 EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2011 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (k) Financial instruments (continued) Held to maturity (continued) After initial measurement, held-to-maturity investments are measured at amortised cost using the effective interest method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in profit or loss. The Company did not have any held-to-maturity investments during the years ended 30 June 2011 and 2010. Available-for-sale financial assets Financial assets that are not (a) financial assets at fair value through profit or loss, (b) loans and receivables, or (c) financial assets held to maturity. After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-forsale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or determined to be impaired, at which time the cumulative loss is reclassified to profit or loss in finance costs and removed from the available-for-sale reserve. The Company did not have any available-for-sale financial assets during the years ended 30 June 2011 and 2010. Trade and other receivables Trade and other receivables consist of all receivables which are of short duration with no stated interest rate and are measured are measured at amortised cost using the effective interest rate. An allowance is made for any unrecoverable amounts. Borrowings <strong>In</strong>terest bearing loans are recorded at the fair value of the proceeds received. Finance charges are recognised on the accrual basis and are added to the carrying amount of the related instrument to the extent that they are not settled in the period they arise. Trade payables Trade and other payables consist of all payables which are of short duration with no stated interest rate and are measured at amortised cost using the effective interest rate. Cash and cash equivalents For the purpose of the statement of cash flows, cash equivalents include short term liquid investments which are readily convertible to known amounts of cash and which were within three months to maturity when acquired, less advances from banks repayable within three months from date of disbursement or confirmation of the advance. Cash and cash equivalents are measured at amortised cost. 50 EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2010/2011
EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2010/2011 NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2011 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (k) Financial instruments (continued) A financial asset is derecognised when the company loses control over the contractual rights that comprise that asset and has transferred its right to cash flows from the asset or has assumed an obligation to pay the received cash flows without material delay to a third party under a ‘pass through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the assets, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another by the same lender on substantially different terms, or the terms of the existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability and the difference in the respective carrying amounts are recognised in the statement of comprehensive income. Offsetting Financial assets and liabilities are offset and the net amounts reported on the statement of financial position when there is a currently legally enforceable right to set off the recognised amount and there is an intention to settle on a net basis, or to realise the assets and settle the liability simultaneously. (l) Foreign currency Monetary assets and liabilities that are denominated in foreign currencies are translated into Kenya shillings at the rates of exchange ruling on the reporting date. Transactions during the year, which are expressed in foreign currencies, are converted at the rates ruling on the dates of the transactions. Gains and losses on exchange are dealt with in profit or loss. Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in Kenya shillings (KShs) which is the company’s functional currency. (m) Hedge accounting The company makes use of derivative instruments to manage exposures to interest rate and foreign currency risks. <strong>In</strong> order to manage these risks, the company applies hedge accounting for transactions which meet specified criteria. At inception of the hedge relationship, the company formally documents the relationship between the hedged item and the hedging instrument, including the nature of the risk, the objective and strategy for undertaking the hedge and the method that will be used to assess the effectiveness of the hedging relationship. EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2010/2011 51
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Page 3 and 4: BUSINESS REVIEW Five Years Financia
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Page 20 and 21: Board of Directors 1 2 3 4 5 6 7 8
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