Page 141 - Capricorn IAR 2020

2020 INTEGRATED ANNUAL REPORT
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.12 Employee benefits
The cost of short-term employee benefits (those payable within 12 months after the service is rendered, such as paid leave, sick leave and bonuses) are recognised in the period in which the service is rendered and are not discounted.
2.12.1 Pension obligations
The Group operates a defined contribution plan. The plan is generally funded through payments to insurance companies or trustee- administered funds, determined by periodic actuarial calculations. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity.
The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
The contributions are recognised as employee benefit expenses when they are due. Prepaid contributions are recognised as assets to the extent that a cash refund or a reduction in the future payments is available. The Group provides no other post-retirement benefits to their retirees.
2.12.2 Severance pay provision
In terms of the Labour Act of Namibia, the Group is required to make payments (or provide other benefits) to employees when it terminates their employment. The implication of this requirement is that severance pay has to be paid to all employees when the employee:
(i) Is dismissed (except if due to misconduct or poor performance)
(ii) Dies while employed
(iii) Retires upon reaching the age of 65
The Group therefore has an obligation, more specifically a defined benefit, in terms of IAS 19 ‘Employee benefits’. The benefit is unfunded and is valued using the projected unit credit method as prescribed by IAS 19 ‘Employee benefits’. Refer to note 30 for assumptions made in the determination of the Group’s liability with respect to severance pay.
2.12.3 Leave pay
Employee benefits in the form of annual leave entitlements are provided for when they accrue to employees with reference to services rendered up to the reporting date.
2.12.4 Performance bonuses
The Group recognises a liability and an expense for bonuses, based on a formula that takes into consideration the profit before tax after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
2.13 Share-based payments
The Group operates two equity-settled share-based compensation plans: 1) a share appreciation rights plan; and 2) a conditional share plan, under which the entities within the Group receive services from employees as consideration for equity instruments (shares) of Capricorn Group Ltd (refer to the directors’ report and remuneration report (unaudited) for more details of each plan). Equity-settled share purchase schemes are valued at grant date. The fair value of the employee services received in exchange for the grant of the shares and share options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the shares and share options granted:
• Including any market performance conditions (e.g. an entity’s share price)
• Excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets and
remaining an employee of the entity over a specified time period)
• Including the impact of any non-vesting conditions (e.g. the requirement for employees to save)
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.
At the end of each reporting period, the Group revises its estimates of the number of shares that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
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