NOTES TO THE ANNUAL FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2007

26.

SHARE BASED PAYMENTS

26.1 Remgro Share Scheme

The share-based payments that are accounted for in the financial statements are in respect of the Remgro Share Scheme (the “Scheme”)and consist of ordinary shares in Remgro Limited that were offered to participants in terms of the Scheme. The offers are valid for one year from the offer date. The Scheme is a deferred purchase scheme and payment takes place in three equal instalments, the first of which is payable three years after the offer date. Participants have no rights to delivery, voting or ordinary dividends on shares before payment has been made. Participants may choose to pay on a later date, with the resultant deferment of rights. Payment relating to offers before 26 November 2004 must be settled within ten years, while offers thereafter must be settled before seven years have passed.

The valuation of the Scheme was performed using an actuarial model. This model was developed by an independent third party from the standard binomial option pricing model in order to address the unique nature of the Scheme, especially with regard to early exercise of offers.

The expected contract lifetimes are estimated by considering separately each of the tranches within that grant. The risk-free rate was estimated by using the implied yield on a SA zero-coupon government bond and the yield curve over the expected contract lifetimes of five, six and seven years from the offer date.

Share price volatility of ordinary shares in Remgro Limited was determined with reference to movements in the share price since 1 October 2000, that being the date from which Remgro commenced trading on the JSE.

Dividend yield was calculated using the two-year moving average dividend yield at each offer date.

2007

2006

R’ 000

R’000

Fair value of offers made during the year

53 353

2 681

Share-based payment cost included in the income statement (in accordance with IFRS 2)

10 275

8 067

– Portion attributable to directors

6 651

5 657

Although the Group elected, in accordance with the transitional provisions of IFRS, to only apply IFRS 2 on transactions entered into after 7 November 2002 that had not vested at 1 January 2005, the following information relates to all offers to the participants of the Scheme.

Number of weighted average exercise prices of all share offers to participants of the Scheme:

	2007		2006
	Number		Number
	of shares	Rand	of shares	Rand
Previous financial years	3 093 691	59.24	4 375 782	54.26
Offered and accepted in current financial year	569 699	135.02	29 079	114.75
Shares paid for and delivered	(262 016)	49.52	(1 308 790)	43.80
Resignations and other	(4 380)	98.67	(2 380)	68.02
Total at 31 March	3 396 994	72.65	3 093 691	59.24

Exercisable at the end of the period	1 797 087	48.46	1 804 454	46.38

Exercise price range of all offers:

	2007			2006
		*Weighted*	*Weighted*		Weighted	Weighted
		*average*	*average*		average	average
	*Number*	*remaining*	*exercise*	Number	remaining	exercise
	*of shares*	*contract*	*price*	of shares	contract	price
	*outstanding*	*lifetime*	*per share*	outstanding	lifetime	per share
	*at year-end*	*in years*	*(Rand)*	at year-end	in years	(Rand)
R40 – R60	1 464 972	3.57	44.98	1 677 301	4.58	45.07
R60 – R80	678 927	6.16	64.67	729 469	7.16	64.75
R80 – R100	656 615	5.13	86.82	658 205	6.14	86.81
R100 – R120	28 430	5.67	114.93	28 716	6.67	115.02
> R120	568 050	6.24	135.01	–	–	–
The following assumptions were used in the binomial model to value offers:
				2007		2006
Weighted average Remgro share price for the year (R)				150.20		116.98
Exercise price (R)				132.60 – 137.80		93.80 – 124.00
Average expected exercise period (years)				5 – 7		5 – 7
Price volatility (%)				20.05 – 20.18		19.9 – 21.3
Risk-free rate (%)				7.1 – 8.6		7.1 – 8.3
Expected dividend yield (%)				2.9 – 3.1		3.2 – 3.7
Current status – offers to directors
– ordinary shares

							*Share price*		*Balance*
	Balance					*Date of*	*on date of*		*of shares*
	of shares	*Shares*			*Number*	*payment*	*payment*		*accepted*
	accepted as at	*accepted*	*Date of*	*Offer*	*of shares*	*and*	*and*	*Increase*	*as at*
	31 March	*during*	*acceptance*	*price*	*paid and*	*delivery*	*delivery*	in value*	*31 March*
Participant	2006	*the year*	*of shares*	*(Rand)*	*delivered*	*of shares*	*(Rand)*	*(R'000)*	*2007*
Executive
W E Bührmann	97 872			87.86					97 872
		7 303	26/06/06	135.00					7 303
D M Falck	458 716			43.60					458 716
	104 917			63.00					104 917
	30 050			87.86					30 050
		92 988	26/06/06	135.00					92 988
J A Preller	24 466			43.60					24 466
	34 572			87.86					34 572
		30 167	26/06/06	135.00					30 167
M H Visser	278 979			63.00					278 979
	342 488			87.86					342 488
		172 681	26/06/06	135.00					172 681
T van Wyk	24 464			43.60	24 464	02/08/06	143.50	2 444.0
	33 195			48.20	33 195	02/08/06	143.50	3 163.4
	42 161			87.86					42 161
		41 598	26/06/06	135.00					41 598
Subtotal	1 471 880	344 737			57 659			5 607.4	1 758 958
Non-executive
P E Beyers	191 130			43.60					191 130
J W Dreyer	191 130			43.60					191 130
J P Rupert	414 938			48.20					414 938
Subtotal	797 198								797 198
Total	2 269 078	344 737			57 659			5 607.4	2 556 156
* It refers to the increase in value of the scheme shares of the indicated participants from the offer date to the date of payment and delivery.

Current status – offers to directors
– ordinary shares

							Share price		Balance
	Balance					Date of	on date of		of shares
	of shares	Shares			Number	payment	payment		accepted
	accepted as at	accepted	Date of	Offer	of shares	and	and	Increase	as at
	31 March	during	acceptance	price	paid and	delivery	delivery	in value*	31 March
Participant	2005	the year	of shares	(Rand)	delivered	of shares	(Rand)	(R'000)	2006
Executive
W E Bührmann	185 229			43.60	185 229	05/01/06	123.30	14 762.8	–
	97 872			87.86					97 872
D M Falck	458 716			43.60					458 716
	104 917			63.00					104 917
	30 050			87.86					30 050
J A Preller	73 394			43.60	48 928	27/03/06	133.39	4 393.2	24 466
	34 572			87.86					34 572
M H Visser	489 296			43.60	489 296	05/01/06	123.30	38 996.9	–
	278 979			63.00					278 979
	342 488			87.86					342 488
T van Wyk	33 195			48.20					33 195
	24 464			43.60					24 464
	42 161			87.86					42 161
Subtotal	2 195 333				723 453			58 152.9	1 471 880
Non-executive
P E Beyers	191 130			43.60					191 130
J W Dreyer	191 130			43.60					191 130
E de la H Hertzog	57 339			43.60	57 339	13/12/05	116.00	4 151.3	–
J P Rupert	414 938			48.20					414 938
Subtotal	854 537				57 339			4 151.3	797 198
Total	3 049 870				780 792			62 304.2	2 269 078
* It refers to the increase in value of the scheme shares of the indicated participants from the offer date to the date of payment and delivery. No shares were offered to the directors for the financial year to 31 March 2006. 26.2 Rainbow Share Scheme Rainbow has an equity settled share scheme for certain of its employees in terms of which share options offered are exercisable in three equal tranches from two, three and four years after the grant date. Subject to the discretion of the Rainbow Share Incentive Trust’s trustees, options are forfeited if not exercised before termination of employment. An expense of R8.0 million (2006: R5.9 million) relating to this scheme was recognised in the income statement.

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