ACCOUNTING Policies –
for the year ended June 2006 continued
of post-retirement medical aid obligations to certain employees
Liabilities for profit sharing and bonus plans are expected to
and pensioners employed before the change in policy.
be settled within 12 months and are measured at the amounts expected to be paid when they are settled.
The present value of the expected future defined benefit obligation is quantified to the extent that service has been
Equity compensation plans
rendered, and is reflected on the balance sheet as a liability.
In share-based payment transactions, the Group measures the
Valuations of these obligations are carried out by independent
goods or services received, and the corresponding increase
actuaries on an annual basis using the projected unit credit
in equity, at the fair value of the goods or services received,
unless the fair value can not be estimated reliably. If so, the Group measures the fair value by reference to the fair value of
Annual charges incurred to reflect additional services rendered
the equity instruments granted.
by employees as well as any variation resulting from changes in the employee composition, and all actuarial gains and
Share options and share appreciation rights are granted to
losses from experience adjustments and changes in actuarial
management and key employees. The schemes in operation are
assumptions are charged/credited to the income statement in
classified as equity-settled share-based compensation plans. No
the year of incurral.
non-market vesting conditions are applicable. The fair value of the employee services received in exchange for the instruments
The Group has insured the pensioner contributions into the
is expensed over the vesting period. The fair value of the services
future through an approved pre-funding insurance policy.
received is determined with reference to the fair value of the
Contributions made to the policy together with investment
instruments granted. The fair value of the instruments granted is
returns thereon are disclosed as a “plan asset” in terms of
determined at grant date. At each balance sheet date, the entity
IAS 19, Employee Benefits and reduce the post-retirement
revises its estimates of the number of instruments expected to
medical aid obligation.
vest. The effect of any changes in this assumption is recognised in the income statement, with a corresponding adjustment to
Termination benefits are payable whenever an employee’s employment is terminated before normal retirement date
When instruments are exercised, the proceeds received net of
or whenever an employee accepts voluntary redundancy
any directly attributable transaction costs are credited to share
in exchange for these benefits. The Group recognises
capital (nominal value) and share premium.
termination benefits when it is demonstrably committed to either terminate the employment of current employees
The Aspen Pharmacare share incentive trusts regulate the
according to a detailed plan without possibility of withdrawal
operation of the share incentive schemes, and are consolidated
or to provide termination benefits as a result of an offer made
into the Group financial statements. Refer to note 16 for more
to encourage voluntary redundancy. Benefits falling due more
details on the schemes.
than 12 months after balance sheet date are discounted to present value.
DIRECTORS’ EMOLUMENTS The directors’ emoluments disclosed in note 27 represent the
Profit sharing and bonus plans
emoluments paid to, or receivable by, directors in their capacity
A liability for employee benefits in the form of profit sharing and
as director or any other capacity. All amounts in respect of the
bonus plans is recognised in trade and other payables when
financial year reported on are presented; including bonuses
there is no realistic alternative but to settle the liability and at
not accrued for in the annual financial statements. The gain on
least one of the following conditions is met:
share options represents the actual gain realised in the year,
• there is a formal plan and amounts to be paid are determined
and represents the difference between grant price and exercise
before the time of issuing the financial statements; or • past practice has created a valid expectation by employees
price. This disclosure is provided in terms of the JSE listings requirements.
that they will receive a bonus/profit share and the amount can be determined before the time of issuing of the financial statements.
Aspen Annual Report 2006