ar11-lr-final

Notes to and forming part of the Financial Statements – continued
For the 52 WEEK period ended 31 July 2011
15. Executive Long Term Incentive Plan (CONTINUED)
(d) Fair values
The fair value of performance shares at grant date has been independently estimated and represents an average of the two
valuations produced from using the Binomial Options Pricing Model and a Monte Carlo simulation. The value of award shares has
been calculated as the present value of the rights at grant date discounted using the Group’s estimated cost of capital and allowing
for expected future dividends.
The following table lists the key inputs used in the various pricing models:
Performance shares
Date granted October 2010 October 2009 November 2008
Vesting date October 2013 October 2012 November 2011
Risk free interest rate (%) 4.18 5.33 5.68
Average expected volatility (%) 25.00 27.50 30.00
Average share price at measurement date ($) 3.81 4.09 3.61
Estimated fair value at grant date ($) 1.30 1.61 1.37
Award shares
Date granted October 2010 October 2009 November 2008
First vesting date (then annually on the next two anniversaries) October 2011 October 2010 November 2009
Weighted average cost of capital (%) 9.60 9.80 10.90
Average share price at measurement date ($) 3.81 4.09 3.61
Average estimated fair value at grant date ($) 3.34 3.62 3.25
(e) Cash settled share-based compensation plan
In 2009, the Group introduced a cash settled share-based compensation plan for holders of ‘performance shares’ granted in
November 2007. The new plan effectively reset the target price for the original plan to make allowance for the elevated target price
set during a period when the Group’s share price included a ‘take over premium’ due to external market speculation.
This plan ceased in October 2010 when the revised target share price hurdle of $3.85 was met triggering the payment of
compensation to participants ($1.684 million). A full provision for the settlement of the plan was recognised in 2010 (refer note 28).
Notes to and forming part of the Financial Statements – continued
For the 52 WEEK period ended 31 July 2011
16. Earnings Per Share
(a) Basic earnings per share
Basic earnings per share is calculated by dividing Group net profit attributable to shareholders by the weighted average number of
ordinary shares outstanding during the year.
GROUP 2011 2010
Profit attributable to shareholders of the parent ($000s) 77,829 60,185
Basic
Weighted average number of ordinary shares on issue (000s) 311,196 311,196
Adjustment for treasury stock (000s) (1,591) (2,709)
Weighted average number of ordinary shares outstanding (000s) 309,605 308,487
Basic earnings per share (cents) 25.1 19.5
(b) Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Group has two types of dilutive potential ordinary share (performance share
rights and award share rights – refer note 15).
Share rights
To calculate the weighted average effect of performance share right dilution it is assumed that the share rights have vested if the
average market price of ordinary shares exceeds the target price vesting criteria.
To calculate the weighted average effect of award share right dilution it is again assumed that the share rights have vested but an
adjustment is made for the number of rights which are expected to be forfeited based on the percentage achievement of individual
and company vesting performance hurdles.
GROUP 2011 2010
Profit attributable to shareholders of the parent ($000s) 77,829 60,185
Diluted
Weighted average number of ordinary shares on issue (000s) 309,605 308,487
Shares deemed to be issued for no consideration in respect of share rights (000s) 1,394 1,385
Weighted average number of ordinary shares for diluted earnings per share (000s) 310,999 309,872
Diluted earnings per share (cents) 25.0 19.4
17. Net Assets Per Share
Net asset backing per share is calculated by dividing Group net assets by the number of ordinary shares outstanding at balance date.
GROUP Note 2011 2010
Net assets ($000s) 271,540 303,246
Basic
Number of ordinary shares on issue (000s) 30 311,196 311,196
Adjustment for treasury stock (000s) 30 (1,719) (1,797)
Number of ordinary shares outstanding (000s) 309,477 309,399
Net assets per share (cents) 87.7 98.0
FINANCIAL STATEMENTS 54
FINANCIAL STATEMENTS 55