LensCrafters 2012 Annual Report Download - page 199

| 113 >CONSOLIDATED FINANCIAL STATEMENTS - NOTES
contributions into a separate entity. The Group has no legal or constructive obligations to
pay further contributions if the fund does not hold sufficient assets to pay all employees
the benefits relating to employee service in the current and prior periods.
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically,
defined benefit plans define an amount of pension benefit that an employee will receive
upon retirement, usually dependent on one or more factors such as age, years of service
and compensation. The liability recognized in the consolidated statement of financial
position in respect of defined benefit pension plans is the present value of the defined
benefit obligation at the end of the reporting period less the fair value of plan assets,
together with adjustments for unrecognized past-service costs. The defined benefit
obligation is calculated annually by independent actuaries using the projected unit credit
method. The present value of the defined benefit obligation is determined by discounting
the estimated future cash outflows using interest rates of high-quality corporate bonds
that are denominated in the currency in which the benefits will be paid and that have terms
to maturity approximating the terms of the related pension obligation.
Actuarial gains and losses due to changes in actuarial assumptions or to changes in
the plan’s conditions are recognized as incurred in the consolidated statement of
comprehensive income.
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 recognized as employee benefits expenses when they are due. Prepaid
contributions are recognized as an asset to the extent that a cash refund or a reduction in
future payments is available.
Provisions for risks
Provisions for risks are recognized when:
• the Group has a present obligation, legal or constructive, as a result of a past event;
• it is probable that the outflow of resources will be required; and
• the amount of the obligation can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required
to settle the obligation using a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the obligation. The increase in the provision
due to passage of time is recognized as interest expense. Risks that are possible are
disclosed in the notes. Risks that are remote are not disclosed or provided for.
Share-based payments
The Company operates a number of equity-settled, share-based compensation plans,
under which the entity receives services from employees as consideration for equity
instruments (options). The fair value of the employee services received in exchange for
the grant of the options is recognized as an expense. The total amount to be expensed is
determined by reference to the fair value of the options granted.