Pharma is a group of companies listed in the EU reporting under IFRS Standards. The company develops and makes a large portfolio of pharmaceutical products, both for the healthcare and beauty markets. Pharma's customers include hospitals, governments, pharmacies and retail pharmacy and supermarket chains. The company has two divisions: Research & Development and Fabrication. In addition to working for the Pharma group, the Research & Development division also conducts research and development on behalf of smaller pharmaceutical companies and for governments.

Following higher than planned employee departures in 20X5/20X6, Pharma initiated a group- wide share-based payment scheme for employees in July 20X7, whereby employees would receive as a cash benefit, the increase in the share price from 1 July 20X7 to 1 July 20Y0, provided they remained in Pharma's employment throughout the period. The scheme was taken up by approximately 10,000 employees and 1,050,000 rights (in total) were granted. It was estimated at 1 July 20X7, that the fair value of this benefit was approximately $2 per right and $2.10 at 30 September 20X7. Due to the effect of adverse circumstances on Pharma's share price, this has now fallen to about $1.50. Management estimated that 70% of the rights would be exercisable on 1 July 20Y0 due to expected employee departures.

Explain the implications of the above information for the financial statements for the year ending 30 September 20X7.