TPCC Annual Report 2008.indd - HeidelbergCement

Tanzania Portland Cement Company Ltd, Annual Report 2008
tingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in
outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
Judgments
In the process of applying the Company’s accounting policies, management has made the following judgment, apart
from those involving estimations, which has the most significant effect on the amounts recognised in the financial state-
ments:
Provision for quarry restoration: The Company’s quarry is an open one with bench heights at 12 - 15 metres. The
overburden materials vary in thickness, but seldom exceed 0.5 metres. The removed overburden is later used as natural
backfill material. Limestone is mined from the quarry in a way that leaves the “used” area as a one-level horizontal pla-
teau. From management’s point of view there shouldn’t be any need for provision to cover future costs for restoration
of the quarry area due to the aforementioned facts regarding both the continuous ongoing backfilling and the way the
area is left after extraction. The Company has prepared a quarry restoration plan.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date,
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below.
Impairment of non-financial assets: The Company assesses whether there are any indicators of impairment for all non-
financial assets at each reporting date. Non-financial assets are tested for impairment when there are indicators that the
carrying amounts may not be recoverable. When value in use calculations are undertaken, management must estimate
the expected future cash flows from the asset or cash generating unit and choose a suitable discount rate in order to
calculate the present value of those cash flows.
Pension and Other Post Employment Benefits: The cost of defined benefit pension plans and other post employment
medical benefits is determined using actuarial valuations. The actuarial valuation involves making assumptions about dis-
count rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due
to the long term nature of these plans, such estimates are subject to significant uncertainty. Further details are given in
Note 27.
7. Standards issued but not yet effective
Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and
Separate Financial Statements
The amendments to IFRS 1 allows an entity to determine the ‘cost’ of investments in subsidiaries, jointly controlled
entities or associates in its opening IFRS financial statements in accordance with IAS 27 or using a deemed cost. The
amendment requires all dividends from a subsidiary, jointly controlled entity or associate to be recognised as income.
There is no longer a distinction between pre-acquisition and post-acquisition dividends. Both revisions will be effective
for financial years beginning on or after 1 January 2009. The revision to IAS 27 will have to be applied prospectively. The
new requirements has no impact on the Company’s financial statements.
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