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Notes to the Financial Statements (cont’d)
For the financial year ended 31 December 2011
2. Summary of significant accounting policies (cont’d)
2.30 Employee benefits (cont’d)
(b) Defined contribution plans
Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into
separate entities or funds and will have no legal or constructive obligations to pay further contributions if any of the
funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and
preceding financial years. Such contributions are recognised as expense in the period in which the related services
is performed. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund
(“EPF”). Some of the Group’s foreign subsidiaries also make contributions to their respective countries’ statutory
pension schemes.
(c) Severance benefits
The subsidiaries in Indonesia operate a partly funded, Severance Benefits Scheme (“the Scheme”) for its eligible
employees. The subsidiaries’ obligation under the Scheme, calculated using the Projected Unit Credit Method,
is determined based on actuarial computations by independent actuaries, through which the amount of benefit
that employees have earned in return for their service in the current and prior years is estimated. That benefit is
discounted in order to determine its present value.
Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives
of eligible employees when the cumulative unrecognised actuarial gains or losses for the Scheme exceed 10% of
the present value of the defined benefit obligation. Past service costs are recognised immediately to the extent that
the benefits are already vested, and otherwise are amortised on a straight-line basis over the average period until
the amended benefits become vested.
The amount recognised in the statements of financial position represents the present value of the defined benefit
obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service cost. Any asset
resulting from this calculation is limited to the net total of any unrecognised actuarial losses and past service cost.
(d) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date or whenever
an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination
benefits when it is demonstrably committed to either terminate the employment of current employees according
to a detailed plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to
encourage voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the measurement
of termination benefits is based on the number of employees expected to accept the offer. Benefits falling due more
than 12 months after reporting date are discounted to present value.
2.31 Segment reporting
For management purposes, the Group is organised into operating segments based on business segments which are
independently managed by the respective segment chief executives responsible for the performance of the respective
segments under their charge. The segment chief executives report directly to the chief operating decision maker of
the Group who regularly review the segment results in order to allocate resources to the segments and to assess the
segment performance. Additional disclosures on each of these segments are shown in Note 40, including the factors
used to identify the reportable segments and the measurement basis of segment information.
2.32 Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after
deducting all of its liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs.
Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which
they are declared.
MALAYSIA SMELTING CORPORATION (43072-A) • ANNUAL REPORT 2011 103