Notes to the annual financial statements

FOR THE YEAR ENDED 31 MARCH 2008


24.	SHARE-BASED PAYMENTS

24.1

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.

	2008	2007
	R million	R million
Fair value of offers made during the year	7	53
Share-based payment cost included in the income statement (in accordance with IFRS 2)	12	10
– Portion attributable to directors	8	7


		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 and weighted average exercise prices of all share offers to participants of the Scheme:
	2008		2007
	Number		Number
	of shares	Rand	of shares	Rand
Previous financial years	3 396 994	72.65	3 093 691	59.24
Offered and accepted in current financial year	145 562	185.69	569 699	135.02
Shares paid for and delivered	(126 383)	56.5	(262 016)	49.52
Resignations and other	(4 250)	117.7	(4 380)	98.67
Total at 31 March	3 411 923	78.01	3 396 994	72.65

Exercisable at the end of the period	2 127 518	53.78	1 797 087	48.46


Exercise price range of all offers:
	2008			2007
		Weighted	Weighted		Weighted	Weighted
		average	average		average	average
	Number of	remaining	exercise	Number	remaining	exercise
	shares	contract	price	of shares	contract	price
	outstanding at	lifetime	per share	outstanding	lifetime	per share
	year-end	in years	(Rand)	at year-end	in years	(Rand)
R40 – R60	1 399 790	2.57	45.03	1 464 972	3.57	44.98
R60 – R80	625 238	5.12	64.46	678 927	6.16	64.67
R80 – R100	648 709	4.1	86.88	656 615	5.13	86.82
R100 – R120	24 248	4.64	114.05	28 430	5.67	114.93
R120 – R140	567 986	5.24	134.89	568 050	6.24	135.01
R140 – R160	390	5.66	155.45	–	–	–
R160 – R180	14 915	6.33	176.83	–	–	–
R180 – R200	130 647	6.22	186.7	–	–	–

The following assumptions were used in the binomial model to value offers:
	2008	2007
Weighted average Remgro share price for the year (R)	185.73	150.2
Exercise price (R)	155.45 – 187.50	132.60 – 137.80
Average expected exercise period (years)	5–7	5–7
Price volatility (%)	19.24 – 20.21	20.05 – 20.18
Risk-free rate (%)	7.7 – 8.4	7.1 – 8.6
Expected dividend yield (%)	2.5 – 2.6	2.9 – 3.1

Current status – offers to directors
– ordinary shares
	Balance						Share price		Balance
	of shares					Date of	on date of		of shares
	accepted	Shares			Number	payment	payment		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	2007	the year	of shares	(Rand)	delivered	of shares	(Rand)	(R’000)	2008
Executive
W E Bührmann	97 872			87.86					97 872
	7 303			135.00					7 303
		38 645	27/06/07	186.70					38 645
D M Falck	458 716			43.60					458 716
	104 917			63.00					104 917
	30 050			87.86					30 050
	92 988			135.00					92 988
		18 146	03/07/07	186.70					18 146
J A Preller	24 466			43.60					24 466
	34 572			87.86					34 572
	30 167			135.00					30 167
		2 319	03/07/07	186.70					2 319
M H Visser	278 979			63.00					278 979
	342 488			87.86					342 488
	172 681			135.00					172 681
		68 230	26/06/07	186.70					68 230
T van Wyk	42 161			87.86					42 161
	41 598			135.00					41 598
		3 029	03/07/07	186.70					3 029
Subtotal	1 758 958	130 369							1 889 327
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	2 556 156	130 369							2 686 525
* 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
		Balance						Share price		Balance
		of shares					Date of	on date of		of shares
		accepted	Shares			Number	payment	payment		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	143.5	2 444.0
		33 195			48.20	33 195	02/08/06	143.5	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.

24.2	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 R10.8 million (2007: R8.0 million) relating to this scheme was recognised in the income statement.

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