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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2015
116
BLUE LABEL INTEGRATED ANNUAL REPORT 2015
1.
SIGNIFICANT ACCOUNTING POLICIES continued
Revenue recognition continued
(f)
Electricity commission
Commissions on the sale of prepaid electricity are recognised when the Group sells electricity to the
customer on behalf of the utility suppliers. Commissions are recorded based on agreed rates per the
contracts. For this category of revenue the Group acts as an agent.
Employee benefits
(a)
Equity compensation benefit
The Group operates an equity-settled forfeitable share incentive plan, under which the entity receives
services from employees as consideration for equity instruments of the Group. The fair value of the
services received in exchange for the grant of forfeitable shares is recognised as an expense. The total
amount to be expensed is determined by the fair value of the forfeitable shares granted. The total
amount expensed is recognised over the vesting period, which is the period over which all of the
vesting conditions are to be satisfied. At each reporting date, the entity recognises the impact of any
shares that have been forfeited prior to the end of the vesting period, if any, in the statement of
comprehensive income with a corresponding adjustment to equity.
The subsidiaries procure the shares in order to settle the award, but these are accounted for as a
purchase of shares in the holding company, and only once the shares vest as the performance
conditions are met would the share be derecognised. When shares are derecognised, the investment
in shares in BLT will be credited and equity will be debited as a contribution to the shareholder.
(b)
Bonus plans
The Group recognises a liability and an expense for bonuses. A liability is recognised where the Group
is contractually obliged or where there is a past practice that has created a constructive obligation.
(c)
Leave pay accrual
The Group recognises a liability and an expense for leave. The accrued liability is determined by valuing
all future leave expected to be taken and payments expected to be made in respect of benefits.
Interest income
Interest income is recognised on a time-proportion basis using the effective interest rate method.
When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount,
being the estimated future cash flow discounted at original effective interest rate of the instrument,
and continues unwinding the discount as interest income. Interest income on impaired loans is
recognised using the original effective interest rate.
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group and
Company’s financial statements in the period in which they are approved by the shareholders.
Distributions of non-cash assets received from subsidiary companies are recognised as a dividend at
the fair value of the non-cash assets received.
Core net profit
Core net profit is a non-IFRS measure used by the Group in evaluating the Group’s performance. This
supplements the IFRS measures. Core net profit is calculated by adjusting net profit for the year with
the amortisation of intangible assets that arise as a consequence of the purchase price allocations
completed in terms of
IFRS 3
– Business Combinations.
Reconciliation of core net profit to relevant IFRS measures are presented in note 22 (core HEPS) and
note 31 (segmental summary).