Notes to the Group financial statements

for the year ended 30 June

		2014		2013
	R million	Number   of shares	Average   price	Number   of shares	Average    price
32.	SHARE INCENTIVE SCHEMES
	All share schemes are equity settled.
(i)	Share option scheme
	Movements in the number of share options outstanding are as follows:
	Movement during the year
	Balance at beginning of year	837 730	48.24	1 503 833	48.68
	Exercised	(463 347)	41.06	(666 103)	49.24
	Balance at end of year	374 383	57.11	837 730	48.24
	Options held by Share Option Trust
	Balance at the beginning of year	33 501	42.89	12 188	44.89
	Purchased from employees	463 347	41.06	666 103	49.24
	Options exercised	–	–	(642 290)	50.54
	Options lapsed	(49 095)	38.35	(2 500)	25.63
	Balance at end of the year	447 753	41.50	33 501	42.89
		822 136	48.61	871 231	48.04

	Share options held by participants at the end of the year have the following terms:
	Financial year of grant	Financial year of lapse	Vested   options	Average   price   R
	2005	2015	368 758	55.83
	2006	2016	5 625	74.00
	Balance at 30 June 2014		374 383	57.11
	Balance at 30 June 2013		837 730	48.24
(i)	Share option scheme continued
	Share options held by Share Option Trust at the end of the year have the following terms:
	Financial year of grant	Financial year of lapse	Options   held	Average   price   R
	2005	2015	441 409	38.47
	2006	2016	6 344	61.83
	Balance at 30 June 2014		447 753	41.50
	Balance at 30 June 2013		33 501	42.89
	Share options are exercisable on the expiry of one year from the date of grant in cumulative tranches of 25% per annum and vest on retirement, retrenchment and death. Options lapse if not exercised within ten years of their date of grant. Options under the scheme were granted at prices ruling on the JSE Limited at the date of granting those options. No options were issued during the year.
(ii)	Conditional share plan    CSP awards provide senior executives with the opportunity to receive shares in Sun International Limited by way of a conditional award, which is subject to the fulfilment of predetermined performance conditions on the expiry of a three year performance period. The performance condition is related to the Company’s total shareholder return (TSR) over a three year period, relative to the TSR of constituents in the INDI 25 index and gambling/hotels sub-sectors of the travel and leisure sector that have a market capitalisation of greater than R1 billion. No awards vest if the Group’s TSR falls below the median TSR of the comparator group while all the awards vest if the Group’s TSR falls within the upper quartile. Between the median and upper quartile the CSP awards vest linearly as the ranking of the Group’s TSR increases. For awards made in 2011 and 2012, 40% of the award is based on the performance condition related to the Company’s TSR over a 3 year period as described above. In addition two new performance conditions were included as follows:   30% of the award is based on achieving AHEPS threshhold and on-target performance targets.   30% of the award is based on the Group achieving and maintaining a B-BBEE rating level of 4 or better as at December 2013.   Movements in the number of share grants outstanding are as follows:

		2014		2013
		Number   of grants	Weighted   average   grant price   R	Number   of grants	Weighted   average   grant price   R
	Balance at beginning of year	492 725	88.00	787 449	91.48
	Lapsed – termination of employment	(32 437)	87.96	(97 894)	86.66
	Lapsed – performance condition not met	(130 504)	89.46	(212 656)	84.12
	Granted	–	–	15 826	89.46
	Balance at end of year	329 784	87.43	492 725	88.00
	Share grants outstanding at the end of the year vest on the following dates, subject to fulfilment of performance conditions:
	Year ending on 30 June
	2014	–	–	246 204	89.46
	2015	100 023	89.46	246 521	86.55
	2016	229 761	86.55	–	–
		329 784	87.43	492 725	88.00

 

(iii)	Equity growth plan
	EGP rights provide senior executives with the opportunity to receive shares in Sun International Limited through the grant of conditional EGP rights, which are rights to receive shares equal in value to the appreciation of the Sun International share price between the date on which the conditional EGP rights are granted and the date on which they are exercised, subject to the fulfilment of predetermined performance conditions over a specified performance period. The performance condition applied to the grants is that the Group’s adjusted headline earnings per share should increase by 2 percent per annum above inflation over a three-year performance period. If the performance condition is not met at the end of 3 years it is retested at the end of 4 and 5 years from the date of grant. From 2011, the awards are no longer re-tested at the end of years 4 and 5. These awards lapse after the initial 3 year period.   Movements in the number of share grants outstanding are as follows:
		2014		2013
		Number   of grants	Weighted   average   grant price   R	Number   of grants	Weighted   average   grant price   R
	Balance at beginning of year	2 653 173	85.68	3 767 343	85.98
	Lapsed – termination of employment	(182 447)	89.48	(278 723)	86.73
	Lapsed – performance condition not met	(563 428)	78.58	(437 581)	90.47
	Exercised	(315 589)	84.08	(409 965)	82.74
	Granted	1 233 549	101.71	12 099	89.46
	Balance at end of year	2 825 258	94.03	2 653 173	85.68
	Exercisable at end of year	1 001 158	87.16	636 778	84.12
	Share grants outstanding at the end of the year become exercisable on the following dates, subject to fulfilment of performance conditions:
	Year ending on 30 June
	2013	–	–	1 217 422	80.84
	2014	1 001 158	87.16	676 610	89.46
	2015	643 796	90.07	759 141	90.07
	2016	609 817	94.87	–	–
	2017	570 487	109.65	–	–
		2 825 258	94.03	2 653 173	85.68

(iv)	Deferred bonus plan
	DBP shares are Sun International Limited shares acquired by senior executives with a portion of their declared annual bonus and entitle the participant to receive a matching award (an equal number of Sun International Limited shares as acquired) at the end of a three-year period. The matching award is conditional on continued employment and the DBP shares being held by the participant at the end of the three-year period.   Movements in the number of matching awards outstanding are as follows:
		2014		2013
		Number   of grants	Weighted   average   grant price   R	Number   of grants	Weighted   average   grant price   R
	Balance at beginning of year	91 745	86.23	88 559	88.86
	Lapsed – termination of employment	(1 722)	82.87	(22 030)	85.62
	Granted	–	–	62 818	85.47
	Matching awards	(17 116)	95.92	(37 602)	91.49
		72 907	84.04	91 745	86.23
	DBP shares held at the end of the year entitle participants to matching awards on the following dates:
	Year ending on 30 June
	2014	–	–	15 451	97.04
	2015	22 964	80.93	23 949	80.93
	2016	49 943	85.47	52 345	85.47
		72 907	84.04	91 745	86.23

(v)	Restricted share plan and Bonus matching share plan (RSP and BMSP)
	RSP and BMSP shares are Sun International Limited shares granted to key staff in return for continuing employment with the Group and matches their bonus payment. The shares will be forfeited and any dividends received on the shares will be repayable should the employee leave the Group prior to the expiry of the vesting period. The vesting period is either 3 or 5 years. In the case of a three year award, 100% of the shares awarded will vest after 3 years and in the case of the five year award, 50% vests after 3 years, 25% after 4 years and the remaining 25% after 5 years.   Movement in the number of shares outstanding are as follows:
		2014		2013
		Number   of grants	Weighted   average   grant price   R	Number   of grants	Weighted   average   grant price   R
	Balance at beginning of year	770 036	91.63	896 069	90.23
	Granted during the year	432 198	95.30	126 595	103.54
	Lapsed – resignation	(78 802)	89.41	(98 803)	90.69
	Vested during the year	(131 046)	95.50	(153 825)	93.90
	Balance at end of year	992 386	92.89	770 036	91.63
	RSP and BMSP share grants outstanding at the end of the year vest on the following dates, subject to fulfilment of employment conditions:
	Year ending on 30 June
	2014	–	–	131 046	95.50
	2015	237 886	88.55	387 823	88.05
	2016	8 258	89.25	133 710	94.90
	2017	635 900	92.41	89 872	92.62
	2018	110 342	105.65	27 585	105.65
		992 386	92.89	770 036	91.63
	Valuation of share incentive grants
	The fair values of CSP and EGP options granted during the year were estimated using the binomial asset pricing model. For the DBP, RSP and BMSP the share grants are valued based on the ruling share price on the date of the grant. The table below sets out the valuation thereof and the assumptions used to value the grants:
	2014	CSP	EGP	DBP	RSP & BMSP
	Weighted average grant price		R101.71		R95.30
	Weighted average 400-day volatility		25.55%		n/a
	Weighted average long term risk rate		5.25%		n/a
	Weighted average dividend yield		3.83%		n/a
	Valuation		R34 million		R41 million
	2013
	Weighted average grant price	R89.46	R89.46	R85.47	R103.54
	Weighted average 400-day volatility	23.00%	26.00%	n/a	n/a
	Weighted average long term risk rate	4.80%	4.80%	n/a	n/a
	Weighted average dividend yield	3.80%	3.80%	n/a	n/a
	Valuation	R0.9 million	R0.3 million	R5 million	R13 million
	The employee share based payment expense for the year was R53 million (2013: R46 million).