Notes to the Financial Statements
74
www.kingsgate.com.au
w . Employee benefits continued
to maturity and currency that match, as closely 
as possible, the estimated future cash outflows.
(iii) Cash bonuses
Cash bonuses are expensed in the statement of 
comprehensive income at reporting date.
A liability is recognised for the amount expected 
to be paid if the Group has a present legal or 
constructive obligation to pay this amount as a 
result of past service provided by the Directors 
or employees and the obligation can be esti-
mated reliably.
(iv) Retirement benefit obligations
Contributions to defined contribution superan -
nuation plans are recognised as an expense in 
the statement of comprehensive income as they 
become payable.
(v) Share-based payment transactions
The Group provides benefits to employees 
(including Directors) in the form of share-based 
payments, whereby employees render services in 
exchange for shares or rights over shares 
(“equity settled transactions”).
The fair value of these equity settled transac -
tions is recognised as an employee benefit 
expense with a corresponding increase in equity. 
The fair value is measured at grant date and 
recognised over the period during which the 
employees become unconditionally entitled.
The fair value at grant date is determined using  
a Black-Scholes option pricing model that takes 
into account the exercise price, the term of the 
option, the share price at the grant date, the 
expected price volatility of the underlying share, 
the expected dividend yield and the risk free 
interest rate for the term of the option.
Upon the exercise of the equity settled reward, 
the related balance of the share-based payments 
reserve is transferred to share capital.
x . Dividends
Dividends are recognised as a liability in the 
period in which they are declared.
y . Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by 
dividing:
〉〉 the profit attributable to owners of the 
Company, excluding any costs of servicing 
equity other than ordinary shares; and
〉〉 by the weighted average number of ordinary 
shares outstanding during the financial year, 
adjusted for bonus elements in ordinary 
shares issued during the year and excluding 
treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures 
used in the determination of basic earnings per 
share to take into account:
〉〉 the after income tax effect of interest and 
other financing costs associated with dilu-
tive potential ordinary shares; and 
〉〉 the weighted average number of additional 
ordinary shares that would have been 
out standing assuming the conversion of  
all dilutive potential ordinary shares.
z . Contributed equity
Issued ordinary share capital is classified as 
equity and is recognised at the fair value of  
the consideration received by the Group. 
Incremental costs directly attributable to the 
issue of shares and share options are recognised 
as a deduction, net of tax from the proceeds.
aa . Goods and Services Tax (GST)
Revenues, expenses and assets are recognised 
net of the amount of associated GST, unless the 
GST incurred is not recoverable from the taxa-
tion authority. In this case it is recognised as 
part of the cost of acquisition of the asset or as 
part of the expense.
Receivables and payables are stated inclusive of 
the amount of GST receivable or payable. The 
net amount of GST recoverable from, or payable 
to, the taxation authority is included with other 
receivables or payables in the statement of 
financial position.
Cash flows are presented on a gross basis. The 
GST components of the cash flows arising from 
investing or financing activities which are recov-
erable from, or payable to the taxation authority, 
are presented as operating cash flows.
Commitments and contingencies are disclosed 
net of the amount of GST recoverable from, or 
payable to, the taxation authority.
bb . Operating segment reporting