KUB Malaysia Berhad Annual Report 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d) 3.6 Revenue (cont’d) (e) Management services to subsidiaries The Company provides management services to its subsidiaries which are recognised at the point in time as and when the services are rendered. (f) Interest income Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. (g) Dividend income Dividend income represents dividends received from subsidiaries, an associate and other investments when there is a right to receive payment is established. 3.7 Employee benefits (a) Short-term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short-term accumulating compensated absences such as paid annual leaves are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short-term non-accumulating compensated absences such as sick leaves are recognised when the absences occur. (b) Defined contribution plans The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employees Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed. (c) Termination benefits The Group recognises the termination benefits expenses such as voluntary and mutual separation scheme, and retrenchment benefits when the Group can no longer withdraw the offer of those benefits. 3.8 Zakat The Group recognises its obligations towards the payment of zakat on business. Zakat is recognised as and when the Group has a current zakat obligation as a result of a zakat assessment. The amount of zakat expense shall be assessed when a company within the Group has been in operation for at least 12 months, i.e. for the period known as “haul (eligible period)”. Zakat rates enacted or substantively enacted by the end of the reporting period are used to determine the zakat expense. The rate of zakat on business, as determined by National Fatwa Council is 2.5% of the zakat base. The zakat base of the Group is determined based on the working capital method. Zakat on business is calculated by multiplying the zakat rate with zakat base. The amount of zakat assessed is recognised as an expense in the financial period/year in which it is incurred. 69 ANNUAL REPORT 2021 FINANCIAL STATEMENTS