Page 59 - Stellar IAR2015

1.7. Share capital and equityAn equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.1.7.1. Share capitalThe Company’s obligation to issue or purchase a xed number of its own equity instruments in exchange for a xed amount of cash or another nancial asset is an equity instrument of the Company.1.7.2. Compound nancial instrumentsDebt instruments with an embedded conversion option, such a cumulative redeemable preference shares convertible at the instance of the holders of such instruments, are treated as compound nancial instruments. The liability and equity components of the instru- ment are separately classi ed as nancial liabilities at amortised cost in accordance with accounting policy 1.4 and equity instruments respectively. The carrying amount of the nancial liability component of the instrument are determined with reference to the fair value by discounting the net present value of future cash ows, net of transaction costs, at market rate at inception for a similar instrument without the equity conversion option. The carrying amount of the equity component of the compound nancial instrument is determined by deducting the fair value of the nancial liability component from the fair value of the compound nancial instrument as a whole.1.7.3. Treasury sharesIf the Group reacquires its own equity instruments, those instruments are deducted from equity. No gain or loss is recognised in pro t or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Consideration paid or received, including any directly attributable incremental costs (net of income taxes) is recognised directly in equity. Repurchased shares held by subsidiaries are classi ed as treasury shares and presented as a deduction from total equity on consolidation.1.7.4. DividendsDividends on the equity component of compound nancial instruments are recognised as a nancial liability on an accrual basis. Dividends on ordinary shares are recognised when they are approved by the directors for payment.Dividends on the nancial liability component of compound nancial instruments are accounted for as nance costs. Dividends on ordinary shares and the equity component of compound nancial instruments are accounted for as movements in equity.1.8. Share-based payments18.1. Forfeitable share planIn the prior year, the Group had an equity-settled share-based incentive scheme that was granted to certain employees of the subsidiaries in terms of its Forfeitable Share Plan (FSP). The last shares vested on 31 August 2014. The fair value of shares granted to employees were measured at grant date and are recognised as an employee expense with a corresponding increase in equity over the period during which the employees are required to provide services to the Group in order to become unconditionally entitled to the equity instruments.Fair value was measured as being the Volume Weighted Average Price of a share as quoted on the JSE for the ve business days immediately preceding the date on which a grant was made.1.8.2. Share-based payments to settle operating expensesDuring the prior reporting period, and in addition to the FSP, the Group entered into a further equity-settled share based payment transaction to settle corporate advisory services rendered to the Group.The fair value of the services procured was measured at the amount invoiced for such services. The services were recognized as an expense with a corresponding increase in equity at the date of the issue of the Company’s equity instruments. The number of shares issued in settlement was determined by reference to the thirty day volume weighted average trading price of the Company’s equity instruments as quoted on the Johannesburg Stock Exchange on the date of the invoice.STELLAR CAPITAL PARTNERS | 55