AS AT 30 JUNE 2011
58
Notes to the Financial Statements (continued)
1. Summary of signifcant accounting policies
(continued)
y. Employee benefts
i. Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary
benefts, annual leave and accumulating vesting sick
leave expected to be settled within 12 months of the
reporting date are recognised in other payables in respect
of employees’ services up to the reporting date and are
measured at the amounts expected to be paid when the
liabilities are settled.
ii. Long service leave
The liability for long service leave is recognised in the
provision for employee benefts and measured as the
present value of expected future payments to be made
in respect of services provided by employees up to the
reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of
service. Expected future payments are discounted using
market yields at the reporting date on national government
bonds with terms to maturity and currency that match as
closely as possible the estimated future cash outfows.
iii. Proft-sharing and bonus plans
The Group recognises a provision where contractually
obliged or where there is a past practice that has created
a constructive obligation.
iv. Share-based payments
Share-based compensation benefts are provided to certain
employees. Information relating to these schemes is set out
in note 37.
The fair value of such instruments is recognised as an
expense with a corresponding increase in equity. The
fair value is measured at grant date and recognised over
the period during which the relevant party becomes
unconditionally entitled to the instruments.
Fair values at grant date are independently determined
using a binomial tree option pricing methodology that
takes into account the exercise price, the term of the
options, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the
expected dividend yield and the risk-free interest rate for
the term of the options.
The fair value of the instruments granted is adjusted to
refect market vesting conditions, but excludes the impact
of any non-market vesting conditions (for example,
proftability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number
and value of instruments that are expected to become
exercisable. The share-based payment expense recognised
each period takes into account the most recent estimate.
Upon the exercise of instruments, the balance of the share-
based payments reserve relating to those instruments
is transferred to share capital and the proceeds received
(if any), net of any directly attributable transaction costs,
are credited to share capital.
z. Contributed equity
Ordinary shares are classifed as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
Where any Group company purchases the Company’s
equity instruments, for example as the result of a share
buy-back or a share-based payment plan, the consideration
paid, including any directly attributable incremental costs
(net of income taxes) is deducted from equity attributable to
the owners of FlexiGroup Limited as treasury shares until the
shares are cancelled or reissued. Where such ordinary shares
are subsequently reissued, any consideration received, net
of any directly attributable incremental transaction costs
and the related income tax efects, is included in equity
attributable to the owners of FlexiGroup Limited.
aa. Dividends
Provision is made for the amount of any dividend declared,
being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the fnancial
year but not distributed at balance date.
ab. Earnings Per Share
i. Basic earnings per share
Basic earnings per share is calculated by dividing the proft
attributable to equity holders of the Company, excluding any
costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding
during the fnancial year, adjusted for bonus elements in
ordinary shares issued during the year.
ii. Diluted earnings per share
Diluted earnings per share adjusts the fgures used in the
determination of basic earnings per share to take into
account the after income tax efect of interest and other
fnancing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed
to have been used for no consideration in relation to dilutive
potential ordinary shares.