SENWES ANNUAL FINANCIAL STATEMENTS 2022
2.11 Employee benefits Short-term Short-term employee benefits are employee benefits ( other than termination benefits ) that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services .
These include normal benefits such as salaries , wages , paid leave , paid sick leave , profit-sharing and other bonuses as well as fringe benefits in respect of existing employees , and are charged to profit and loss in the period in which they occurred .
An accrual is raised for the expected costs of incentive bonuses where a legal or constructive obligation exists , an accurate estimate of the obligation can be made and the obligation is expected to be settled within twelve months after the end of the period in which the employees rendered the related services .
An accrual is raised for the undiscounted expected cost of the obligation where the obligation is due to be settled within twelve months after the end of the period in which the employees rendered the related employee services . The provision is for both normal leave days and long-service leave days accumulated , converted to a rand value at year-end , based on the cash equivalent thereof . The required adjustment is recognised in profit or loss .
An accrual is raised for normal thirteenth cheque bonuses accrued , as a pro rata-payout is made where resignation occurs prior to the employee ’ s normal elected date of payout .
Long-term The distinction between short-term and other long-term employee benefits is based on the expected timing of settlement rather than the employee ’ s entitlement to the benefits .
These include a leave accrual in respect of existing employees where leave is not expected to be settled wholly within 12 months . Long-term leave is based on historical leave taken .
Termination benefits An entity shall recognise a liability and expense for termination benefits at the earlier of when the entity can no longer withdraw the offer of those benefits and when the entity recognises the costs for a restructuring that involves the payment of termination benefits .
Share-based payments
Equity-settled share-based payments The scheme will be a forfeitable share award scheme , where shares will be forfeited where future service and performance conditions are not met . The fair value of the shares granted are determined by using the market value of the shares on grant date adjusted with the present value of dividends not entitled to . The grant date is the date at which the entity and the participant agree to a share-based payment arrangement . The share-based payment expense will be recognised over the vesting period . The vesting period includes the service requirement attached to an award . The above expense will therefore be recognised and spread over the period from the grant date to the vesting date . The length of this period will vary from tranche to tranche .
Where the employees are employed by a subsidiary of the Senwes Group , this company would be the entity receiving the services , and would have to account for the transaction as an equity-settled share-based payment , with a corresponding increase in capital contributed by Senwes . Senwes would be the settling entity that needs to account for the transaction as equity-settled , as it settles the transaction in its own shares with an increase in its investment in the subsidiary . As the shares vest , the investment will be converted to an interest-bearing loan , interest will be charged at a market related rate .
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