White Feather

IFRS2 Reporting &

Fair Value Opinion

IFRS2 Reporting

International Financial Reporting Standards requires companies to recognise the cost of share-based awards to employees in the Profit and Loss accounts.

Our fully customisable IFRS2 reporting suite (which can cover US GAAP reporting), can be integrated with Howells Share Plan Admin or Insider List software or stand alone. 

 

Adding tax, we provide further analyses:
  • Line-by-line social security reserving

  • Deferred tax entries (equity and P&L)

  • Corporation tax deduction amounts based on the data we will keep on exercise prices achieved

  • Based on outcome assumptions, leaver rates and fair values, we provide an IFRS2 charge for full and half-year reporting

  • Standard reports for accounts disclosure and schedules showing the IFRS2 charge across subsidiaries, divisions and countries if required.

We will:
  • Calculate the IFRS2 accounting charge for the reporting period

  • Full, person-by-person, IFRS2 amortisation reporting with assumptions that can be tailored for each award

  • Includes social security reserve

  • Prior to launch we will carry out a full reconciliation.

IFRS2 forward planning

We work closely with you to achieve efficiencies and we can extend our work to provide budgeted future IFRS2 charges and divisional based analyses.

Fair Value Opinion

 

International Financial Reporting Standard no2 requires companies to value their share plan awards and then charge this “cost” (number of shares under award multiplied by the IFRS2 Fair Value) to income.

 

Our service deals with both market-based awards (awards where the performance outcome is linked to share price) and non market-based awards.

Our approach to both forms of award is underpinned by the Black-Scholes option pricing formula. Where market-based performance measures are used this is supplemented by a Monte-Carlo simulation process which models the likely outcomes based on the volatility of your company’s and your comparator companies’ TSRs and the correlation between your company data and your comparators'.

 

Our IFRS2 Fair Value Service is a stand-alone service; you do not need to be a SchemeTrack or IMTrack client to use the service.

AWARD
DOCUMENT REVIEW

​​DOCUMENT REVIEW

  • The date of grant (this is not always straight forward, particularly for SAYE)

  • Are there dividend equivalents?

  • The Vesting date (this is often a date later than the end of the performance period).

DATA
CAPTURE

DATA CAPTURE

 

To undertake the valuation we use Datastream to gain:

 

  • Historical share price or total return data

  • Risk free rate

For awards with share price based targets

(Market-based awards)

AWARD
DOCUMENT REVIEW

 DOCUMENT REVIEW

  • Who are the comparators

  • Averaging period

  • Currency

  • Grant date  (not always straight  forward)

  • Dividend equivalents

  • Vesting date (often a date later than the end of the performance period)

  • Holding periods

DATA
ANALYSIS

DATA ANALYSIS  

 We analyse historical data to:

  • Identify your TSR volatility

  • Your competitors' TSR volatility 

  • The inter-relationships between your performance and the performance of your comparator group

DATA
CAPTURE

DATA CAPTURE

To undertake the valuation we use Datastream to gain:

  • Historical Total Return data for you and your comparator group

  • Risk free rate

MODEL
DESIGN

MODEL DESIGN

We construct a model which calculates the payout outcome for any performance scenario.

MONTE CARLO

MONTE CARLO

 

A monte carlo simulation is applied to your model. This simulates a large number of futures. Underpinned by a Black-Scholes valuation this  provides a value per share of your award (as a %) to be applied to your share price at grant date.

FAIR
VALUE
REPORT

FAIR VALUE

The outcome of our analysis is a short report setting out:

  • The fair value per share

  • The financial accounts basic data on assumptions used and value

For awards with non-share price related targets

(or no targets)

DATA
ANALYSIS

DATA ANALYSIS

  

We analyse the historical data to:

  • Identify your company’s share price or TSR volatility

  • Identify the risk free rate.

MONTE CARLO

FAIR VALUE CALCULATION

We take the calculation of volatility and risk free rate, together with the knowledge as to whether dividend equivalents are paid or not and we compute the value of the award (per share) using the Black-Scholes formula.

FAIR
VALUE
REPORT

FAIR VALUE

The outcome of our analysis is a short report setting out:

  • The fair value per share

  • The financial accounts basic data on assumptions used and value

ST8 Howells