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Every Note Counts

N otes to the Financial Statements

Year ended 31 December 2010

When the benefits of a plan change, the portion of the increased benefit relating to past service by employees is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the income statement.

In calculating the Group’s obligation in respect of a plan, any actuarial gain or loss is recognised as income or expense when the net cumulative unrecognised actuarial gains and losses for each individual plan at the end of the previous reporting year exceed 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses are recognised over the expected average remaining working lives of the employees participating in the plans.

When the calculation results in a benefit to the Group, the recognised asset is limited to the net total of any unrecognised past service cost and the present value of any future refunds from the plan or reductions in future contributions to the plan.

Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

Equity compensation benefits

The Employee Share Option Plan (the Plan) allows the employees of a subsidiary participating in the Plan to acquire shares of the said subsidiary. The fair value of options, when granted, will be recognised as an employee expense with a corresponding increase in equity. The fair value will be measured at grant date and spread over the period during which the employees of the subsidiary become unconditionally entitled to the options. At each reporting date, the subsidiary will revise its estimates of the number of options that are expected to be exercisable. It will recognise the impact of the revision of original estimates in employee expense and in a corresponding adjustment to equity over the remaining vesting period.

The proceeds received net of any directly attributable transaction costs will be credited to share capital when the options are exercised.

2.15

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

2.16

Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

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