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 6. INTANGIBLE ASSETS 2011 2010 KShs’000 KShs’000 COST At the beginning of the year 49,762 49,762 Additions 1,849 - 51,611 49,762 AMORTISATION At the beginning of the year 48,718 46,940 Charge for the year 1,660 1,778 50,378 48,718 NET BOOK VALUE At 30 June 1,233 1,044 Intangible assets relate to computer software in use by the company. 7. PREPAID OPERATING LEASES 2011 2010 KShs’000 KShs’000 COST At the beginning year 12,886 12,886 AMORTISATION AND IMPAIRMENT At the beginning of the year 1,142 3,267 Amortization charge 63 210 Provision for impairment written back - (2,335) At the end of the year 1,205 1,142 NET BOOK VALUE At 30 June 11,681 11,744 Included in prepaid operating leases is a parcel of land acquired at a cost of KShs 408,330 for which the company’s ownership is the subject of a dispute in court. A provision for impairment for the parcel of land, with a carrying amount of KShs 373,498, was made in the books of account in 2009, this provision was reversed in 2010 and no further provisions have been made in the current year. 8. INVESTMENT PROPERTIES Investment properties relate to two pieces of leasehold land held by the company, under long-term lease arrangements. The land was valued at KShs 1.495 billion by Crystal Valuers Limited, accredited independent valuers, as at 30 June 2009. The present value of the ground rent obligations is immaterial and thus, the valuation amount of KShs 1.495 billion is equivalent to the fair values of these properties. 58 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 9. DERIVATIVE FINANCIAL INSTRUMENTS As part of its asset and liability management, the company uses derivatives for hedging purposes in order to reduce its exposure to interest rate and foreign currency risks. This is done by engaging in interest rate swaps and currency swaps. Interest rate swaps relate to contracts taken out by the company with other financial institutions in which the company either receives or pays a floating rate interest in return for paying or receiving, a fixed rate of interest. The payment flows are usually netted against each other, with the difference being paid by one party to the other. In a currency swap, the company pays a specified amount in one currency and receives a specified amount in another currency. Currency swaps are mostly gross- settled. The table below shows the fair values of derivative financial instruments, recorded as assets or liabilities at year end. 2011 KShs’000 Assets Cross currency swap 916,925 Liabilities Cross currency swap 929,580 The company exchanged a Japanese Yen payable loan of JPY 821,970,000 for a US$ 10,172,896 equivalent resulting in a gain of KShs 1,124,072 as at 30 June 2011. 10. DEPOSITS 2011 2010 KShs’000 KShs’000 Short-term deposits: Kenya Commercial Bank Limited 348,143 518,860 The Co-operative Bank of Kenya Limited - 109,088 CfC Stanbic Bank Limited - 60,637 348,143 688,585 Restricted deposits: Housing Finance Company of Kenya Limited 58,586 57,349 The short-term deposits mature within three months and the weighted average interest rate earned on the deposits during the year was 4.5% (2010 – 4.38%). The deposits with Housing Finance Limited have been held as collateral for staff mortgages. The weighted average interest rate earned on the deposits during the year was 2.67% (2010 - 2.67%). 11. INVENTORIES 2011 2010 KShs’000 KShs’000 Consumables 1,149,464 596,470 Raw materials 317,577 476,642 Work-in-progress 8,528 17,587 Finished products 75,685 98,834 1,551,254 1,189,533 There was neither write down of inventories recognized as an expense nor inventories recognized as expense during the year. EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2010/2011 59
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