Notes to the Financial Statements Contd.... - Colombo Stock Exchange

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Notes to the Financial Statements Contd.... K E G A L L E P L A N T A T I O N S P L C 2 0 0 9 2.3.14 Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense. 2.3.15 Retirement Benefit Obligation a) Defined Benefit Plans –Gratuity The Company measures the present value of the promised retirement benefits of gratuity which is a defined benefit plan with the advice of an actuary every two years using projected benefits valuation method. Actuarial gains and losses are recognised as income or expenses over the expected average remaining working lives of the participants of the plan. The key assumptions used by the actuary include the followings: i) Rate of Discount - 10% (per annum) ii) Rate of Salary Increase - Workers 11%every two years - Staff 20% every three years iii) Retirement Age - Workers 60 years - Staff 60 years In addition, annual increase in salaries of staff employees at the rate of 2.50% per annum and annual increase of 7.50% per annum in the cost of living allowance was assumed. iv) The company will continue as a going concern. The actuarial present value of the accrued benefits as at 31st March 2009 is Rs. 233,477,081/- This item is grouped under retirement benefit obligations in the Balance Sheet. The liability is not externally funded. 44 b) Defined Contribution Plans – Employees’ Provident Fund & Employees’ Trust Fund Employees are eligible for Employees’ Provident Fund Contributions and Employees’ Trust Fund Contributions in line with the respective statutes and regulations. The Company contributes 12% and 3% of gross emoluments of employees to the Employees’ Provident Fund and to the Employees’ Trust Fund respectively. 2.3.16 Grants and Subsidies Grants and subsidies are recognised at their fair value where there is reasonable assurance that the grant/ subsidy will be received and all attaching conditions, if any, will be complied with. When the grant or subsidy relates to an income item it is recognised as income over the periods necessary to match them to the costs to which it is intended to compensate on a systematic basis. Grants and subsidies related to assets, including non-monetary grants at fair value are deferred in the Balance Sheet and credited to the Income Statement over the useful life of the asset. 2.3.17 Impairment of Non Financial Assets The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cashgenerating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices or other available fair value indicators.
Impairment losses of continuing operations are recognised in the Income Statement in those expense categories consistent with the function of the impaired asset, except for property previously revalued where the revaluation was taken to equity. In this case the impairment is also recognised in equity up to the amount of any previous revaluation. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Company makes an estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot ‘’exceed’ the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Income Statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment losses recognised in relation to goodwill are not reversed for subsequent increases in its recoverable amount. The following criteria are also applied in assessing impairment of specific assets: Goodwill Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating unit (or group of cash-generating units), to which the goodwill relates. Where the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying amount of the cashgenerating unit (group of cash-generating units) to which goodwill has been allocated, an impairment loss is recognised. Impairment losses relating to Goodwill cannot be reversed in future periods. The Company performs its annual impairment test of goodwill as at 31st March. However, at present Company does not have any recorded Goodwill as at the Balance Sheet date. Notes to the Financial Statements Contd.... K E G A L L E P L A N T A T I O N S P L C 2 0 0 9 45 Intangible Assets Intangible assets with indefinite useful lives are tested for impairment annually as of 31st March either individually or at the cash generating unit level, as appropriate. However, at present Company does not have any recorded intangible assets as at the Balance Sheet date. 2.3.18 Income Statement Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable net of trade discounts and sales taxes. The following specific criteria are used for the purpose of recognition of revenue. (a) Sale of Goods Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch of the goods. (b) Interest Interest Income is recognised as the interest accrued (taking into account the effective yield on the asset) unless collectibility is in doubt. (c) Dividends Dividend income is recognised on a cash basis. (d) Rental income Rental income is recognised on an accrual basis. (e) Royalties Royalties are recognised on an accrual basis in accordance with the substance of the relevant agreement. ( f ) Others Other income is recognised on an accrual basis. Net Gains and losses of a revenue nature on the disposal of property, plant & equipment and other non current assets including investments have been accounted for in the Income Statement, having deducted from proceeds on disposal, the carrying
Page 1 and 2: K E G A L L E P L A N T A T I O N S
Page 3 and 4: Contents K E G A L L E P L A N T A
Page 5 and 6: Performance - Year Ended 31st March
Page 7 and 8: incurred on rubber. The balance amo
Page 9 and 10: TEA PRODUCTION Kg ‘000 K E G A L
Page 11 and 12: Mr. S S Poholiyadde Director Operat
Page 13 and 14: Key Data - Estates K E G A L L E P
Page 15 and 16: With the assistance of Gramasewaka
Page 17 and 18: Rubber Production The year under re
Page 19 and 20: Rupees Mn Statement of Value Added
Page 21 and 22: Strategic Direction and Corporate S
Page 23 and 24: The Remuneration Committee of the P
Page 25 and 26: Business Risk Management Risk Manag
Page 27 and 28: Risk Management Contd.... K E G A L
Page 29 and 30: Financial Calender 2 0 0 8 / 2 0 0
Page 31 and 32: Donations Donations made during the
Page 33 and 34: In keeping with the provisions unde
Page 35 and 36: As at 31 March, 2009 Balance Sheet
Page 39 and 40: Year Ended 31 March 2009 K E G A L
Page 41 and 42: Sheet date, that have a significant
Page 43 and 44: assets with finite lives is recogni
Page 45: 2.3.10 Immature and Mature Plantati
Page 49 and 50: Year Ended 31st March 2009 3. LEASE
Page 51 and 52: Year Ended 31st March 2009 Notes to
Page 53 and 54: Year Ended 31st March 2009 K E G A
Page 55 and 56: Year Ended 31st March 2009 13. INTE
Page 57 and 58: Year Ended 31st March 2009 14. RETI
Page 61 and 62: Year Ended 31st March 2009 Tea Rubb
Page 65 and 66: Year Ended 31st March 2009 28. SECU
Page 69 and 70: 1. Stock Exchange Investor Informat
Page 71 and 72: Definitions Capital Employed The su

Notes to the Financial Statements Contd.... - Colombo Stock Exchange

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