Annual Report & Accounts 2013 - Pinewood Studios

56 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedShare-based payment transactions continuedThe cost of equity-settled transactions with employees is measured by reference to the fair value at the date at whichthey are granted. The fair value is determined by an external valuer using the binomial method. In valuing equity-settledtransactions, no account is taken of any performance conditions, other than the conditions linked to the price of theshares of Pinewood Shepperton plc (‘‘market conditions”).The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period inwhich the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitledto the award (‘‘vesting date”). The cumulative expense recognised for equity-settled transactions at each reporting dateuntil the vesting date reflects the extent to which the vesting period has expired and the number of awards that, inthe opinion of the Directors of the Group at that date based on the best available estimate of the number of equityinstruments, will ultimately vest.No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upona market condition and in circumstances where holders of awards with no performance conditions attached cancel theirawards whilst remaining in the employment of the Group. These are treated as vesting irrespective of whether or notthe market condition is satisfied, provided that all other performance conditions are satisfied.Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms hadnot been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result ofthe modification.Where an equity-settled award is cancelled by the award holder whilst remaining in the employment of the Group, it istreated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognisedimmediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award onthe date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award,as described in the previous paragraph.Where an equity-settled award is cancelled due to the holder of the award no longer remaining in the employment of theGroup, no expense is recognised.The dilutive effect of outstanding issuable awards is reflected as additional share dilution in the computation of earningsper share. Awards that are contingently issuable are not considered dilutive unless the performance conditions forultimate vesting are met.Cash and cash equivalentsCash and short-term deposits in the statement of financial position comprise cash at bank and in hand. For the purposeof the Group statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as described above,net of outstanding bank overdrafts.Interest-bearing loans and borrowingsObligations for loans and borrowings are recognised when the Group becomes party to the related contracts and aremeasured initially at the fair values of consideration received less directly attributable transaction costs. After initialrecognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effectiveinterest method, allocating the interest income or interest expense over the relevant period. The loan issue costs areamortised in the income statement over the remaining maturity of the loans at a constant carrying amount and arereviewed for changes in circumstances that may indicate that the loans will not be held to maturity.