IOOF  | Annual Report 2012 Capital risk management page 99 Parent 2012 2011 No. ’000 $’000 No. ’000 $’000 Ordinary shares On issue at 1 July 231,904  868,451  230,156  858,628  Adviser performance rights vested during the year (note 31) - 427  46  453  Issue of shares on exercise of options under executive and employee share option plan (note 31) 134  1,094  1,702  9,464  Employee performance rights vested during the year (note 31) - 736  - 330  Transfer from employee equity-settled benefits reserve on exercise of options (note 26) - 444  - 1,049  Transfer of lapsed share options - - - (1,077) Acquisition of treasury shares - (2,082) - (396) On issue at 30 June 232,038  869,070  231,904  868,451  in respect of its life insurance business and financial services  licensed operations. During the year, the Group has complied  with all externally imposed capital requirements to which it is  subject. The Group’s and the Company’s objectives when managing  capital is to safeguard their ability to continue as a going  concern, so that they can continue to provide returns to  shareholders and benefits to other stakeholders, and to  maintain an optimal structure to reduce the cost of capital.  In order to maintain or adjust the capital structure, the Group  may adjust the amount of dividends paid to shareholders,  return capital to shareholders, buy back its shares on market,  issue new shares, sell assets, or otherwise adjust debt levels. The Group and the Company monitor capital on the basis of  investment capital, working capital and regulatory capital. Investment capital is the Group’s capital that is not required for  regulatory and working capital requirements of the business.  The investment capital is invested in: Each subsidiary manages its own capital required to support  planned business growth and meet regulatory requirements.  Australian Prudential Regulation Authority (APRA) regulated  subsidiaries have their own capital management plan which  specifically addresses the regulatory requirements of that  entity and sets a target surplus over minimum regulatory  requirements. Regular monitoring of regulatory requirements  ensures sufficient capital is available and appropriate planning  is made to retain target surpluses. IOOF Holdings Ltd is  primarily the provider of equity capital to its subsidiaries. Such  investment is funded by IOOF Holding Ltd’s own investment  capital, through capital issues, profit retention and, in some  instances, by debt. Subsidiary capital generated in excess of planned requirements  is returned to IOOF Holdings Ltd, usually by way of dividends.  A standby facility is in place as a safeguard against a temporary  need for funds and to provide a short term funding facility  that allows the business to take advantage of acquisition  opportunities as they arise. The weighted average cost of capital is regularly monitored. Funding decisions take into consideration the cost of debt  versus the cost of equity with emphasis on the outcome that is  best for shareholder interests.  During 2012, the Group’s capital risk management strategy was  unchanged from 2011. Further information in relation to solvency requirements  imposed by the Life Insurance Act is provided in note 40(h) Life  Insurance Business – Solvency Requirements.  Regulatory capital is the capital which the Group is required to  hold as determined by legislative and regulatory requirements  Working capital is the capital that is required to meet the day  to day operations of the business. The investment capital is available to support the organic  development of new businesses and products and to respond  to investment and growth opportunities such as acquisitions,  as they arise. The seed capital is primarily available to support  the business in establishing new products and is also used to  support solvency requirements of the benefit funds.  •  bank bills and deposits; •  subsidiaries; •  available-for-sale assets; •  unit trusts, as investments; and •  Group operated unit trusts, as seed capital.