As the fair value of the services received cannot be measured reliably, the services have been valued by reference to the fair value of shares and options granted. The fair value of such options and shares is measured at the grant date using the Black-Scholes model.

In terms of IFRS 2, share-based payments are required to be expensed over the vesting period. Any accelerated vesting of the awards and options requires immediate recognition of the unrecognised portion.

In the prior year, the former ultimate holding company GUS plc indirectly sold its controlling interest in the Lewis Group. This sale resulted in a change in control and in terms of the scheme rules, the awards and options issued at date of listing vested immediately.

The volatilities for the options granted after the date of the listing were based on the volatility of Lewis’ share price from the date of listing to the date of granting the share awards and options. The expected volatility for the share awards and options granted at the date of listing was based on a weighted average of the volatilities of similar listed entities.

The employee share incentive schemes are in operation for employees, executives and directors holding salaried employment office. The aggregate number of shares which may be utilised for these schemes shall not exceed 10% of the issued share capital of the company.

In the prior year, the GUS group made available 4% of its shareholding for no consideration in order to meet the commitment of the share incentive schemes to deliver to the participants as a result of the immediate vesting of the share awards and options as a consequence of the disposal of their controlling interest.

Employees receive their share awards granted at date of listing if they have been in continued employment with the group until the vesting date. Share awards vest between two and four years after grant date. In terms of the scheme rules, the share awards and options vest immediately, should there be a change in control.

Executives receive their share awards granted at date of listing if they have been in continued employment with the group until the vesting date. Share awards vest between three and five years after grant date. In terms of the scheme rules, the share awards and options vest immediately, should there be a change in control.

Share options are granted to selected executives. The exercise price of the options is the average market price for the last three days, including the date of the grant or, in respect of options granted at date of listing, the listing price of the group’s shares. Options vest between three and five years and must be exercised within 10 years after being granted. In terms of the scheme’s rules, the options vest immediately, should there be a change in control.

In terms of the scheme, senior executives have been offered the right to acquire shares of the group for no consideration subject to the achievement of performance targets. The shares will vest after three years and is conditional upon the executive still being in the employ of the company other than in the event of death, ill health, retirement or retrenchment.

The performance targets are set by the Remuneration and Nomination Committee and are approved by the Board. These targets will be set at the beginning of each of the three years and a proportionate number of the shares granted will be allocated to each year.

No performance shares will accrue if the group achieves less than 90% of target. Any achievement between 90% and 100% of target will result in a proportionate accrual of shares weighted towards 100% of target.

Senior executives are eligible for an annual bonus based on achievement of performance targets. These eligible executives can elect to invest all or part of their net bonus in the group’s shares (“invested shares”).

These shares are deferred for three years and matching shares equal to the before tax bonus are awarded for no consideration at the end of the period. The matching share award will lapse, should the executive terminate his or her employment before the completion of the three-year period other than in the event of death, ill health, retirement or retrenchment.

Invested shares paid for through the investment of executives’ net bonuses amounted to 53 592 shares. These shares are held by the Trust on the executives’ behalf.

Share options awarded under the Lewis Executive Share Option Scheme vested as a consequence of the disposal of its controlling interest by GUS in the prior year. The exercise price of these options are R28.00. In terms of a written undertaking, A J Smart agreed not to dispose of any shares he may become entitled to under these awards prior to 1 October 2007.

Share award under Lewis Executive Performance Scheme granted on 30 June 2006 (refer to note 17.3).

Matching share options under Lewis Co-investment Scheme granted on 30 June 2006 (refer note 17.3). The Trust holds 21 806 shares on his behalf by virtue of his investment of his net bonus for 2006 into the scheme.