subsequently at amortised cost using the effective interest method.
2.19 inCome.
2.19.1 revenue. income is recognised insofar as it is likely that the economic benefits will flow to the group and insofar as the income can be measured reliably. group income mainly derives from the provision of serv- ices to third parties (not including group services), after deduction of sales tax and discounts granted to clients. these services mainly concern:
• Temporary employment and secondment services: provision of temporary staff whereby hours worked at agreed rates during the financial reporting period are recognised as revenue;
• Call centre services: handling of telephone operations for third parties. the revenue consists of units (call units or conversations) relating to the reporting period and at an agreed rate;
• Recruitment and selection services: recruitment and selection of employees for third parties whereby revenue is booked once the commission has been completed as agreed;
• Reintegration services: supporting of reintegration services for third parties based on an hourly rate, for hours worked during the reporting period;
• Fees for IT and engineering projects based on a set price are recognised as revenue based on the stage of completion of the contract during the reporting period; • Outplacement: provision of coaching to jobseekers. revenue is determined on the basis of the amount of time to be declared during the reporting period for each person being coached compared to the estimated total amount of time to be spent on each person being coached.
no revenue is recognised if there are major uncertainties as to whether the funds owing can be collected.
2.19.2 other inCome and expenses. other income and expenses arise from activities other than regular business activities, such as the disposal of non-mone- tary assets or debts.
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2.20 Costs.
2.20.1 operating leases. lease contracts whereby the risks and rewards associated with ownership lie wholly or primarily with the lessor are classified as oper- ating leases. Payments made under operating leases are charged to the profit and loss statement for the duration of the lease using the straight-line method.
2.20.2 finanCial leases. lease contracts whereby the risks and rewards associated with the ownership lie wholly or primarily with the lessee are classified as finan- cial leases. the minimum lease payments are recognised partly as borrowing costs and partly as settlement of the outstanding liability. the financial costs are charged to each period in the total lease period in such a way that this results in a constant, regular interest rate on the outstanding balance of the liability.
2.20.3 share-based remuneration. usg People n.v. granted option rights in the years up to and including 2004. these option rights can be exercised fully and unconditionally. under ifrs 1 valuation of option plans that could be fully and unconditionally exercised before 1 january 2005 is not mandatory, nor is recognising a result in the profit and loss statement. income result- ing from the exercise of option rights is recognised at that time as share capital (at nominal value) and share premium, net of transaction costs.
share-based remuneration other than that relating to the option plan set out above is recognised as follows. the fair value of shares allocated conditionally (equity- settled) under the group’s share plan (‘unique share Plan’), including the company-paid wage tax and social security premiums relating to these shares (cash-settled), is recognised as an expense in the profit and loss state- ment. the total amount recognised as an expense in the profit and loss statement during the vesting period is determined on the basis of the fair value of the (con- ditionally) allocated shares on the date of allocation and any tax commitments for the employees which are payable by the company, as determined on the report-
ing date and the time of settlement. non-market related performance conditions such as revenue growth, profit- ability and staff turnover are included in the estimate of the ultimate total number of shares to be allocated. the estimate of the ultimate total number of shares to be allocated is revised at balance sheet date on the basis of performance conditions. the actual perform- ance conditions and staff turnover are determined at the end of the performance period and on the date that the allocation becomes unconditional. any effect of this revision and final determination is recognised in the profit and loss statement. the expenses are recognised on a time-weighted basis over the period to which the performances pertain. in the event of cancellation, either at the initiative of the staff member or of the employer, unrealised expenses pertaining to the period between the cancellation and the end of the performance period are charged against the result in a one-off deduction. a reserve is maintained in equity for the expected ex- pense based on fair value of the shares to be granted, as determined on the day of allocation. the expenses relating to the tax commitments for participants in the share plan payable by the group are recognised in the financial statements under the provisions, as determined on the reporting date and at the time of settlement. in addition to the aforementioned share plan, the group has issued stock appreciation rights (sars). the fair value of the allocated sars (cash-settled) is recognised as an expense in the profit and loss statement. the total amount recognised as an expense in the income state- ment during the vesting period is determined by the fair value of the (conditionally) allocated sars. the usg People share price is a market-related condition. the non market-related performance condition of expected staff turnover was included in the estimate of the ultimate amount to be paid. the estimate of the ultimate amount to be paid is revised at balance sheet date. actual staff turnover is determined on the date on which allocation becomes unconditional. the effect of this revision and final determination is recognised in the profit and loss statement. expenses are recognised on a time-weighted basis over the conditional period of the sars, a reserve
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annual accounts
is maintained for the fair value of the sars, as deter- mined on the reporting date and date of allocation.
2.20.4 finanCial Costs. financial costs comprise interest due on funds drawn, calculated using the effective interest method, downward adjustments to the fair value and realised value of derivative financial instruments and other interest paid.
2.20.5 finanCial inCome. financial income comprises interest received on outstanding monies and upward ad- justments to the fair value and realised value of derivative financial instruments.
2.21 taxation. Profit-based tax on the income for the