TANJUNG OFFSHORE BERHAD

NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2009
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
t) Signifi cant Accounting Estimates and Judgements (continued)
Share-based payments to employees
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TANJUNG OFFSHORE BERHAD (662315-U)
ANNUAL REPORT 2009
The cost of providing the share-based payments to the employees is charged to the income statement over the vesting
period. The cost is based on the fair value of the options and the number of the options expected to vest. The fair value
of the options is determined using Black Scholes pricing model.
Amortisation of intangible assets
The goodwill of patent and purchases are amortised on a straight line basis over their useful lives over 17 years and 10
years respectively. The Group assesses annually the useful lives of the intangible assets and if the expectation differs from
the original estimate, such difference will impact the amortisation expenses in the period in which such estimate has been
charged.
4. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES
The operation of the Group and the Company is subject to a variety of fi nancial risks. The Group’s and the Company’s overall
fi nancial risk management objective is to ensure that the Group and the Company creates value for its shareholders.
The main areas of fi nancial risks faced by the Group and the Company are as follows:
i) Credit risk
The Group’s main exposure to credit risk is in respect of its trade and other receivables. The Group manages the exposure
to credit risk by performing credit evaluation on the major customers and outstanding debts are being monitored and
pursued for full recovery.
ii) Liquidity and cash fl ow risk
The Group and the Company actively manages its debts maturity profi le, operating cash fl ows and availability of funding
so as to ensure that all repayment and funding needs are met.
iii) Interest rate risk
The Group and the Company have cash and bank balances and deposits placed with licensed banks. The Group and the
Company manages its interest rate risks by placing such balances on varying maturities and interest rate terms.
The Group and the Company are also exposed to interest rate risk through the impact of rate charges on its borrowings.
To mitigate the interest rate risk, the management of the Group and the Company consistently monitors the interest rate
exposure against the existing/potential income from operations.
iv) Foreign currency exchange risk
The Group and the Company imports a wide range of engineering equipment and spare parts for its business operations
from various countries, subjecting its purchase costs to foreign exchange fl uctuations. In this aspect, the Group and
the Company mitigates its exposure to foreign exchange fl uctuations through back-to-back purchase and selling
arrangements between its customers and the foreign suppliers. As a result, the Group’s and the Company’s purchase
costs and currencies transacted are matched to the revenues generated from the sale of the Group’s products, thus
forming a natural hedge.