Directors, employees and consultants of the Group receive
remuneration in the form of share-based payment transactions,
whereby the directors, employees and consultants render services as
consideration for equity instruments (equity-settled
transactions).
The cost of equity-settled transactions is determined by the
fair value at the date when the grant is made using an appropriate
valuation model.
That cost is recognised, together with a corresponding increase
in other capital reserves in equity, over the period in which the
performance and/or service conditions are fulfilled in employee
benefits expense (Note 12). The cumulative expense recognised for
equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has
expired and the Group's best estimate of the number of equity
instruments that will ultimately vest. The statement of profit or
loss expense or credit for a period represents the movement in
cumulative expense recognised as at the beginning and end of that
period and is recognised, depending on the type of services
rendered, in employee benefits expense (Note 12), as part of
professional fees and if related to the development of biological
assets, the expense are allocated proportionately based on the area
of mature and immature plantations.
No expense is recognised for awards that do not ultimately vest,
except for equity-settled transaction for which vesting is
conditional upon a market or non-vesting condition. These are
treated as vesting irrespective of whether or not the market or
non-vesting condition is satisfied, provided that all other
performance and/or service conditions are satisfied.
When the terms of an equity-settled transaction award are
modified, the minimum expense recognised is the expense had the
terms had not been modified, if the original terms of the award are
met. An additional expense is recognised for any modification that
increases the total fair value of the share-based payment
transaction, or is otherwise beneficial to the employee as measured
at the date of modification.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted earnings
per share (further details are given in Note 14).
o) Foreign currency
Each entity in the Group determines its own functional currency
and items included in the financial statements of each entity are
measured using that functional currency. Management determines the
functional currency based on the the primary economic environment
in which the individual entity operates. The Company's functional
currency is Singapore Dollars (SGD) while the functional currency
of the Group's principal subsidiaries is Ringgit Malaysia (RM). The
Group has elected to recycle the gain or loss that arises from the
direct method of consolidation, which is the method the Group uses
to complete its consolidation.
i) Transactions and balances
Transactions in foreign currencies are initially recorded by the
Group entities at their respective functional currency spot rates
at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign
currencies are retranslated at the functional currency spot rate of
exchange at the reporting date.
Differences arising on settlement or translation of monetary
items are recognised in profit or loss with the exception of
monetary items that are designated as part of the hedge of the
Group's net investment of a foreign operation. These are recognised
in other comprehensive income until the net investment is disposed
of, at which time, the cumulative amount is reclassified to profit
or loss. Tax charges and credits attributable to exchange
differences on those monetary items are also recorded in other
comprehensive income.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates at
the dates of the initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value is determined. The
gain or loss arising on retranslation of non-monetary items
measured at fair value is treated in line with the recognition of
gain or loss on change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in
other comprehensive income or profit or loss is also recognised in
other comprehensive income or profit or loss, respectively).
ii) Group companies
On consolidation the assets and liabilities of foreign
operations are translated into USD at the rate of exchange
prevailing at the reporting date and their income statements are
translated at exchange rates prevailing at the dates of the
transactions. The exchange differences arising on translation for
consolidation are recognised in other comprehensive income. On
disposal of a foreign operation, the component of other
comprehensive income relating to that particular foreign operation
is recognised in profit or loss.
Any goodwill arising on the acquisition of foreign operation and
any fair value adjustments to the carrying amounts of assets and
liabilities arising on the acquisition are treated as assets and
liabilities of the foreign operation and translated at the spot
rate of exchange at the reporting date.
In the case of a partial disposal without loss of control of a
subsidiary that includes a foreign operation, the proportionate
share of the cumulative amount of the exchange differences are
re-attributed to non-controlling interest and are not recognised in
profit or loss.
p) Leases
The determination of whether an arrangement is, or contains, a
lease is based on the substance of the arrangement at inception
date. The arrangement is assessed for whether fulfillment of the
arrangement is dependent on the use of a specific asset or assets
or the arrangement conveys a right to use the asset or assets, even
if that right is not explicitly specified in an arrangement.
Group as a lessee
Finance leases that transfer substantially all the risks and
benefits incidental to ownership of the leased item to the Group,
are capitalised at the commencement of the lease at the fair value
of the leased asset or, if lower, at the present value of the
minimum lease payments. Any initial direct costs are also added to
the amount capitalised. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognised in finance costs in
profit or loss. Contingent rents, if any, are charged as expenses
in the period in which they are incurred.
A leased asset is depreciated over the useful life of the asset.
However, if there is no reasonable certainty that the Group will
obtain ownership by the end of the lease term, the asset is
depreciated over the shorter of the estimated useful life of the
asset and the lease term.
Operating lease payments are recognised as an operating expense
in profit or loss on a straight-line basis over the lease term. The
aggregate benefit of incentives provided by the lessor is
recognised as a reduction of rental expense over the lease term on
a straight-line basis.
q) Borrowing costs
Borrowing costs are capitalised as part of the cost of a
qualifying asset if they are directly attributable to the
acquisition, construction or production of that asset.
Capitalisation of borrowing costs commences when the activities to
prepare the asset for its intended use or sale are in progress and
the expenditures and borrowing costs are incurred. Borrowing costs
are capitalised until the assets are substantially completed for
their intended use or sale. All other borrowing costs are expensed
in the period they occur. Borrowing costs consist of interest and
other costs that an entity incurs in connection with the borrowing
of funds.
r) Convertible bonds and embedded derivatives
When convertible bonds are issued, the total proceeds are
allocated to the liability component and conversion option, which
are separately presented on the statements of financial position.
The conversion option is recognised initially at its fair value and
is accounted for as a derivative liability. The difference between
the total proceeds and the conversion option is allocated to the
liability component. The liability component is subsequently
carried at amortised cost using EIR method until the liability is
extinguished on conversion or redemption of the bonds.
Derivative financial instruments are initially recognised at
fair value on the date on which a derivative contract is entered
into and are subsequently remeasured at fair value. Derivative
financial instruments are carried as assets when the fair value is
positive and as liabilities when the fair value is negative. Any
gain or losses arising from changes in fair value on derivative
financial instruments are taken to profit or loss for the financial
year.
s) Biological assets
Biological assets, which include mature and immature oil palm
plantations, are stated at fair value less estimated costs to sell.
Gains or losses arising on initial recognition of plantations at
fair value less estimated costs to sell and from the changes in
fair value less estimated costs to sell of plantations at each
reporting date are included in profit or loss for the period in
which they arise.
Oil palm trees have an average life of 28 years; with the first
three years as immature and the remaining as mature. Oil palm
plantation is classified as mature when 60% of oil palm per block
is bearing fruits with an average weight of 3 kilograms or more per
bunch. Biological assets also include land preparation costs which
is the cost incurred to clear the land and to ensure that the
plantations are in a state ready for the planting of seedlings.
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