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
The following sensitivity analysis shows how profit and equity would change if the market risk variables
had been different on the reporting date with all other variables held constant.
2011 2010
KShs 000
KShs’ 000
Effect on
profit
Effect on
equity
Effect on
profit
Effect on
Profit
+ 1% Movement 100 70 1,051 736
-1 % Movement (100) (70) (1,051) (736)
Fair values of financial instruments
The company did not have financial instruments whose subsequent measurement is at fair value.
43. CONTINGENT LIABILITIES 2011 2010
KShs’000
KShs’000
Pending law suits 198,781 198,781
Guarantee of staff mortgages 55,933 57,349
254,714 256,130
Pending law suits relate to legal proceedings involving the company for breach of contract and also
for loss of business as a result of trucks repossessed. However, in the opinion of the directors, no
liability is likely to crystallise.
The deposits with Housing Finance Corporation Limited have been held as collateral for staff mortgages.
The liability would only crystallise if a staff member defaults on their mortgage payments.
Tax Assessment
The Kenya Revenue Authority (KRA) carried out an audit of the company covering corporate tax,
employee taxes, withholding tax and VAT for the period from 2006 to 2011. KRA, in their letter dated
7 September 2010, has demanded KShs 689,663,361 as the principal tax. In the opinion of the directors,
after taking appropriate tax advice, this amount is not payable and they have appealed to the
Commissioner to review the assessment. The directors are of the opinion that the outcome of their
appeal will be favourable hence no provision has been made for any tax liability that may arise from
this assessment in these financial statements.
44. CAPITAL COMMITMENTS 2011 2010
KShs’000 KShs’000
Authorised by the directors but not contracted for 787,000 2,039,812
Authorised by the directors and contracted for 415,000 769,858
45. OPERATING LEASE RENTALS
Not later than 1 year - 11,581
Later than 1 year but not later than 2 years 11,681 16,112
11,681 27,693
EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS 2010/2011 81