Group Overview Operation and Financial Review Financials Other Information Sustainability and Governance 85 Annual Report 2025 Notes to the financial statements For the financial year ended 31 December 2025 2. Summary of material accounting policies information (cont’d) 2.22 Employee benefits (cont’d) (b) Defined benefit plans The Group also provides additional provisions for employee service entitlements in order to meet the minimum benefits required to be paid to qualified employees, as required under the applicable Indonesian Labour Law. The said additional provisions, which are unfunded, are estimated by actuarial calculations using the projected unit credit method. The estimated liability for employee benefits is the aggregate of the present value of the defined benefit obligations at the end of the reporting period. Defined benefit costs comprise the following: – Service cost; – Net interest on the net defined benefit liability; and – Re-measurements of the net defined benefit liability Service costs which include current service costs, past service costs and gains or losses on nonroutine settlements are recognised as expense in profit or loss. Past service costs are recognised when the plan amendment or curtailment occurs, or when the Group recognises the related restructuring costs, whichever is the earlier. Net interest on the net defined benefit liability is the change during the period in the net defined benefit liability that arises from the passage of time, which is determined by applying the discount rate to the net defined benefit liability. Net interest on the net defined benefit liability is recognised as expense or income in profit or loss. Re-measurements comprising actuarial gains and losses are recognised immediately in other comprehensive income in the period in which they arise. Re-measurements are recognised in retained earnings within equity and are not reclassified to profit or loss in subsequent periods. 2.23 Leases The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Group as lessee The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. (a) Right-of-use assets The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Following initial recognition, right-of-use assets are subsequently measured at amortised cost and depreciated over the term of the lease using the straight-line method.
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