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VERITY INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
The Company operates a share-based payment scheme whereby selected employees and directors are granted Performance Incentive Units (PIUs). These PIUs are designed to reward participants based on the growth in value of the Company and vest only upon the occurrence of a defined liquidity event, such as a sale, flotation, or other significant corporate transaction.
The PIUs entitle the holders to a share of the proceeds in excess of a predetermined threshold upon a qualifying liquidity event, subject to continued service conditions and performance criteria.
The Company accounts for PIUs in accordance with Section 26 of FRS 102 – Share-Based Payment. The arrangement is classified as an equity-settled share-based payment, and the fair value of the PIUs at grant date is recognised as an expense over the estimated vesting period, with a corresponding credit to an equity reserve.
The fair value of the PIUs is determined using an appropriate valuation model, taking into account the terms and conditions upon which the PIUs were granted, including the performance and market conditions.
As the PIUs vest only upon the occurrence of a non-routine event (a liquidity event), the Company has assessed the probability of such an event occurring. Where it is not considered probable that a liquidity event will occur, no charge is recognised. This assessment is reviewed at each reporting date.
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
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