2012 Annual Report (2 April 2013) - Grange Resources

2012 ANNUAL REPORT
57
PAGE
(ac) Employee entitlements
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits,
annual leave and accumulating 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.
Long service leave
The liability for long service leave is recognised in the provision
for employee benefits 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 outflows.
Defined contribution superannuation funds
Contributions to defined contribution funds are recognised as an
expense in the income statement as they become payable.
Share-based payment transactions
Share based compensation benefits are provided to Directors and
eligible employees under various plans. Information relating to the
plans operated by the Company is set out in Note 40.
The fair value of rights and options granted under the plans is
recognised as an employee benefit expense with a corresponding
increase in equity. The fair value is measured at the grant date
and recognised over the period during which the Director or
eligible employee become unconditionally entitled to the rights
and options.
The fair value of rights is determined with reference to the fair
value of rights issued, which includes the volume weighted
average price of the Company’s shares.
The fair value of options at grant date is independently
determined using either binomial option pricing or Black-Scholes
pricing models that take into account the exercise price, the term
of the option, the impact of dilution, the share price at the grant
date, the expected volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the
option.
The fair value of the options granted is adjusted, where necessary,
to reflect market vesting conditions but excludes the impact of
any non-market vesting conditions.
Non-market vesting conditions are included in the assumptions
about the number of rights and options that are expected to be
exercisable. At each reporting date, the entity revises its estimate
of the number of rights and options that are expected to vest or
become exercisable. The employee benefit expense recognised
each period takes into account the most recent estimate. The
impact of the revision to original estimates, if any, is recognised in
the income statement with a corresponding adjustment to equity.
Where an equity-settled award is modified, as a minimum an
expense is recognised as if the terms had not been modified. In
addition, an expense is recognised for any increase in the value
of the transaction as a result of the modifications, as measured at
the date of modification.
Where an equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately.
However, if a new award is substituted for the cancelled award,
and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were
a modification of the original award, as described in the previous
paragraph.
The dilutive effect, if any, of outstanding options is reflected as
additional share dilution in the computation of earnings per share.
(ad) Contributed equity
Ordinary share capital is recognised at the fair value of the
consideration received by the Company.
Any transaction costs arising on the issue of ordinary shares are
recognised directly in equity as a reduction, net of tax, of the
share proceeds received.
(ae) 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 financial period but not
distributed at balance date.