b'NOTES TO THE FINANCIAL STATEMENTS >for the year ended 30 June 2019NOTE 1. SIGNIFICANT ACCOUNTING POLICIESCONTINUEDthe best estimate of the number of awards that are likely toThe financial instruments recognised at fair value in vest and the expired portion of the vesting period. The amountthe consolidated statement of financial position have recognised in profit or loss for the period is the cumulativebeen analysed and classified using a fair value hierarchy amount calculated at each reporting date less amounts alreadyreflecting the significance of the inputs used in making recognised in previous periods. the measurements. The fair value hierarchy consist of the Market conditions are taken into consideration in determiningfollowing levels:fair value. Therefore any awards subject to market conditionsa.quoted prices (unadjusted) in active markets for identical are considered to vest irrespective of whether or not thatassets or liabilities (level 1)market condition has been met, provided all other conditionsb.inputs other than quoted prices included within level are satisfied. 1 that are observable for the asset or liability, either If equity-settled awards are modified, as a minimum andirectly (as prices) or indirectly (derived from prices)expense is recognised as if the modification has not been(level 2)made. An additional expense is recognised, over the remainingc.inputs for the asset or liability that are not based on vesting period, for any modification that increases the totalobservable market data (unobservable inputs) (level 3)fair value of the share-based compensation benefit as at the date of modification. The directors consider that the carrying amount of all financial assets and liabilities recorded in the financial statements If the non-vesting condition is within the control of theapproximate their fair value.consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is notISSUED CAPITALwithin the control of the consolidated entity or employee and is not satisfied during the vesting period, any remainingOrdinary shares are classified as equity.expense for the award is recognised over the remaining vestingIncremental costs directly attributable to the issue of new period, unless the award is forfeited. shares or options are shown in equity as a deduction, netIf an equity-settled award is cancelled, it is treated as if it hasof tax, from the proceeds.vested on the date of cancellation, and any remaining expenseWhere the consolidated entity purchases the companys equity is recognised immediately. If a new replacement award isinstruments, for example as the result of a share buy-back or substituted for the cancelled award, the cancelled and newa share-based payment plan, the consideration paid, including award are treated as if they were a modification. any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the owners FAIR VALUE MEASUREMENT of Donaco International Limited as treasury shares until the When an asset or liability, financial or non-financial, isshares are cancelled or reissued. Where such ordinary shares measured at fair value for recognition or disclosure purposes,are subsequently reissued, any consideration received, net of the fair value is based on the price that would be receivedany directly attributable incremental transaction costs and the to sell an asset or paid to transfer a liability in an orderlyrelated income tax effects, is included in equity attributabletransaction between market participants at the measurementto the owners of Donaco International Limited.date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principalDIVIDENDSmarket, in the most advantageous market. Provision is made for the amount of any dividend declared, Fair value is measured using the assumptions that marketdetermined or announced by the directors on or before the participants would use when pricing the asset or liability,end of the financial year but not distributed at balance date.assuming they act in their economic best interest. For non-financial assets, the fair value measurement is basedEARNINGS PER SHAREon its highest and best use. Valuation techniques that areBasic earnings per shareappropriate in the circumstances and for which sufficient dataBasic earnings per share is calculated by dividing the profit is available to measure fair value, are used, maximising the useattributable to the owners of Donaco International Limited, of relevant observable inputs and minimising the use excluding any costs of servicing equity other than ordinary of unobservable inputs. shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.48 DONACO INTERNATIONAL LIMITED 2019 ANNUAL REPORT'