DIPPED PRODUCTS PLC / ANNUAL REPORT 2008—2009

Accounting Policies
11.5. Grants
Grants related to property, plant and equipment other than grants received for forestry are initially deferred
and allocated to income on a systematic basis over the useful economic life of the related Property, plant and
equipments as follows:
Buildings
Sanitation & water supply
Plant & equipment
40 years
20 years
131/3 years
Grants related to income are recognised in profit & loss in the year in which it is receivable.
Grants received for forestry are initially deferred and credited to profit & loss at once when the related blocks of
trees are harvested.
11.6. Retirement benefits to employees
The Defined Retirement Benefit Plan adopted is as required under the Payment of Gratuity Act No. 12 of 1983
and Indian Repatriate Act No. 34 of 1978 to eligible employees. This item is grouped under retirement benefit
obligations in the Balance Sheet. Provision for gratuity on the employees of the company is based on an actuarial
valuation using the Projected Unit Credit (PUC) method as recommended by Sri Lanka Accounting Standard
(SLAS) 16 - Retirement Benefit Costs. The actuarial valuation was carried out by a professionally qualified firm of
actuaries, Messrs Actuarial and Management Consultants (Pvt.) Limited as at December 31, 2008. The company
expects to carry out an actuarial valuation once in every two years.
The key assumptions used by the actuary include the following:
Rate of interest – 10% (per annum)
Rate of salary increase
- Workers – 22% (every two years)
- Staff – 10% (per annum)
Retirement age
- Workers – 60 years
- Staff – 60 years
Daily wage rate
- Tea – Rs. 200/-
- Rubber – Rs. 200/-
The company will continue in business as a going concern.
However according to the Payment of Gratuity Act No. 12 of 1983, the liability for payment to an employee arises
only after the completion of 5 years continued service.
The liability is not externally funded.
11.7. Revenue recognition
In keeping with the practice in Plantation Industry, revenue and profit or loss on sale of Perennial crops are
recognised in the financial period of harvesting. Revenue is recorded at invoice value net of brokerage, sale
expenses and other levies related to revenue.
12. Cash Flow Statement
The Cash Flow Statement has been prepared using the “indirect method”. Interest paid is classified as operating cash flows,
interest, dividends and grants received are classified as investing cash flows while dividends paid is classified as financing
cash flows for the purpose of presenting of Cash Flow Statement.
D I P P E D P R O D U C T S P L C A N N U A L R E P O R T 2 0 0 8 – 2 0 0 9
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