Maxis Berhad | Annual Report 2013

99 OVERVIEW OUR BUSINESS STRATEGIC REVIEW CORPORATE GOVERNANCE FINANCIAL STATEMENTS Maxis Berhad Annual Report 2013 OTHER INFORMATION 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (t) Employee benefits (continued) (iv) 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”) and share-based incentive arrangement (which arrangement has not been effected). Where the Group and the Company pay for services of 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 statement of profit or loss 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 statement of profit or loss and a corresponding adjustment to equity. The fair value of employee share options is measured using a modified Black Scholes model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historical volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on maturity of the share options), expected dividends and the risk-free interest rate (based on data from recognised financial information sources). Non-market vesting conditions attached to the transactions are not taken into account in determining fair value. When share options are exercised, the proceeds received from the exercise of the share options together with the corresponding share options reserve, net of any directly attributable transaction costs are transferred to share capital (nominal value) and share premium. If the share options expire or lapse, the corresponding share options reserve attributable to the share options is transferred to retained earnings. In the separate financial statements of the Company, the grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity. (u) Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s and of the Company’s activities. The Group’s revenue is shown net of service tax, returns, rebates, discounts and after eliminating sales within the Group. The Group and the Company recognise revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s and of the Company’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group and the Company base their estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. (i) Telecommunications revenue Revenues from mobile postpaid services and fixed line services are recognised at the time of customer usage and when services are rendered. Service discounts and incentives are accounted as a reduction of revenue when granted. Unutilised amounts on certain mobile postpaid rate plans are deferred up to one month. Unutilised amounts exceeding one month are recognised as breakage revenue.