IGO Interactive Annual Report 2018

Notes to the consolidated financial statements 30 June 2018 (continued) 26 Share-based payments (continued) Vesting of share rights (continued) Service rights - short-term incentive scheme (continued) 2018 Number of share rights Weighted average fair value Outstanding at the beginning of the year - - Rights issued during the year 423,357 3.51 Rights vested during the year (99,560) 3.51 Rights lapsed during the year (33,595) 3.51 Outstanding at the end of the year 290,202 3.51 Employee Share Ownership Award In accordance with the terms of the EIP, the Employee Share Ownership Award (ESOA) provides for shares to be issued by the Company to employees for no cash consideration. All employees (excluding executive directors, senior management and other employees entitled to participate in the LTI scheme and non-executive directors) who have been continuously employed by the Group for a period of at least three months prior to 1 July are eligible to participate in the ESOA. Under the ESOA, eligible employees may be granted up to $1,000 worth of fully paid ordinary shares in Independence Group NL annually for no cash consideration. The number of shares issued to participants in the scheme is the offer amount divided by the weighted average price at which the Company's shares are traded on the Australian Securities Exchange for the 20 days up to and including the date of grant. 2018 Number 2017 Number Number of shares issued under the plan to participating employees 76,452 48,443 Each participant was issued with shares worth $1,000 based on the weighted average market price of $3.61 (2017: $3.97). The performance rights will not be subject to any further escrow restrictions once they have vested to the employees. Share trading policy The trading of shares issued to participants under the Company’s EIP is subject to, and conditional upon, compliance with the Company’s employee share trading policy. Non-executive Directors The EIP permits non-executive directors to be eligible employees and therefore to participate in the plan. It is not currently intended that non-executive directors will be issued with performance rights under the EIP and any such issue would be subject to all necessary shareholder approvals. (b) Recognition and measurement Equity-settled transactions The fair values of equity settled awards are recognised in share-based payments expense, together with a corresponding increase in share-based payments reserve within equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date). The cost of these equity-settled transactions is measured by reference to the fair value at the date at which they are granted. The fair value is determined with the assistance of a valuation software using a trinomial tree which has been adopted by the Boyle and Law (1994) node alignment algorithm to improve accuracy. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Independence Group NL (market conditions). Independence Group NL 53 IGO ANNUAL REPORT 2018— 117 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2018