Final Sameer Annual Report 2010 - Sameer Africa Limited

Notes to the consolidated financial statements
for the year ended 31 december 2010
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss
had been recognised.
(g) Inventories
Work in progress and manufactured finished goods are valued at production cost including direct production costs (cost of
materials and labour) and an appropriate proportion of production overheads and factory depreciation. The cost of stocks
is based on the weighted average principle.
If the purchase or production cost is higher than net realisable value, stocks are written down to net realisable value. Net
realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion
and selling expenses.
The provision for slow moving finished goods inventory should is computed in accordance with the group’s stocks internal
provisioning policy, which requires management to consider making a full provision for items with a stockholding of greater
than 12 months.
(h) Trade and other receivables
Trade and other receivables are stated at amortised cost less an estimate made for doubtful receivables based on a review
of all outstanding amounts at year end.
(i) Employee benefits
(i) Defined contribution plan
The company and all its employees also contribute to the respective National Social Security Funds in the countries in
which the group operates, which are defined contribution schemes.
The company’s contributions to the defined contribution schemes are charged to the profit or loss in the year to which
they relate. The company has no further obligation in respect of the defined contribution plans once the contributions
have been paid.
(ii) Staff gratuity (Defined Benefit Plan)
The group has a defined benefit plan for its unionised employees under its Collective Bargaining Agreement. The Group’s
net obligation in respect of defined benefit pension plan is calculated by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine
its present value.
Employees who retire on reaching the retirement age fixed by the group or grounds of ill health receive twenty one days
basic wage for less than six years or services per completed years of service. For six years of service or more, employees
receive twenty eight days basic wage per completed year of service. This is based on the wage or salary at the time of
such resignation or termination.
The provision for liability recognised in the financial statements is the estimated entitlement as a result of services rendered
by employees up to the financial reporting date. The defined benefit scheme is unfunded.
The calculation is performed annually by a qualified actuary using the projected unit credit method. The Group recognises
all actuarial gains and losses and all expenses related to defined benefit plans in personnel expenses in profit or loss.
The Group recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or
settlement occurs. The gain or loss on curtailment comprises any resulting change in the present value of defined benefit
obligation and any related actuarial gains and losses and past service cost that had not previously been recognised.
(iii) Leave accrual
The monetary value of the unutilised leave by staff as at year end is carried in the accruals as a payable and the movement
in the year is debited/credited to the statement of comprehensive income.
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