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Financial Reports &
Governance HENGYUAN REFINING COMPANY BERHAD l ANNUAL REPORT 2023 115
Other Information

NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

2 SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.18 REVENUE (continued)
Revenue from contracts with customers (continued)
(b) Procurement of oil products

The Company has contracts with its trading counterparties to acquire, on their behalf, oil products produced and
resell back to them at a later date, where applicable. The Company is acting as an agent in these arrangements.
When another party is involved in providing oil products or services to its trading counterparties, the Company
determines whether it is a principal or an agent in these transactions by evaluating the nature of its promise to the
trading counterparties. The Company is a principal and records revenue on a gross basis if it controls the promised oil
products before transferring them to the trading counterparties. However, if the Company’s role is only to arrange
for another entity to provide the oil products, then the Company is an agent and will need to record revenue at the
net amount that it retains for its agency services.
Revenue from other sources – interest income
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except
for financial assets that subsequently become credit-impaired. For credit-impaired financial assets, the effective interest
rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).

2.19 PURCHASES
Purchases reflect all costs related to acquisition of inventories and supplies used for conversion into finished products,
including the effects of the changes therein (cost of inventories), foreign exchange gains and losses.

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.