ANNUAL REPORT 2008 - KNM Steel Sdn Bhd
ANNUAL REPORT 2008 - KNM Steel Sdn Bhd
ANNUAL REPORT 2008 - KNM Steel Sdn Bhd
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NOTES TO THE<br />
FINANCIAL STATEMENTS (CONT’D)<br />
2. Significant accounting policies (cont’d)<br />
(n)<br />
Employee benefits<br />
(i)<br />
Short-term employee benefits<br />
Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave<br />
and sick leave are measured on an undiscounted basis and are expensed as the related service<br />
is provided.<br />
A provision is recognised for the amount expected to be paid under short-term cash bonus or profitsharing<br />
plans if the Group has a present legal or constructive obligation to pay this amount as a<br />
result of past service provided by the employee and the obligation can be estimated reliably.<br />
The Group’s contribution to the statutory pension funds are charged to the income statements in<br />
the year to which they relate. Once the contributions have been paid, the Group has no further<br />
payment obligations.<br />
(ii)<br />
Share-based payment transactions<br />
The grant date fair value of share options granted to employees is recognised as an employee<br />
expense, with a corresponding increase in equity, over the period in which the employees become<br />
unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect<br />
the actual number of share options that has been vested.<br />
The fair value of employee share options is measured using a trinomial option pricing model.<br />
Measurement inputs include share price on measurement date, exercise price of the instrument,<br />
expected volatility (based on weighted average historic volatility adjusted for changes expected<br />
due to publicly available information), weighted average expected life of the instruments (based<br />
on historical experience and general option holder behaviour) and expected dividends. Service<br />
and non-market performance conditions attached to the transactions are not taken into account<br />
in determining fair value.<br />
(iii) Long service leave<br />
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit<br />
that employees have earned in return for their service in the current and prior periods. That benefit<br />
is discounted to determine its present value, and the fair value of any related assets is deducted.<br />
The discount rate is the yield at the reporting date on national government bonds that have maturity<br />
dates approximating the terms of the Group’s obligations.<br />
(o)<br />
Loans and borrowings<br />
Loans and borrowings are stated at amortised cost with any difference between cost and redemption<br />
value being recognised in the income statement over the period of the loans and borrowings using the<br />
effective interest method.<br />
(p)<br />
Payables<br />
Payables are measured initially and subsequently at cost. Payables are recognised when there is a<br />
contractual obligation to deliver cash or another financial asset to another entity.<br />
<strong>KNM</strong> GROUP BERHAD<br />
70<br />
<strong>ANNUAL</strong> <strong>REPORT</strong> <strong>2008</strong>