Notes to the financial statements | Note 10.7

Summary of material accounting policies
The Group has a share-based payment compensation plan. The plan is an equity-settled plan, consisting of the long-term incentive plan (LTIP), the employee share ownership plan (ESOP) and an additional share award (ASA).

The expense relating to the services rendered by the employees, and the corresponding increase in equity, is measured at the fair value of the equity instruments at their grant date based on the market price at that date. This compensation cost is recognised over the vesting period, based on the best available estimate at each reporting date of the number of equity instruments that are expected to vest.

During the vesting period, participants have all the shareholders' rights, including the right to vote and share in any dividend distribution.

Telkom's shareholders approved the Telkom forfeitable share plan (FSP) and the ASA at the September 2013 AGM.

In the FSP, employees acquire shareholder rights on the grant date for the forfeitable shares (these include dividends and voting rights).

An employee turnover assumption of 3.1% to 7.0% has been used in calculating the expected number of shares that will vest. The turnover relates to the various entities within the Group.

The vesting timelines and principal assumptions used in calculating the expected number of shares that will vest for the Telkom share scheme are as follows:

The vesting timelines and principal assumptions used in calculating the expected number of shares that will vest for the BCX share scheme are as follows:

The vesting timelines and principal assumptions used in calculating the expected number of shares that will vest for the Trudon share scheme are as follows:

The vesting timelines and principal assumptions used in calculating the expected number of shares that will vest for the Gyro share scheme are as follows:

The vesting timelines and principal assumptions used in calculating the expected number of shares that will vest for the Openserve share scheme are as follows:

The actuaries independently verified the probabilities.

Certain BCX employees were granted shares in terms of a BCX share scheme. Based on the BCX Group achieving the performance conditions, the shares will vest between the 2026 and 2030 financial years.

Certain Trudon employees were granted shares in terms of a Trudon share scheme. Based on Trudon achieving the performance conditions, the shares will vest in the 2026 financial year.

Certain Gyro employees were granted shares in terms of a Gyro share scheme. Based on Gyro achieving the performance conditions, the shares will vest between the 2026 and 2028 financial years.

Certain Openserve employees were granted shares in terms of an Openserve share scheme. Based on Openserve achieving the performance conditions, the shares will vest between the 2026 and 2030 financial years.

For the vesting to occur, the targets (including performance conditions) must be met. The targets are measured in each financial year after the grant date.

The weighted average remaining vesting period for all the shares outstanding as at 31 March 2026 is 1.52 years (31 March 2025: 0.54 years).

The following table illustrates the movement in the maximum number of shares that were granted to employees:

In relation to market-related performance criteria, IFRS 2 requires a fair value to be placed on employee share grants/options. Fair value is measured as the market price of the entity's share grants/options adjusted for the terms and conditions applicable to the grant/option. Since employee share grants/options are not traded, there is no market price available. For this reason, the fair value of the grants/options must be determined by using an option pricing model.

The following tables represent the assumptions used in the valuation of the share scheme:

The key performance indicators related to all the share scheme grants are headline earnings per share, free cash flow, return on invested capital, social impact, emissions and total shareholder return.

The share price volatility is based on the five-year average volatility observed for the Telkom share price.