annual report - Tenaga Nasional Berhad

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d.)(x)Employee benefits (Cont’d.)(ii)Post-employment benefitsThe Group has various post-employment benefit schemes which are either defined contribution or definedbenefit plans.Defined contribution plansThe Group’s contributions to defined contribution plans are charged to the income statement in the financialyear to which they relate. Once the contributions have been paid, the Group has no further paymentobligations.Defined benefit plansThe Group makes contributions to the Company’s Retirement Benefit Plan, a defined benefit plan and approvedfund independent of the Company’s finances. A book provision is also provided by the Company as thecontribution rate required to fund the benefits under the said plan is in excess of the Inland Revenue maximumlimit. The Group and the Company also provide for a post retirement medical plan for certain employees.The liability in respect of a defined benefit plan is the present value of the defined benefit obligation at thebalance sheet date minus the fair value of plan assets, together with adjustments for actuarial gains/losses andpast service cost. The Group determines the present value of the defined benefit obligation and the fair valueof any plan assets with sufficient regularity such that the amounts recognised in the financial statements do notdiffer materially from the amounts that would be determined at the balance sheet date.The defined benefit obligation, calculated using the Projected Unit Credit Method, is determined by anindependent actuarial firm, considering the estimated future cash outflows using market yields at balance sheetdate of Government securities which have currency and terms to maturity approximating the terms of therelated liability. The last revaluation was done in February 2007.The amount of net actuarial gains and losses are credited or charged to the income statement, as the casemay be, over the expected average remaining service lives of the participating employees.(iii)Share-based compensationThe Group has applied the provision of FRS 2 to all equity instruments granted after 31 December 2004 butnot yet vested as at 1 September 2006, the effective date the Group adopted this FRS.The Group operates an equity-settled, share-based compensation plan for the employees of the Group.Employee services received in exchange for the grant of the share options is recognised as an expense in theincome statement over the vesting periods of the grant with a corresponding increase in equity.The total amount to be expensed over the vesting period is determined by reference to the fair value of theshare options granted, excluding the impact of any non-market vesting conditions (for example, profitability andsales growth targets). Non-market vesting conditions are included in assumptions about the number of optionsthat are expected to be vested. At each balance sheet date, the Group revises its estimates of the number ofshare options that are expected to be vested. It recognises the impact of the revision of original estimates, ifany, in the income statement, with a corresponding adjustment to equity.The proceeds received net of any directly attributable transaction costs are credited to share capital (nominalvalue) and share premium when the options are exercised.[ Tenaga Nasional Berhad ] [ Annual Report 2008 ]195