Maxis Berhad | Annual Report 2012

Maxis Berhad // Annual Report 2012 117 FINANCIAL STATEMENTS CORPORATE GOVERNANCE ANALYSIS OF SHAREHOLDINGS OTHER INFORMATION ANNUAL GENERAL MEETING 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Finance leases and hire purchase agreements Leases and hire purchases of property, plant and equipment where the Group assumes substantially all benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of interest on the finance lease balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment acquired under finance leases or hire purchase agreements are depreciated over the shorter of the estimated useful life of the asset and the lease term. (s) Operating leases Leases of assets where a significant portion of risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight line basis over the lease period. (t) Employee benefits (i) Short-term employee benefits Wages, salaries, paid annual leave, bonuses and non-monetary benefits are accrued in the financial year in which the associated services are rendered by employees including full-time Executive Directors of the Group and of the Company. The Group and the Company recognise provision where contractually obliged or where there is a past practice that has created a constructive obligation. (ii) Post-employment benefits Defined contribution plans A defined contribution plan is a pension plan under which the Group and the Company pay fixed contributions into a separate entity and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. The Group’s and the Company’s contributions to defined contribution plans are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group and the Company have no further payment obligations. (iii) Share-based compensation The Group and the Company operate an equity-settled, share-based compensation plan for eligible employees and directors of the Group and of the Company, pursuant to the Employee Share Option Scheme (“ESOS”). Where the Group and the Company pay for services of its employees using the share options, the fair value of the employee services rendered in exchange for the grant of the share options is recognised as an expense in the income statement over the vesting periods of the grants, with the corresponding increase in equity. The total amount to be expensed over the vesting period is determined by reference to the fair value of the share options at grant date and the number of share options to be vested by the vesting date. At each reporting date, the Group and the Company revise their estimates of the number of share options that are expected to vest by the vesting date. Any revision of this estimate is included in the income statement and a corresponding adjustment to equity.