Annual Report 2010-2011 - Colombo Stock Exchange

Notes to the Financial Statements Contd.
3. Property plant & equipment contd.
Of the 42 JEDB / SLSPC estates handed over to the Kegalle Plantations PLC and Maskeliya Plantations PLC, all estate leases
except for that of Ambanpitiya Estate has been executed as at the balance sheet date. With regard to Namunukula Plantations,
lease agreements for 10 estates have been executed and memorandum of record has been signed for the balance 10 estates.
All of these leases will be retroactive to June 22, 1992 the date of formation of the companies. In terms of the ruling obtained
from Urgent Issue Task Force (UITF) of the Institute of Chartered Accountants of Sri Lanka the leasehold right to bare land and
all immovable assets under finance lease in these estates have been taken into the books of the companies retroactive to June
22, 1992. While the bare land has been accounted for based on a value established just prior to the formation of the companies
upon a revaluation carried out by a valuation specialist, Mr. D.R. Wickremasinghe, all other immovable assets under finance leases
have been taken into the books of the companies at their book values as they appeared in the books of JEDB /SLSPC, on the
day immediately preceding the date of formation of the companies. Subsequent to the withdrawal of UITF Abstract 11 and 23, the
Sri Lanka Accounting Standard Application Guidance 1; Accounting for Leasehold Lands was issued. Accordingly, lease rentals
prepaid to acquire land use rights, which was previously shown under property plant and equipment have now been re-classified
under leasehold property. Prepaid lease rentals paid to acquire land rights are amortised over the lease term in accordance with
the pattern of benefits provided.
The assets are amortised on a straight-line basis over their estimated useful lives.
Land and buildings and certain movable assets and liabilities of the Sri Lanka State Plantations Corporation at Glencroft Office
situated at Norwood Estate have not been incorporated in the financial statements of Maskeliya Plantations PLC.
The other assets of the two companies included under Property, plant and equipment represents all other movable assets vested
in the company by gazette notification at the date of formation of the company.
The unexpired period of the lease as at the balance sheet date was 34 years.
Property (excluding leasehold property) with a carrying amount of Rs. 3,057 mn(2010 - Rs. 2,579 mn) are pledged as security for
loans obtained.
Borrowing costs amounting to Rs. 26.6mn ( 2010 Rs. 28.76mn) have been capitalised which was incurred on long term loans
related to immature plantations in the plantation sector using a capitalisation rate of 11% - 12% (2010 11.77%).
Impairment of property, plant and equipment
The recoverable amount for certain items of plant and machinery was estimated and impairment losses were recognized to reduce
the carrying amounts as follows:
Richard Pieris Natural Foams Ltd - Rs. 55 mn (2010 Rs.16 mn)
Hamefa Kegalle (Pvt) Ltd - Rs. 7 mn (2010 Rs. 13 mn)
C. Company
As at Additions Disposals/ As at
01.04.2010 transfers 31.03.2011
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Cost / valuation
Plant, machinery, tools & electrical installations 59,069 199 - 59,268
Office & other equipment 25,917 129 - 26,046
Furniture, fixtures & fittings 16,489 221 - 16,710
Motor vehicles 66,776 - - 66,776
Computers 25,859 1,761 - 27,620
194,110 2,310 - 196,420
Richard Pieris and Company PLC | Annual Report 2010/2011 78