EAPCC_Annual_Report_.. - Investing In Africa
EAPCC_Annual_Report_.. - Investing In Africa
EAPCC_Annual_Report_.. - Investing In Africa
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EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED<br />
ANNUAL REPORT AND FINANCIAL STATEMENTS<br />
2010/2011<br />
NOTES TO THE FINANCIAL STATEMENTS (continued)<br />
FOR THE YEAR ENDED 30 JUNE 2011<br />
2. SIGNIFICANT ACCOUNTING POLICIES (continued)<br />
(k)<br />
Financial instruments (continued)<br />
A financial asset is derecognised when the company loses control over the contractual rights that comprise<br />
that asset and has transferred its right to cash flows from the asset or has assumed an obligation<br />
to pay the received cash flows without material delay to a third party under a ‘pass through’ arrangement;<br />
and either (a) the Company has transferred substantially all the risks and rewards of the assets,<br />
or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has<br />
transferred control of the asset.<br />
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or<br />
expires. When an existing financial liability is replaced by another by the same lender on substantially<br />
different terms, or the terms of the existing liability are substantially modified, such an exchange or<br />
modification is treated as a derecognition of the original liability and the recognition of a new liability<br />
and the difference in the respective carrying amounts are recognised in the statement of comprehensive<br />
income.<br />
Offsetting<br />
Financial assets and liabilities are offset and the net amounts reported on the statement of financial<br />
position when there is a currently legally enforceable right to set off the recognised amount and there is<br />
an intention to settle on a net basis, or to realise the assets and settle the liability simultaneously.<br />
(l)<br />
Foreign currency<br />
Monetary assets and liabilities that are denominated in foreign currencies are translated into Kenya<br />
shillings at the rates of exchange ruling on the reporting date. Transactions during the year, which are<br />
expressed in foreign currencies, are converted at the rates ruling on the dates of the transactions.<br />
Gains and losses on exchange are dealt with in profit or loss.<br />
Items included in the financial statements of the company are measured using the currency of the primary<br />
economic environment in which the entity operates (“functional currency”). The financial statements<br />
are presented in Kenya shillings (KShs) which is the company’s functional currency.<br />
(m)<br />
Hedge accounting<br />
The company makes use of derivative instruments to manage exposures to interest rate and foreign<br />
currency risks. <strong>In</strong> order to manage these risks, the company applies hedge accounting for transactions<br />
which meet specified criteria. At inception of the hedge relationship, the company formally documents<br />
the relationship between the hedged item and the hedging instrument, including the nature of the risk,<br />
the objective and strategy for undertaking the hedge and the method that will be used to assess the<br />
effectiveness of the hedging relationship.<br />
EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED<br />
ANNUAL REPORT AND FINANCIAL STATEMENTS 2010/2011 51