Investments
Investments held as fixed assets are shown at cost less provision for impairment.
Operating Leases
Rentals under operating leases are charged to the profit and loss account on a straight line basis
over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a
straight line basis over the period until the date the rent is expected to be adjusted to the prevailing
market rate.
Share Based Payments
Where employees are awarded share options, the fair value of the options at the date of the grant is expensed to staff and personnel costs in the Profit and Loss Account over the vesting period. The fair value at the date of grant is determined using valuation models which consider the terms and conditions attached to the awards. Inputs into the valuation model include the risk-free rate and the expected volatility of the Company’s share price (see Note 20).
The fair value of the award also considers non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Company keeping the scheme open or performance based KPI’s). Non-market vesting conditions are considered by adjusting the number of equity instruments expected to vest at each Balance Sheet date so that the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also expensed to the Profit and Loss Account.