23 Employee benefits

Pension plans

Defined contribution plans

The Group operates a number of defined contribution pension plans, which include stakeholder pension plans whose assets are held separately from those of the Group in independently administered funds.

The total expense relating to these plans in the current year was £1.31 million (2011: £1.10 million) and represents contributions payable by the Group to the funds.

At the end of the financial year, there were outstanding pensions contributions of £0.09 million (2011: £0.08 million), which are included in creditors.

Share-based payments

The Group Share Options and Share Matching Plans provide for a grant price equal to the average quoted market price of the Group shares on the date of grant. The vesting period is generally three years. The options expire if they remain unexercised after the exercise period has lapsed. Furthermore, options are forfeited if the employee leaves the Group before the options vest, unless for retirement, redundancy or health reasons. The options are equity settled.

The number and weighted average exercise prices of share options are as follows:


20122011
OptionsWeighted
Average
Exercise
Price
£
OptionsWeighted
Average
Exercise
Price
£
Outstanding at beginning of year 8,948,751 0.13 8,840,161 0.13
Granted during the year 89,942 0.45 361,986 0.25
Forfeited/lapsed during the year (61,834) 0.71 (253,396) 0.39
Exercised during the year

Outstanding at the end of the year 8,976,859 0.13 8,948,751 0.13
Exercisable at the end of the year 161,592 0.37 131,185 0.55

The options outstanding at 31 March 2012 had a weighted average remaining contractual life of 5.5 years (2011: 5.7 years) and exercise prices ranging from £0.085 to £0.825 (2011: £0.085 to £0.91).

The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured based on Black–Scholes, Binominal lattice and Monte Carlo models. The contractual life of the option is used as an input into this model.

Options granted before September 2004 (with the exception of SAYE) can only be exercised if the Company's growth based on annualised earnings per share in the period or any three consecutive financial years after the grant exceeds RPI plus an average of 2% per annum. Options granted in September 2004 can only be exercisable where the Company's earnings per share growth is at least RPI plus 4% over the three-year period from date of grant.

The options granted in September 2009 are exercisable between September 2012 and September 2019 at an exercise price of £0.085 per share. They can only be exercised when the Company's share price has reached a minimum of £0.51, maintained as an average over the three-month period preceding the Notice of Exercise, and the Company has achieved a minimum of 10% Return on Capital Employed.

The only vesting conditions on all other options are detailed below:

Date of
grant
Type of
instrument
Valuation
model
No. out-
standing
on
31 March
2012
Share
price
on date
of grant
(£)
Exercise
price
(£)
Expected
volatility
%
Vesting
period
(yrs)
Expected
life
(yrs)
Risk
free
rate
%
Expected
annual
dividend
%
Fair
value
(£)
02/07/2003 Share Options Binomial 37,000 0.640 0.650 48.21 3.00 3.00 3.50 2.50 0.20
27/09/2004 Share Options Binomial 40,000 0.760 0.730 37.45 3.00 3.00 4.72 2.50 0.22
01/10/2004 7 Year SAYE Binomial 4,595 0.760 0.700 37.15 7.00 7.00 4.84 2.50 0.31
01/10/2005 7 Year SAYE Binomial 2,042 0.710 0.700 28.81 7.00 7.00 4.33 2.50 0.21
15/03/2005 Share Options Binomial 7,000 0.830 0.830 29.24 3.00 3.00 4.85 2.50 0.13
01/10/2006 SAYE 5 Year Binomial 11,592 0.600 0.500 39.85 5.00 5.00 4.70 3.00 0.22
01/10/2006 SAYE 7 Year Binomial 2,736 0.600 0.500 39.85 7.00 7.00 4.66 3.00 0.30
01/10/2007 SAYE 5 Year Binomial 9,605 0.740 0.750 29.26 5.00 5.00 5.00 3.39 0.17
01/10/2007 SAYE 7 Year Binomial 6,091 0.740 0.750 29.26 7.00 7.00 5.06 3.39 0.20
01/10/2008 SAYE 3 Year Binomial 61,405 0.370 0.450 34.02 3.00 3.00 4.02 7.67 0.04
01/10/2008 SAYE 5 Year Binomial 45,567 0.370 0.450 34.02 5.00 5.00 4.17 7.67 0.04
01/10/2008 SAYE 7 Year Binomial 17,836 0.370 0.450 34.02 7.00 7.00 4.31 7.67 0.04
30/09/2009 Share Options Monte Carlo 5,950,000 0.280 0.085 53.54 3.00 3.00 1.94 3.32 0.09
01/10/2009 SAYE 3 Year Binomial 1,411,398 0.280 0.170 45.44 3.00 3.00 1.83 3.38 0.11
01/10/2009 SAYE 5 Year Binomial 638,457 0.280 0.170 45.44 5.00 5.00 2.58 3.38 0.12
01/10/2009 SAYE 7 Year Binomial 304,327 0.280 0.170 45.44 7.00 7.00 3.09 3.38 0.12
01/10/2010 SAYE 3 Year Black–Scholes 221,760 0.370 0.250 47.86 3.00 3.00 1.11 1.36 0.16
01/10/2010 SAYE 5 Year Black–Scholes 103,824 0.370 0.250 47.86 5.00 5.00 1.83 1.36 0.18
01/10/2010 SAYE 7 Year Black–Scholes 11,682 0.370 0.250 47.86 7.00 7.00 2.43 1.36 0.20
01/10/2011 SAYE 3 Year Black–Scholes 73,796 0.410 0.450 53.63 3.00 3.00 0.93 0.00 0.14
01/10/2011 SAYE 5 Year Black–Scholes 8,226 0.410 0.450 47.64 5.00 5.00 1.51 0.00 0.17
01/10/2011 SAYE 7 Year Black–Scholes 7,920 0.410 0.450 43.20 7.00 7.00 2.18 0.00 0.19

Expected volatility was determined by calculating the historical volatility of the Group's share price over one, two and three years back from the date of grant. The expected life used in the model has been adjusted, based on management's best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations.

The Group recognised a total charge of £0.23 million and a credit of £0.19 million in relation to equity-settled share-based payment transactions in 2012 and 2011 respectively.

As at 31 March 2012, outstanding options to subscribe for ordinary shares of 5p were as follows:

Grant date / employees entitledNumber of
instruments
Contractual
life of options
02/07/03 / Executive 37,000 July 2006 — July 2013
27/09/04 / Executive 40,000 Sept 2007 — Sept 2014
21/10/04 / SAYE 4,595 Oct 2011
15/03/05 / Executive 7,000 Mar 2008 — Mar 2015
01/10/05 / SAYE 2,042 Oct 2012
01/10/06 / SAYE 14,328 Oct 2011, 2013
01/10/07 / SAYE 15,696 Oct 2012, 2014
01/10/08 / SAYE 124,808 Oct 2011, 2013, 2015
01/10/09 / SAYE 2,354,182 Oct 2012, 2014, 2016
30/09/10 / Executive 5,950,000 Sept 2012 — Sept 2019
01/10/10 / SAYE 337,266 Oct 2013, 2015, 2017
01/10/11 / SAYE 89,942 Oct 2014, 2016, 2018

8,976,859

In accordance with IFRS 1, transitional provisions, share option arrangements granted before 7 November 2002 have not been included in the IFRS 2 charge calculated.

All options require continued employment from grant date to the later of vesting date or exercise date.

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