cont'd - KNM Steel Sdn Bhd

68KNM GROUP BERHAD I Annual Report 2012Notes to the Financial Statements (cont’d)2. Significant accounting policies (Cont’d)(k)Equity instruments (cont’d)(iii)Repurchase, disposal and reissue of share capital (treasury shares)When share capital recognised as equity is repurchased, the amount of the consideration paid,including directly attributable costs, is recognised as a deduction from equity and is not re-valuedfor subsequent changes in the fair value or market price of shares. Repurchased shares areclassified as treasury shares in the statement of changes in equity.Where treasury shares are distributed as share dividends, the cost of the treasury shares is appliedin the reduction of the share premium account or distributable reserves, or both. Where treasuryshares are reissued by re-sale in the open market, the difference between the sales considerationnet of directly attributable costs and the carrying amount of the treasury shares is recognised inequity, and the surplus or deficit on the transaction is presented in share premium.(iv)Distributions of non-cash assets to owners of the CompanyThe Group measures a liability to distribute non-cash assets as a dividend to the owners of theCompany at fair value of the assets to be distributed. The carrying amount of the dividend isremeasured at each reporting period and at the settlement date, with any changes recogniseddirectly in equity as adjustments to the amount of the distribution. On settlement of the transaction,the Group recognises the difference, if any, between the carrying amount of the assets distributedand the carrying amount of the liability in profit or loss.(v)Warrant reservesThe proceeds from the Rights Issue with Warrants is allocated to both Rights Share and Warrantsusing a reasonable and appropriate method of allocation.The Warrants issued are recognised in the statements of financial position as “Warrant Reserve”at fair value as at the date of issuance and credited to “Warrant Reserve” account which is nondistributable.The “Warrant Reserve” will be transferred to “Share Capital” account upon the exerciseof Warrants. The “Warrant Reserve” in relation to the unexercised Warrants will be transferred to“Share Capital” account upon expiry of the exercise period of the Warrants.(l)Employee benefits(i)Short-term employee benefitsShort-term employee benefits obligations in respect of salaries, annual bonuses, paid annual leaveand sick leave are measured on an undiscounted basis and are expensed as the related serviceis provided.A liability is recognised for the amount expected to be paid under short-term cash bonus if theGroup has a present legal or constructive obligation to pay this amount as a result of past serviceprovided by the employee and the obligation can be estimated reliably.The Group’s contributions to the statutory pension funds are charged to the profit or loss in the yearto which they relate. Once the contributions have been paid, the Group has no further paymentobligations.(ii)Long service leaveThe Group’s net obligation in respect of long-term employee benefits is the amount of future benefitthat employees have earned in return for their service in the current and prior periods. The longtermemployee benefits have been measured at the present value of the future cash outflows tobe made for those benefits.