Ardagh Glass Finance plc - Irish Stock Exchange

ACCOUNTING POLICIES (Continued)
The expected returns on plan assets and the increase during the period in the present value of
plan liabilities arising from the passage of time are recognised as components of finance income and
finance costs respectively. Differences between the expected and the actual return on plan assets,
together with the effect of changes in the current or prior assumptions underlying the liabilities are
recognised in the Statement of Recognised Income and Expense.
Past-service costs are recognised immediately in income, unless the changes to the pension plan are
conditional on the employees remaining in service for a specified period of time (the vesting period).
In this case, the past-service costs are amortised on a straight-line basis over the vesting period.
Settlements and curtailments trigger immediate recognition of the consequent change in
obligations and related assets in the Income Statement together with any previously unrecognised past
service costs that relate to the obligations being settled or curtailed.
For defined contribution plans, the Group pays contributions to publicly or privately administered
pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further
payment obligations once the contributions have been paid. The contributions are recognised as
employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the
extent that a cash refund or a reduction in the future payments is available.
The expected return on plan assets is determined by considering the expected returns available on
the assets underlying the current investment policy. Expected yields on fixed interest investments are
based on gross redemption yields as at the balance sheet date. Expected returns on equity and property
investments reflect long-term real rates of return experienced in the respective markets.
Other long term employee benefits
The Group’s obligation in respect of other long term employee benefits such as jubilee and medals
plans represents the amount of future benefit that employees have earned in return for service in the
current and prior periods. The obligation is computed on the basis of the projected unit credit method
and is discounted to present value using a discount rate equating to the market yield at the balance
sheet date on high-quality corporate bonds of a currency and term consistent with the currency and
estimated term of the post-employment obligations. Actuarial gains and losses are recognised in full in
the period in which they arise.
TERMINATION BENEFITS
Termination benefits are recognised as an expense when the Group is demonstrably committed
without realistic possibility of withdrawal to a formal detailed plan to terminate employment before
normal retirement date or providing termination benefits as a result of an offer made to encourage
voluntary redundancy. If the effect is material, benefits payable are recognised at their present value by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money.
SHARE BASED COMPENSATION
The group has an equity settled share based compensation plan in place for certain employees.
The fair value of the employee services received in exchange for the grant of the options is recognised
as an expense. The total amount to be expensed over the vesting period is determined by reference to
the fair value of the options granted, excluding the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-market vesting conditions are included in
assumptions about the number of options that are expected to vest. At each balance sheet date, the
F-72