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Notes to the Consolidated Financial Statements31 December 2024ESR Group Limited Annual Report 2024159STRATEGIC REPORTSCORPORATE GOVERNANCEFINANCIAL STATEMENTS2.4MATERIAL ACCOUNTING POLICIES (continued)Share-based paymentThe Company operates a share option scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group%u2019s operations. Employees of the Group receive remuneration in the form of share-based payment, whereby employees render services in exchange for equity instruments (%u201cequity-settled transactions%u201d). The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using a binomial model.The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefit expense. The cumulative expense recognised for equity-settled transactions at 31 December 2024 and 2023 until the vesting date reflects the extent to which the vesting period has expired and the Group%u2019s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in the cumulative expense recognised as at the beginning and end of that period.No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the employee as measured at the date of modification.Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where nonvesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.The dilutive effect of outstanding option is reflected as additional share dilution in the computation of earnings per share.