Realising Value Guinness Peat Group plc

Notes to Financial Statements continued38. Share-based Payments – continuedThe charge to the income statement in respect of GPG share options is calculated using a stochastic valuation model based on themethodology underlying the Black-Scholes model, projecting forward the Company share price and calculating the value earned whenthe options are exercised and discounting this back to the calculation date.The assumptions in the model are as follows:Volatility20% per annumRisk free interest rate2.6% per annumDividend at grant1p per shareThe Directors have set the volatility assumption after analysing the historical volatility of the Group share price and taking account ofthe current levels of equity market volatility. To allow for the effects of early exercise it was assumed that in each simulation the optionswere exercised as soon as they were “in the money” and these values were averaged to get the overall price.The Group recognised total expenses of £Nil related to equity-settled share-based payments in the year ended 31 December 2012(2011: £1 million).94 GUINNESS PEAT GROUP PLC