Annual Report 2005 - Leeden Limited

Notes to the Financial Statements- 31 December 2005432.20 Trade and other payablesLiabilities for trade and other amounts payable, which are normally settled on 30-90 day terms, and payables to related parties areinitially recognised at fair value and subsequently measured at amortised cost using the effective interest method.Gains and losses are recognised in the profi t and loss account when the liabilities are derecognised as well as through the amortisationprocess.2.21 ProvisionsProvisions are recognised when the Group has a present obligation (legal or constructive) where, as a result of a past event, it isprobable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate canbe made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursementis recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision ispresented in the profi t and loss account net of any reimbursement.ACE DYNAMICS LIMITEDIf the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that refl ects, whereappropriate, the risks specifi c to the liability. Where discounting is used, the increase in the provision due to the passage of time isrecognised as fi nance costs.Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. If it is no longer probable thatan outfl ow of resources embodying economic benefi ts will be required to settle the obligation, the provision is reversed.2.22 Employee benefitsDefined contribution planThe Group participates in the national pension schemes as defi ned by the laws of the countries in which it operates. In particular,the Singapore companies in the Group make contributions to the Central Provident Fund scheme in Singapore, a defi ned contributionpension scheme. Contributions to national pension schemes are recognised as an expense in the period in which the related serviceis performed.Employee equity compensation benefits optionThe Group has an employee share option plan for the granting of non-transferable share options.The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which the shareoptions are granted. In valuing the share options, no account is taken of any performance conditions, other than conditions linked tothe price of the shares of the Company (‘market conditions’), if applicable.The cost of equity-settled transactions is recognised, together with a corresponding increase in the employee share option reserve,over the period in which the performance and/or service conditions are fulfi lled, ending on the date on which the relevant employeesbecome fully entitled to the award (‘the vesting date’). The cumulative expense recognised for equity-settled transactions at eachreporting date until the vesting date refl ects the extent to which the vesting period has expired and the Group’s best estimate of thenumber of equity instruments that will ultimately vest. The profi t or loss charge or credit for a period represents the movement incumulative expense recognised as at the beginning and end of that period.No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a marketcondition, which are treated as vested irrespective of whether or not the market condition is satisfi ed, provided that all otherperformance conditions are satisfi ed.Where the terms of an equity-settled award are modifi ed, as a minimum an expense is recognised as if the terms had not beenmodifi ed. In addition, an expense is recognised for any modifi cation, which increases the total fair value of the share-based paymentarrangement, or is otherwise benefi cial to the employee as measured at the date of modifi cation.ANNUAL REPORT 2005