Financial Statements, Statement of Directors - Hemas Holdings, Ltd

valuation multiples, quoted share prices for publiclytraded subsidiaries or other available fair valueindicators.Impairment losses of continuing operations arerecognised in the Income Statement in those expensecategories consistent with the function of the impairedasset, except for property previously revalued andinvestment accounted for in the equity method, wherethe revaluation was taken to equity. In this case theimpairment is also recognised in equity up to theamount of any previous revaluation.For assets excluding goodwill, an assessment is made ateach reporting date as to whether there is anyindication that previously recognised impairment lossesmay no longer exist or may have decreased. If suchindication exists, the Group makes an estimate ofrecoverable amount. A previously recognisedimpairment loss is reversed only if there has been achange in the estimates used to determine the asset’srecoverable amount since the last impairment loss wasrecognised. If that is the case the carrying amount ofthe asset is increased to its recoverable amount. Thatincreased amount cannot exceed the carrying amountthat would have been determined, net of depreciation,had no impairment loss been recognised for the asset inprior years. Such reversal is recognised in the IncomeStatement unless the asset is carried at revaluedamount, in which case the reversal is treated as arevaluation increase.Goodwill is reviewed for impairment, annually or morefrequently if events or changes in circumstancesindicate that the carrying value may be impaired.Impairment is determined for goodwill by assessing therecoverable amount of the cash-generating unit (orgroup of cash-generating units), to which the goodwillrelates. Where the recoverable amount of the cashgeneratingunit (or group of cash-generating units) isless than the carrying amount of the cash-generatingunit (group of cash-generating units) to which goodwillhas been allocated, an impairment loss is recognised.Impairment losses relating to Goodwill cannot bereversed in future periods.2.4.14 PROVISIONSProvisions are recognised when the company has apresent obligation (legal or constructive) as a result of apast event, where it is probable that an outflow ofresources embodying economic benefits will berequired to settle the obligation and a reliable estimatecan be made of the amount of the obligation. If theeffect of the time value of money is material, provisionsare determined by discounting the expected futurecash flows at a pre-tax rate that reflects current marketassessments of the time value of money and, whereappropriate, the risks specific to the liability.2.4.15 RETIREMENT BENEFIT LIABILITY(a) Defined Benefit Plan – GratuityThe Group measures the present value of the promisedretirement benefits of gratuity which is a definedbenefit plan with the advice of an actuary using theProjected Unit Credit Method. Actuarial gains and lossesare recognised as income or expenses over theexpected average remaining working lives of theparticipants of the plan.However, as per the payment of Gratuity Act No. 12 of1983 this liability only arises upon completion of 5 yearsof continued service.(b) Defined Contribution Plans – Employees’ ProvidentFund and Employees’ Trust FundEmployees are eligible for Employees’ Provident FundContributions and Employees’ Trust Fund Contributionsin line with the respective statutes and regulations. TheCompany contributes 12% and 3% of grossemoluments of employees to Employees’ ProvidentFund and Employees’ Trust Fund respectively. Someemployees of the group are eligible for MercantileServices Provident Society Fund, for which the groupcontributes 12% of gross emoluments of employees.2.4.16 INCOME STATEMENTRevenue RecognitionRevenue is recognised to the extent that it is probablethat the economic benefits will flow to the Companyand the revenue and associated costs incurred or to beincurred can be reliably measured. Revenue ismeasured at the fair value of the consideration receivedor receivable net of trade discounts, value added taxes,and other sales taxes and after eliminating intra-groupsales.The following specific criteria are used for the purposeof recognition of revenue.(a) Sale of GoodsRevenue from sale of goods is recognised when thesignificant risks and rewards of ownership of the goodshave passed to buyer; with the Group retaining neithercontinuing managerial involvement to the degreeusually associated with ownership, nor effective controlover the goods sold.(b) Rendering of ServicesRevenue from rendering of services is recognised in theaccounting period in which the services are rendered orperformed.(c) Energy SuppliedRevenue from energy supplied is recognised, upondelivery of energy to Ceylon Electricity Board and willbe adjusted for capacity charge for MinimumGuaranteed Energy Amount (MGEA) at the end of theAnnual Report 2010/11 Hemas Holdings PLC 71