3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.14 Employee benefits
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the income statement when incurred.
Employee leave entitlements
Employees’ entitlements to annual leave are recognised when they accrue to employees. An accrual is made for the estimated
liability for the annual leave as a result of services rendered by the employees up to the balance sheet date.
Bonus plans
The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration the profit after
certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has
created a constructive obligation.
Share-based payments
Share option plans
The share option schemes allow the Group employees to acquire shares of the Company. The fair value of options granted is
recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread
over the period during which the employees become unconditionally entitled to the options. At each balance sheet date, the
Company revises its estimates of the number of options that are expected to become exercisable. It recognises 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 transactions costs are credited to share capital (nominal value)
when the options are exercised.
The share option reserve is transferred to retained earnings upon cancellation or expiry of the vested option or awards. When
the options are exercised or awards are released, the share option reserve is transferred to share capital if new shares are
issued.
Performance Share Plan and Restricted Share Plan
The Performance Share Plan and the Restricted Share Plan are accounted as equity-settled share-based payments. Equity-
settled share-based payments are measured at fair value at the date of grant. The share-based expense is amortised and
recognised in the income statement on a straight-line basis over the vesting period. At each balance sheet date, the Company
revises its estimates of the number of shares that the participating employees and directors are expected to receive based on
non-market vesting conditions. The difference is charged or credited to the income statement, with a corresponding adjustment
to equity over the remaining vesting period.
The fair value of the options granted to employees of its subsidiaries is recognised as an increase in the cost of the Company’s
investment in subsidiaries, with a corresponding increase recorded in equity over the vesting period.
There are group share-based payment arrangements in which employees of the Company’s subsidiaries receive remuneration
in the form of share-based payments and the Company settles these transaction for its subsidiary. These are regarded as
capital contribution and added to cost of investment in subsidiaries in the Company’s balance sheet.
72
TELECHOICE INTERNATIONAL LIMITED
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS
