Company Notes


 
Notes to the Group Annual Financial Statements
for the year ended 30 June 2011
 
 
    2011  
R’million  
  2010  
R’million  
15.   SHARE-BASED COMPENSATION RESERVE        
  During the year the following share-based payment expenses were recognised in the statement of comprehensive income regarding share-based arrangements that existed        
  Equity settled – recognised directly in equity        
  South African Management Deferred Incentive Bonus Scheme   12,2     3,3  
  Aspen Share Incentive Scheme and Aspen Share Appreciation Plan   14,1     22,1  
  Aspen South African Workers' Share Plan   –     0,9  
  Cash settled – recognised in trade and other payables        
  South African Management Deferred Incentive Bonus Scheme   3,5     3,5  
  Aspen International Phantom Share Scheme   0,8     –  
    30,6     29,8  
  The movements in the share-based compensation reserve are presented in the statement of changes in equity here.  
  The Group currently operates the following share-based payment schemes:  
  Aspen Share Incentive Scheme
Share options were granted to management and key employees in terms of this scheme. The scheme was adopted by shareholders in January 1999. An amendment to the trust deed was approved by shareholders on 18 January 2000, in terms of which share options offered and taken up were released in five equal annual tranches, commencing on the second anniversary of an offer date and expiring after eight years. The scheme is equity settled. The last tranche in terms of this scheme was awarded in September 2007.  
  In October 2009, the South African Management Deferred Incentive Bonus Scheme was adopted and now operates under the terms and conditions of this scheme.  
  Aspen Share Appreciation Plan
Share appreciation rights are granted to management and key employees in terms of this scheme. The Aspen Share Appreciation Plan was adopted in October 2005. The maximum period of rights awarded in terms of this plan is five years and vesting takes place three years from the allocation date. Share appreciation rights are no longer awarded, other than to three offshore employees who continue on the scheme under legacy arrangements. The scheme is equity settled. Refer to note 15.2 for detail of rights issued in terms of this scheme.  
  Aspen South African Management Deferred Incentive Bonus Scheme
In October 2009, the Aspen Board, acting through its Remuneration & Nomination Committee, proposed that the remuneration structure of management and key employees be amended. As part of this change in the remuneration structure the award of share appreciation rights under the Aspen Share Appreciation Plan was discontinued (except for three offshore employees) and replaced by the South African Management Deferred Incentive Bonus Scheme. The deferred incentive bonus is payable in cash or shares, at the election of the employee. There is a three-year vesting period. The employee to whom the award is made must remain in the employ of Aspen at the time of vesting. The deferred incentive bonus amount is calculated based on the performance of the Aspen Group company which employs the relevant employee and individual performance targets. Refer to note 15.3 for detail of shares issued in terms of this scheme.  
  Election of cash  
  Should an employee elect to receive cash at the time of the award, the cash amount will be payable to the employee three years after the date of the award, provided that the employee is still employed by Aspen at that date. Notional interest at Aspen’s overnight call rate will be added to the deferred incentive bonus amount at the end of the three-year period.  
  Election of shares  
  Should an employee elect to receive shares at the time of the award, the deferred incentive bonus amount granted is increased by 10%. These shares will be issued in terms of the Aspen Share Incentive Scheme and held by the Aspen Share Incentive Trust until the three-year vesting period has expired. Employees will, on vesting date, receive any dividends/capital distributions that were paid to the Trust during the vesting period.  
  Accounting treatment  
  The Group has entered into a share-based payment agreement whereby the employee has the right to choose either settlement in cash or settlement in equity. The entity has thus granted a compound financial instrument, which includes a debt and an equity component.  
  On measurement date management measured the fair value of the debt component first. Thereafter, the fair value of the equity instrument was measured, taking into consideration the fact that the employee forfeits the right to receive cash in order to obtain the shares.  
  The services received from the employees in respect of each component (debt and equity) shall be accounted for separately at each reporting date. The debt component will be accounted for as a cash-settled share-based payment arrangement. The debt component shall therefore be measured at fair value at each reporting date, with changes in fair value recognised in the statement of comprehensive income for the period.  
  The equity component will be accounted for as an equity-settled share-based payment arrangement. The fair value of the services shall be measured at the fair value of the equity instruments on grant date. The services shall then be recognised over the vesting period, with a corresponding increase in equity. Shares lapsed or cancelled will be held in the Trust for future grants.  
  Aspen International Phantom Share Scheme  
  In order to incentivise the management of Aspen’s International businesses in the medium term, a phantom share scheme exists for selected international employees. Awards are linked to the performance of the employee, the businesses and growth in the Aspen share price. Due to regulatory restrictions in respect of transfer and ownership of Aspen shares to offshore employees, the scheme is operated on a phantom basis, which is designed to give an employee the same economic benefit as ownership of shares. The phantom shares entitle eligible employees to receive a cash bonus based initially on a predetermined value and thereafter on changes in the Aspen share price. This scheme is cash-settled.  
  Aspen South African Workers’ Share Plan  
  The Aspen South African Workers’ Share Plan was adopted in October 2005. In terms of the plan all permanent employees not covered by one of the other share schemes, who had a minimum of one year’s continuous service with the Company, qualified for Aspen shares to a value of R9 000, awarded over a three-year period. The last tranche in terms of this plan was issued in July 2009. This scheme is equity-settled.  
  General  
  The total number of shares that could be issued to employees in terms of all the above schemes is 64,7 million shares which equates to approximately 15% of the Company’s issued share capital. To date the number of shares awarded in terms of these schemes is 32,6 million shares, representing 8% of the Company’s issued share capital.  
  Should an employee resign from the Group prior to the vesting date as indicated above, the shares or cash will not be issued and will be forfeited.  
  Should an employee be retrenched or retire, all shares or cash will become due to the employee.  
  Should an employee become deceased, all the shares or cash will vest in the estate of the deceased.  
  It is Group policy that all directors and employees should not deal in shares or exercise share options and/or share appreciation rights of the Company for the periods from half year-end and year-end to 24 hours after publication of the half year-end and year-end results or when the Company is trading under a cautionary announcement.  
  The valuation of the share-based payment expense requires a significant degree of judgement to be applied by management. Refer to here for detail.  

  15.1   Aspen Share Incentive Scheme  
    Grant  
price  
(R) 
Expiry  
date  
Options  
out-  
standing  
on 30 June  
2010  
’000  
Vested  
’000  
Non-  
vested  
’000  
Exercised  
during  
the year  
’000  
Lapsed/  
cancelled  
during  
the year  
’000  
Options  
out-  
standing  
on  
30 June  
2011  
’000  
Vested  
’000  
Non-  
vested  
’000  
 
    R6,50   Jan 2011   125   125   –   125   –   –   –   –    
    R7,77   Jul 2011   6   6   –   5   –   1   1   –    
    R8,28   Aug 2011   1   1   –   –   –   1   1   –    
    R9,20   Aug 2011   1 200   1 200   –   –   –   1 200   1 200   –    
    R9,46   Sept 2011   5   5   –   5   –   –   –   –    
    R11,11   Feb 2012   2   1   1   2   –   –   –   –    
    R11,20   Jan 2012   202   202   –   78   –   124   124   –    
    R11,46   Feb 2012   3   3   –   –   –   3   3   –    
    R12,07   Mar 2012   1   1   –   1   –   –   –   –    
    R12,23   May 2012   6   6   –   6   –   –   –   –    
    R12,30   Jun 2012   200   160   40   –   –   200   200   –    
    R12,46   Apr 2012   3   3   –   3   –   –   –   –    
    R12,67   Jul 2012   616   280   336   288   –   328   328   –    
    R14,86   Sept 2012   6   –   6   6   –   –   –   –    
    R14,96   Oct 2012   6   –   6   3   –   3   3   –    
    R15,75   Nov 2012   1   –   1   1   –   –   –   –    
    R16,93   Sept 2012   1   –   1   1   –   –   –   –    
    R18,23   Oct 2012   41   20   21   20   –   21   21   –    
    R20,73   Sept 2012   6   4   2   4   2   –   –   –    
    R21,49   Mar 2012   13   6   7   6   –   7   7   –    
    R22,13   May 2012   30   24   6   –   –   30   30   –    
    R23,92   Jul 2012   193   46   147   49   2   142   69   73    
    R23,93   Jun 2013   3   1   2   2   –   1   1   –    
    R24,57   Jun 2013   24   12   12   12   12   –   –   –    
    R32,89   Sept 2014   328   78   250   49   34   245   112   133    
    R35,09     Sept 2015   194   27   167   15   37   142   54   88    
        3 216   2 211   1 005   681* 87   2 448   2 154   294    
    * Options exercised during the year resulted in 0,7 million shares (2010: 1,2 million shares) being issued yielding proceeds of R10,0 million (2010: R16,1 million).  
    The weighted average share price at which shares were exercised during the year was R87,28 (2010: R67,18).  
    The following reflects the number of shares that will be issued on the assumption that all share options are exercised on the earliest possible date  
      Number of shares  
‘000  
Consideration  
R’million  
    2012   2 323   32,6  
    2013   96   3,2  
    2014   29   1,0  
      2 448   36,8  

  15.2   Aspen Share Appreciation Plan  
    Grant  
price  
(R) 
Expiry  
date  
Rights  
outstanding  
on 30 June  
2010  
’000  
Vested  
’000  
Non-  
vested  
’000  
Granted  
during the  
year  
’000  
Exercised  
during the  
year  
’000  
Lapsed/  
cancelled  
during the  
year  
’000  
Rights  
outstanding  
on 30 June  
2011  
’000  
Vested  
’000  
Non-  
vested  
’000  
  Fair value  
at  
measurement  
date  
(R) 
Share price  
at  
measurement  
date  
(R) 
Volatility  
%  
Dividend  
yield  
%  
Risk-free  
rate  
%  
    R23,92   Jul 2010   431   431   –   –   406   25   –   –   –     10,96   30,54   25,43   2,54   7,55  
    R30,53   Oct 2010   26   26   –   –   26   –   –   –   –     8,86   31,70   24,62   2,54   7,55  
    R31,94   Nov 2012   9   9   –   –   9   –   –   –   –     9,82   33,00   27,45   2,30   8,09  
    R31,96   Nov 2010   4   4   –   –   4   –   –   –   –     8,43   32,08   24,66   2,54   7,55  
    R32,39   Jan 2012   4   4   –   –   4   –   –   –   –     10,58   32,10   28,00   1,95   8,94  
    R32,59   Dec 2010   4   4   –   –   4   –   –   –   –     12,46   37,99   24,70   2,34   7,30  
    R32,82   Sept 2011   1 310   1 310   –   –   780   –   530   530   –     9,64   33,19   27,44   2,30   8,72  
    R33,24   Dec 2010   4   4   –   –   4   –   –   –   –     12,11   37,99   24,70   2,34   7,30  
    R33,41   Jan 2011   1   1   –   –   1   –   –   –   –     12,88   39,17   24,79   2,34   7,30  
    R33,64   Sept 2011   8   –   8   –   8   –   –   –   –     11,36   34,60   27,43   2,39   9,42  
    R34,55   Oct 2012   4   4   –   –   4   –   –   –   –     10,05   34,94   27,43   2,30   8,63  
    R34,75   Feb 2012   7   7   –   –   4   –   3   3   –     10,59   33,57   28,06   1,95   8,94  
    R35,53   Sept 2011   2 414   –   2 414   –   1 171   –   1 243   1 239   4     11,46   35,99   27,44   2,39   9,42  
    R35,61   Mar 2012   4   4   –   –   –   –   4   4   –     11,40   35,25   28,23   1,95   8,94  
    R36,03   Jan 2014   69   –   69   –   –   –   69   –   69     14,55   39,02   33,84   2,30   7,37  
    R37,16   Jun 2012   4   4   –   –   4   –   –   –   –     12,48   37,76   27,46   1,95   8,94  
    R37,47   Jul 2012   105   –   105   –   62   –   43   43   –     11,31   37,00   27,64   2,39   9,42  
    R38,15   May 2012   14   14   –   –   11   –   3   3   –     13,39   39,61   27,73   1,95   8,94  
    R41,03   Oct 2013   1 505   –   1 505   –   8   75   1 422   –   1 422     13,78   41,40   31,69   2,32   7,32  
    R43,41   May 2011   3   3   –   –   3   –   –   –   –     11,43   38,10   25,50   2,34   7,30  
    R60,28   Sept 2014   135   –   135   33   –   –   168   –   168     20,96   61,86   35,52   2,30   8,08  
    R88,82   Sept 2015   –   –   –   99   –   –   99   –   99     32,17   91,25   35,95   2,13   8,17  
        6 065   1 829   4 236   132   2 513*   100   3 584   1 822   1 762              
    *During the year 2,5 million rights (2010: 2,3 million rights) were exercised which resulted in 1,6 million shares (2010: 1,3 million shares) being issued.  
    The fair value was determined with the use of a binomial model. Volatility was based on historical data, taking into account the expected life of the appreciation rights.  
    The weighted average share price at which shares were exercised during the year was R90,25 (2010: R67,36).  
    The vesting profile of the share appreciation rights is as follows  

      Number of  
rights  
‘000  
    2012   3 317  
    2013   168  
    2014   99  
      3 584  
    In terms of the Aspen Share Appreciation Plan, employees are settled the growth on appreciation rights in Aspen shares at date of exercise. The number of shares required to be issued can thus only be determined at date of exercise.  

  15.3   South African Management Deferred Incentive Bonus Scheme  
    Grant  
price  
(R) 
Expiry  
date  
Shares  
out-  
standing  
on  
30 June  
2010  
’000#
Grsanted  
during  
the year  
’000  
Re-  
allocated  
during  
the year  
‘000  
Re-  
leased  
during  
the year  
‘000  
Lapsed/  
cancelled  
during  
the year*
’000  
Shares   
outstand-   
ing on   
30 June   
2011   
’000#
 
  Fair  
value at  
measure-  
ment  
date  
(R) 
Share  
price at  
measure-  
ment  
date  
(R) 
    R64,70     Oct 2012   195   –   –   2   7   186      61,86   64,00  
    R77,92   Oct 2012   4   –   –   –   –   4      61,86   64,00  
    R86,88   Oct 2013   –   211   7   1   6   211      86,88   93,30  
        199   211^ 7   3   13   401         
    # The total number of shares are not vested at 30 June 2011 and 30 June 2010.  
    * Lapsed or cancelled shares, held by the Aspen Share Incentive Scheme Trust, are reallocated to future grants.  
    ^ During the year the Group bought 210 934 shares (2010: 203 822 shares) that will be held in the Aspen Share Incentive Scheme Trust until vesting date. These shares are accounted for as treasury shares in the Group Annual Financial Statements.  
    The fair value was determined by reference to the share price on the grant date.  

      2011  
R’million  
  2010  
R’million  
    For accounting purposes the deferred incentive bonus has been split into an equity and a liability component. Refer to the accounting policy here for detail.        
    Cumulative share-based payment amount (included in the statement of changes in equity)  15,4     3,3  
    Opening balance   3,3     –  
    For the year   12,2     3,3  
    Bonus provision – liability component (included in other payables in the statement of financial position)  7,3     3,6  
    Opening balance   3,6     –  
    Cash-settled share-based amount for the year   3,5     3,5  
    Notional interest on liability component   0,2     0,1  
      22,8     6,9  

  15.4   Aspen International Phantom Share Scheme        
    Grant price
(R) 
Expiry date   Granted  
during the  
year  
’000  
Shares   
outstanding   
on 30 June   
2011   
’000**
    R88,82   Oct 2013   34   34   
    **The total number of shares are not vested at 30 June 2011.  
    The fair value was determined by reference to the share price on the grant date.  
    The liability included in trade and other payables on the statement of financial position relating to the Aspen International Phantom Share Scheme is R0,8 million.