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Tiger Brands Limited Integrated Annual Report
2014
Annual financial statements
measured by reference to the fair value at the date on
which they are granted. The fair value is determined
by an external valuer using a modified version of the
Black-Scholes model or Monte-Carlo simulation, further
details of which are given in note 23.
The cost of equity-settled transactions is recognised,
together with a corresponding increase in equity,
over the period in which the service conditions are
fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (“the
vesting date”). The cumulative expense recognised
reflects the extent to which the vesting period has
expired and the group’s best estimate of the number
of equity instruments that will ultimately vest. The
income statement charge for a period represents the
movement in the cumulative expense at the beginning
and end of that period.
No expense is recognised for awards that do not
ultimately vest, except for equity-settled transactions
where vesting is conditional upon a market or
non-vesting condition, which are treated as vesting
irrespective of whether or not the market or non-vesting
condition is satisfied, provided that all other
performance and/or service conditions are satisfied.
Where the terms of an equity-settled transaction
award are modified, the minimum expense
recognised is the expense as if the terms had not
been modified, if the original terms of the award are
met. If, at the date of modification, the total fair
value of the share-based payment is increased or is
otherwise beneficial to the employee, the difference
is recognised as an additional expense.
Where an equity-settled award is cancelled (other
than forfeiture), it is treated as if it had vested on the
date of cancellation, and any unrecognised expense
recognised immediately. This includes any award
where non-vesting conditions within the control of
either the entity or the employee are not met.
However, if a new award is substituted and
designated as a replacement for the cancelled
award, the cancelled and new awards are treated
as if they were a modification of the original award,
as described above.
The dilutive effect of outstanding equity-settled options is
reflected as additional share dilution in the computation
of earnings and headline earnings per share.
Cash-settled transactions
The cost of cash-settled transactions such as the
general employee share option plan portion is
measured initially at fair value at the grant date using
a modified version of the Black-Scholes model,
taking into account the terms and conditions upon
which the instruments were granted (see note 23).
This fair value is expensed over the period until
vesting with recognition of a corresponding liability.
The liability is remeasured at each reporting date up
to and including the settlement date with changes in
fair value recognised in profit or loss.
Accounting for BEE transactions
Where equity instruments are issued to a black
economic empowerment (BEE) party at less than
fair value, the instruments are accounted for as
share-based payments in terms of the stated
accounting policy.
Any difference between the fair value of the equity
instrument issued and the consideration received is
accounted for as an expense in the income statement.
A restriction on the BEE party to transfer the equity
instrument subsequent to its vesting is not treated as
a vesting condition, but is factored into the fair value
determination of the instrument.
Treasury shares
Shares in Tiger Brands Limited held by the group
are classified within total equity as treasury shares.
The shares acquired by the Black Managers Trust
(I and II), Thusani Trust, Brimstone SPV and The Tiger
Brands Foundation are accounted for as treasury
shares in line with the consolidation requirement for
special-purpose entities. Treasury shares are treated
as a deduction from the issued and weighted