Annual report and accounts 2023 - Flipbook - Page 155
Strategic Report
Corporate Governance
Accounts
Share-based compensation
The Group grants equity-settled share-based payments to certain employees. These are measured at fair value (excluding the effect of non-market-based vesting conditions)
at the grant date. The fair value of the equity-settled share-based payment determined at the grant date is expensed on a straight-line basis over the vesting period, based on
the Group’s estimate of the shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions. Fair value is measured using the Black-Scholes
pricing model.
The Group also provides employees with the ability to purchase the Company’s ordinary shares at a discount to the current market value through payroll.
The Group records as an expense the fair value of the discount on the shares purchased by the employee as a charge to the income statement and a credit to the share
options reserve.
At each year end date, the entity revises its estimates of the number of options 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 the income statement, with a corresponding adjustment to the share options reserve.
Profit-sharing and bonus plans
The Group recognises a liability and an expense for various bonuses based on formulae that take into consideration the profit attributable to the Company’s shareholders
after certain adjustments.
The Group recognises a provision where there is a contractual obligation or where there is a past practice that has created a constructive obligation.
Provisions
A provision is recognised if, as the result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably and it is probable that an
outflow of economic benefits will be required to settle the obligation.
A restructuring provision is recognised when the Group has approved a detailed and formal restructuring plan which has been either announced or has commenced.
Future operating costs are not provided for.
Dividend distributions
Dividend distributions to the Company’s shareholders are recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by
the Company’s shareholders.
Share repurchase programme
Any share repurchase programmes would result in the cancellation of repurchased shares and the transfer of the relevant permanent capital into a Capital Redemption
Reserve. The Capital Redemption Reserve is included in “Other reserves” within equity. Refer to Note 28.
Alternative performance measures
Alternative performance measures (APMs) are tracked by management to assess the Group’s operating performance and to inform financial, strategic and operating decisions.
These are therefore presented within the Annual Report and Accounts. Definitions of APMs and reconciliation to GAAP measures can be found in the Glossary on pages 199
to 204.
Adjusting items
The Group excludes adjusting items from its non-GAAP measures because of their size, frequency and nature to allow shareholders to better understand the elements of
financial performance in the year, so as to facilitate comparison with prior periods and to assess trends in financial performance more readily. These items are primarily
non-operational.
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