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Annual Report 2014 | S P SETIA BERHAD GROUP | 131

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 October 2014

V. FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(u) Foreign currencies (cont’d)

(iii) Translation of foreign operations

For consolidation purposes, all assets and liabilities of foreign operations that have a functional currency other than RM (including

goodwill and fair value adjustments arising from the acquisition of the foreign operations) are translated at the exchange rates

ruling at the reporting date.

Income and expense items are translated at exchange rates approximating those ruling on transactions dates.

All exchange differences arising from the translation of the financial statements of foreign operations are dealt with through the

exchange translation reserve account within equity. On the disposal of a foreign operation, the exchange translation differences

relating to that foreign operation are recognised in profit or loss as part of gain or loss on disposal.

(v) Employee benefits

(i) Short term employee benefits

Wages, salaries, paid annual leave, paid sick leave, maternity leave, bonuses and non-monetary benefits are recognised as

an expense in the period in which the associated services are rendered by employees other than those that are attributable

to property development activities or construction contract in which case such expenses are recognised in the property

development costs or contract costs.

(ii) Post-employment benefits

The Company and its subsidiaries incorporated in Malaysia make contributions to the Employees Provident Fund (“EPF”)

and foreign subsidiaries make contributions to their respective countries’ statutory pension schemes. The contributions are

recognised as a liability after deducting any contributions already paid and as expenses in the period in which the employees

render their services.

(iii) Share-based payment transactions

The Group operates an equity-settled share-based long term incentive plan (“LTIP” or “Scheme”), which comprises the

Employee Share Grant Plan (“ESGP”) and Employee Share Option Scheme (“ESOS”) for its employees and Executive Directors.

ESGP

Employees and Executive Directors are entitled to ESGP in the form of Restricted Share Plan (“RSP”) and Performance Share

Plan (“PSP”) as consideration for services rendered. The RSP is a restricted share plan for employees and Executive Directors,

while the PSP is a performance share plan for selected senior management and Executive Directors.

The RSP and PSP are settled by way of issuance and transfer of new shares upon vesting. The total fair value of RSP and PSP

granted is recognised as an employee cost with a corresponding increase in the share options reserve within equity over the

vesting period after taking into account the probability that the RSP and PSP will vest.

The fair value of RSP and PSP is measured at grant date using the binomial model, taking into account, if any, the market vesting

conditions upon which the RSP and PSP were granted but excluding the impact of any non-market vesting conditions. Non-

market vesting conditions are included in assumptions about the number of shares that are expected to vest on the vesting

date.

At each reporting date, the Group revises its estimates of the number of RSP and PSP that are expected to vest on vesting date.

It recognises the impact of the revision of original estimates, if any, in profit or loss and a corresponding adjustment to equity

over the remaining vesting period. The equity amount is recognised in the share-based payment reserve.