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1.20 Inventories
Inventories are stated at the lower of cost and estimated net realisable value. Estimated net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion and selling expenses. The cost of raw materials is determined on either
the first-in first-out or average cost basis. The cost of manufactured inventory and work-in-progress includes materials and parts, direct labour,
other direct costs and includes an appropriate portion of overheads, but excludes interest expense.
1.21 Foreign currencies
Transactions in foreign currencies are translated at the rates of exchange ruling at the transaction date. Monetary assets and liabilities in foreign
currencies are translated at the rates of exchange ruling at the reporting date. Translation differences are generally recognised in the statement
of profit or loss.
Non-monetary assets and liabilities are measured based on historical cost in a foreign currency are translated at an exchange rate at the date
of the transaction.
1.22 Share-based payments
The Bidcorp Incentive Scheme (“BIS”) grants options or conditional share plan awards (CSPs) to acquire shares in the holding company,
Bidcorp, to executive directors, management and staff. The fair value of options granted is recognised as an employee expense with a
corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become
unconditionally entitled to the options. The fair value of the options is measured using a binomial model, taking into account the terms and
conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share
options that vest except where staff are unable to meet the scheme’s employment requirements. Participants of the BIS who were granted
options and who had not exercised their options at the unbundling date, exchanged existing Bidvest Group Limited options for a replacement
right over one Bidcorp share and one Bidvest share. The original option prices were not adjusted.
In terms of the conditional share plan scheme, a conditional right to a share in Bidcorp is awarded to executive directors subject to
performance and vesting conditions. The fair value of services received in return for the CSPs has been determined by multiplying the number
of conditional share awards expected to vest, by the share price at the date of the award less discounted by anticipated future cash outflows.
1.23 Employee benefits
Leave benefits due to employees are recognised as a liability in the financial statements.
The group’s liability for post-retirement benefits, accruing to past and current employees in terms of defined benefit schemes, is actuarially
calculated. Where the plan is funded, the obligation is reduced by the fair value of the plan assets. Unfunded obligations are recognised as a
liability in the financial statements.
The projected unit credit method is used to determine the present value of the defined benefit obligations and the related current service cost
and, where applicable, past service cost.
Actuarial gains or losses in respect of defined benefit plans are recognised in other comprehensive income.
However, when the actuarial calculation results in a benefit to the group, the recognised asset is limited to the net total of any unrecognised
past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.
Past service costs are recognised in the statement of profit or loss in the period of a plan amendment.
Liabilities for employee benefits which are not expected to be settled within 12 months are discounted using the market yields at the statement
of financial position date on high-quality bonds with terms that most closely match the terms of maturity of the related liabilities.
Contributions to defined contribution pension plans are recognised as an expense in the statement of profit or loss as incurred.
Bidcorp Limited Annual integrated report 2016 |
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Financial overview