Maxis Berhad | Annual Report 2012

Maxis Berhad // Annual Report 2012 114 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) Fair value estimates (continued) The face values for financial assets and financial liabilities with a maturity of less than one year are assumed to be approximately equal to their fair values. For derivative financial instruments that are measured at fair value, the fair values are determined using a valuation technique which utilises data from recognised financial information sources. Assumptions are based on market conditions existing at each reporting date. The fair value is calculated as the present value of estimated future cash flow using an appropriate market based yield curve. (j) Inventories Inventories, which comprise telecommunications components, incidentals and devices, are stated at the lower of cost and net realisable value. Cost includes the actual cost of materials and incidentals in bringing the inventories to their present location and condition, and is determined on a weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. (k) Receivables Receivables are carried at invoice amount and/or income earned less an allowance for impairment. The allowance is established when there is objective evidence that the Group and the Company will not be able to collect all amounts due according to the original terms of receivables. When the debt becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised in the income statement. (l) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, deposits held at call with licensed banks, other short-term, highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the statements of financial position. For the purposes of the statements of cash flows, cash and cash equivalents are presented net of pledged deposits. (m) Share capital (i) Classification Ordinary shares and redeemable preference shares with discretionary dividends are classified as equity. Other shares are classified as equity and/or liability according to the economic substance of the particular instrument. Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity. (ii) Share issue costs External costs directly attributable to the issue of new shares are deducted, net of tax, against proceeds and shown in equity. (iii) Dividends to shareholders of the Company Dividend distribution to the Company’s shareholders is recognised as a liability in the period they are approved by the Board of Directors except for the final dividend which is subject to approval by the Company’s shareholders. (n) Payables Payables, including accruals, represent liabilities for goods received and services rendered to the Group and the Company prior to the end of the financial year and which remain unpaid. Payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2012 Continued