Page 100 - HRC_AR2020

98 I 2020 ANNUAL REPORT I financial reports

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 (CONTINuED)

2 sUMMarY of siGnificant accoUntinG policies (continued)
2.19 leases (continued)
company as lessee (continued)
Short term leases and leases of low value assets

Short term leases are leases with a lease term of 12 months or less. Low value assets comprise of small items such as
IT equipment. Payments associated with short term leases and leases of low value assets are recognised on a straight
line basis as an expense in profit or loss.
2.20 eMploYee Benefits
(a) short-term employee benefits
The Company recognises a liability and an expense for bonuses, based on a formula that takes into consideration
the profit attributable to the Company’s shareholders after certain adjustments. The Company recognises
a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
Wages, salaries, paid annual leave, sick leave, bonuses, social security contributions and non-monetary benefits
are accrued in the period in which the associated services are rendered by employees of the Company.
Short term accumulating compensated absences such as paid annual leave is recognised when services
are rendered by employees that increase their entitlement to future compensated absences, and short term
non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(b) post-employment benefits
The Company’s post-employment benefit scheme comprises only of the defined contribution plan.
Contributions to the Employees’ Provident Fund, which is a defined contribution plan, are charged to the profit
or loss when incurred. Once the contributions have been paid, the Company has no further payment obligations.
(c) employee leave entitlement
Employee entitlements to annual leave are recognised as a liability when they accrue to the employees.
The estimated liability for leave is recognised for services rendered by employees up to the reporting date.

(d) long-term employee benefits
The Company provides death in service and long-term disability benefits to its employees. The benefit is on a lump
sum basis based on a multiplier of the last drawn average annual salary of the employee and is not dependent
on the employee’s length of service. Accordingly, it is charged to profit or loss when incurred.
2.21 cUrrent anD DeferreD incoMe taX
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the
extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is
also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities. This liability is measured using the best estimate of the most likely outcome.