Eng - IOI Group

Notes To The Financial Statements cont’d3. ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS (“FRSs”) AND AMENDMENTS TO FRSscont’d3.2 New and revised FRSs, Amendments to FRSs and Issues Committee (“IC”) Interpretations not adopted cont’d3.2.2 IC Interpretation 8This interpretation applies to transactions in which goods or services are received, including transactions in which the entitycannot identify specifically some or all of the goods or services received. Where the fair value of the share-based payment isin excess of the identifiable goods or services received, it is presumed that additional goods or services have been or will bereceived. The whole fair value of the share-based payment will be charged to income statement. The Group will apply thisinterpretation from its annual periods beginning 1 July 2007.3.3 Impact of FRSs and Amendments to FRSs adoptedThe adoption of FRS 102, 108, 110, 116, 127, 128, 131, 132, 133 and 124 does not have any significant financial impacton the Group. The principal effects of changes in accounting policies resulting from the adoption of other new and revisedFRSs are as follows:3.3.1 FRS 2: Share-based PaymentFRS 2 requires an entity to recognise the fair value of share options granted to employees as an expense with a correspondingincrease in equity over the vesting period.The Company together with its listed subsidiary, IOI Properties Berhad, a 71% owned subsidiary of the Company eachoperates an equity-settled share-based compensation plan, where share options are issued by the respective companies totheir respective eligible executives and full time executive directors.Prior to 1 July 2006, no compensation expense was recognised in income statement for share options granted. The Companyand its subsidiary recognised an increase in share capital and share premium when the options were exercised.With the adoption of FRS 2, the compensation expense relating to share options is now recognised within staff costs in theincome statement over the vesting periods of the grants with a corresponding increase in equity. The total amount to berecognised as compensation expense is determined by reference to the fair value of the share options at the date of the grantand the number of share options to be vested by the vesting date. The fair value of the share options is computed using abinomial options pricing model performed by an actuary. At every balance sheet date, the Group revises its estimates of thenumber of share options that are expected to vest by the vesting date. Any revision of the estimates is included in the incomestatement and a corresponding adjustment to equity over the remaining vesting period.In accordance with the transitional provisions, this change in accounting policy for share options has been accountedretrospectively to all options granted after 31 December 2004 but not yet vested on 1 January 2006. Accordingly, certaincomparatives have been restated as disclosed in Note 3.5.IOI Corporation BerhadANNUAL REPORT 2007 134