axiata group berhad | annual report 2015
144
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(u) Employee benefits (continued)
(v) Post-employment benefit obligations (continued)
The Group determines the present value of the defined benefit obligation and the fair value of any plan assets with sufficient regularity
such that the amounts recognised in the financial statements do not differ materially from the amounts that would be determined at the
end of the reporting period. The liability recognised in the statement of financial position in respect of defined benefit pension plans is the
present value of the defined obligation at the end of the reporting period less the fair value of plan assets, together with adjustments for
actuarial gains/losses and unrecognised past-service costs.
The defined benefit obligation is calculated annually by independent actuaries using projected unit credit method. The present value of
the defined benefit obligation is determined by discounting the estimated future cash flows using interest rates of high-quality corporate
bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximately to the terms
of related pension obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used.
Remeasurement, comprising actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions, are
charged or credited to equity in other comprehensive income in the period in which they arise and will not be reclassified to profit or loss.
Past-service costs are recognised immediately in profit or loss.
(vi) Cash-Based Long Term Incentive (“LTI”) compensation
The Group and the Company recognise a liability and an expense for cash-based long term incentive compensation and over the vesting
period, based on a formula that takes into consideration the number of employees, a performance multiplier and discount rate. Provision is
recognised when the Group and the Company have a present legal or constructive obligation as a result of past events.
(v) Deferred revenue
Deferred revenue comprises:
(i)
The unutilised balance of airtime and access fee in respect of prepaid cards sold to customers. Such revenue amounts are recognised as
revenue upon utilisation of airtime and activation of access right by the customer.
(ii) The value of advance billings made to customers in respect of the rental of fibre optic network. Such amounts are recognised as revenue
systematically over the period covered by the advance billings.
(w) Indefeasible right of use (“IRU”)
The Group has entered into certain IRU agreements with its customers. An IRU is a right to use a specified amount of capacity for a specific time
period that cannot be revoked or voided. Such agreements are accounted for either as lease or service transactions.
Those IRU agreements that provide the lessee with exclusive right to the purchased capacity and limit the purchased capacity to a specified fibre
are accounted as lease transactions. Other IRUs are accounted for as service contracts.
IRU agreements that transfer substantially all the risks and rewards of ownership to the lessee are classified as sale-type leases. All other IRU
leases are classified as operating leases.
(x) Foreign currencies
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates. The consolidated financial statements are presented in RM, which is the Company’s functional
and presentation currency.
