Osim FR 050407.indd

Notes to the Financial Statements - 31 December 2006 (cont’d)2. Summary of significant accounting policies (cont’d)2.23 Employee benefits (cont’d)b) Employee leave entitlementEmployee entitlements to annual leave are recognised as a liability when they accrue to employees. The estimatedliability for leave is recognised for services rendered by employees up to balance sheet date.c) Defined benefit plansThe cost of providing defi ned benefi t plan is determined using actuarial valuation method. Actuarial gains andlosses are recognised as income or expense when the cumulative unrecognised actuarial gains or losses for eachplan exceed 10% of the defi ned benefi t obligation and the fair value of the plan assets. These gains or losses arerecognised over the expected average remaining working lives of the employees participating in the plans.d) Employee share option plansEmployees of the Group receive remuneration in the form of share options as consideration for services rendered(‘equity-settled transactions’).The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on whichthe share options are granted. In valuing the share options, no account is taken of any performance conditions, otherthan conditions linked to the 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 shareoption reserve, over the period in which the performance and/or service conditions are fulfi lled, ending on the dateon which the relevant employees become fully entitled to the award (‘the vesting date’). The cumulative expensesrecognised for equity-settled transactions at each reporting date until the vesting date refl ects the extent to whichthe vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimatelyvest. The charge or credit to the profi t and loss account for a period represents the movement in cumulative expenserecognised 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 amarket condition, which are treated as vested irrespective of whether or not the market condition is satisfi ed, providedthat all other performance conditions are satisfi ed.Notes to the Financial Statements 101Annual Report 2006