EAPCC_Annual_Report_.. - Investing In Africa

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)
(o)
Employee benefits
i) Short-term benefits
Short-term benefits consist of salaries, bonuses and any non-monetary benefits such as medical aid
contributions and free services. They exclude equity based benefits and termination benefits. Short-term
employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided.
A provision is recognised for the amount expected to be paid under a short-term cash bonus only if the
company has a present legal or constructive obligation to pay this amount as a result of past services
provided by the employee and if the obligation can be measured reliably.
ii) Retirement benefit costs
The company operates a funded defined contribution pension scheme for senior and supervisory staff,
as well as an in-house gratuity scheme for unionisable employees. The company also contributes to
the statutory National Social Security Fund. This is a defined contribution scheme registered under the
National Social Security Act. The company’s obligations under the scheme are limited to specific contributions
legislated from time to time and are currently limited to a maximum of KShs 200 per month per
employee.
The company’s obligations to all staff retirement benefits schemes are charged to the profit or loss as
they fall due.
(p)
(q)
(r)
Provision for employee entitlements
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is
made for the estimated liability for annual leave accrued at the reporting date. The company’s unionisable
staff who resign or whose services are terminated either due to illness or other reasons after completion
of ten years of continuous and meritorious service are entitled to twenty one days pay for each
completed year of service by way of gratuity, based on the wages or salary at the time of such resignation
or termination of services, as provided for in the trade union agreement. An employee who is dismissed
or terminated for gross misconduct is not entitled to gratuity. The service gratuity is provided for in the
financial statements at present value of benefits payable as it accrues to each employee.
Mining and exploration costs
All exploration costs for the mining of limestone are expensed in the period that they occur and form part
of cost of sales.
Provisions
Provisions are recognised when the company has a present legal or constructive obligation as a result of
past events and it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate of the amount of the obligation can be made.
Where the effect of the time value of money is material, the amount of a provision is the present value of
the expenditure expected to be required to settle the obligation, discounted at a rate that reflects current
market assessments of the time value of money and the risks specific to the liability.
EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS 2010/2011 53