A plc issues 50,000 share options to its employees on 1 Januar y 2006, which the employees can only exercise if they remain with the company until 31 December 2008. The options have a fair value of £5 each on 1 Januar y 2006.

It is expected that the holders of options over 8,000 shares will leave A plc before 31 December 2008.

In March 2006 adverse press comments regarding A plc’s environmental policies and a downturn in the stock market cause the share price to fall significantly to below the exercise price on the options. The share price is not expected to recover in the foreseeable future.

Required What charge should A plc recognise for share options in the financial statements for the yearended 31 December 2006?