EPRs are granted to certain non-managerial employees of the group in terms of the Assore Employee Trust (AET) share-based payment scheme. The number of EPRs allocated in a particular year is based on 10% of the employee’s annual salary on the date of the allocation, relative to the Assore share price. The growth in the value of the EPRs and resultant cash payment is linked to the Assore share price on the date of the payment. This value is reduced by the outstanding balance of the notional debt allocated, which is calculated as the value of the Assore share price on the date that the EPRs were first allocated. The notional amount attracts interest at a rate linked to the prime rate, reduced by 22% of the value of the dividends declared on the Assore shares included in the EPR allocations. The EPRs vest after one year of service rendered by the employee and are settled after 10 years after the initial allocation date.

At 30 June 2019, the fair value of the EPRs, utilising the Monte Carlo valuation technique, amounted to R14 180 000 (2018: R12 795 000). The number of EPRs that have vested to date amount to 200 560 (2018: 187 127), and have a combined intrinsic value of R2 331 200 (2018: R2 281 000).

The following assumptions were used in determining the fair value of the EPRs:

• dividend yield, between 1,87% and 4,31% (2018: 1,87% and 4,01%)
• expected volatility, between 38,54% and 50,02% (2018: 41,64% and 51,73%)
• risk-free interest rate between 6,72% and 7,16% (2018: 7,65% and 8,18%)