138 / 280
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2014
136
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Employee benefits (continued)
(a) Equity compensation benefit (continued)
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 Blue Label Telecoms
Limited 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 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’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 30
(segmental summary).