The fair values of the above equity instruments have been determined using the following criteria:
Share Options and SAYE
Options
Share Options |
SAYE |
|
| Share price on grant |
111 – 171p |
147p |
| Expected volatility |
26.8% - 27.5% |
26.3% - 28.5% |
| Expected life | 5 years |
3 or 5 years |
| Expected dividend yield |
1.45% |
1.45% |
| Risk-free interest rate |
4.1% - 4.5% |
4.1% - 4.5% |
| Fair value at measurement date |
33.01p – 46.26p |
43.51p - 54.83p |
| Weighted fair value |
39.18p |
50.13p |
 |
|
|
The volatility has been based on the
annualised average of the standard
deviations of the daily historical
continuously compounded returns of the
Group’s share price over the most
appropriate period from the date of grant.
The risk-free rate of interest was assumed
to be the yield to maturity on a UK Gilt
strip with the term to maturity equal to the
expected life of the option.
The expected dividend yield is an estimate
of the dividend yield at the date of grant for
the duration of the option’s life.
LTIP
For LTIP awards with a total shareholder
return (“TSR”) performance condition, the
fair value has been calculated as the market
value of the shares on the date of grant
adjusted to reflect some of the terms and
conditions upon which the shares were
awarded. The Group took into account the
market based TSR condition and the fact
that a participant is not entitled to receive
dividends over the three year performance
period.
For LTIP awards with an earnings per share
performance condition, the fair value has
been calculated as the market value of the shares on the date of grant adjusted to reflect the fact that a participant is not entitled to receive dividends over the three year performance period.
LTIP awards |
|
| Fair value at measurement date |
52.22p - 284.64p |
| Weighted fair value | 146.69p |
| Holding period | 3 years |
| Expected dividend yield |
0.88% - 1.45% |
|
|
PSP
For the purposes of calculating the fair
value of conditional shares awarded under
the PSP the fair value was calculated as the
market value of the shares at the date of
grant adjusted to reflect the fact that a
participant is not entitled to receive
dividends over the performance period.
PSP awards |
|
| Fair value at measurement date |
52.22p - 284.64p |
| Weighted fair value | 186.37p |
| Holding period | 3 years |
| Expected dividend yield |
0.88% - 1.45% |
SIP
For the purposes of calculating the fair
value of conditional shares awarded under
the SIP, the fair value was calculated as the
market value of the shares at the date of
grant. Participants are entitled to receive
dividends over the three year holding
period therefore no adjustment was made
to the market value.
SIP awards |
|
| Fair value at measurement date |
52.22p - 284.64p |
| Weighted fair value | 224.64p |
| Holding period | 3 years |
During the year ended 31 December 2007, the Group recognised expense of £2,142,000 related to the fair value of the share based payment arrangements (year ended 31 December 2006: £1,659,000).
In determining the charge to the income statement, the Group made the following assumptions with regard to annual lapse rates as at the date of grant:
| Share scheme | Annual lapse rate |
| ESOS | 13.00% |
| SAYE | 5.00% |
| LTIP | 0.00% |
| PSP | 5.00% |
| SIP | 10.00% |
In addition, the Group estimated that all non-market based performance conditions would be satisfied in full.
34. Events after the balance
sheet date
On 6 February 2008, RPS Groep BV
completed the acquisition of 100% of the
share capital of Kraan Consulting Holding
BV for a maximum total consideration of
€6,475,000 (£4,798,000) payable in cash.
Consideration paid at completion was
€4,025,000 (£2,983,000). Subject to certain
operational requirements being met, a
further €1,200,000 (£889,000) will be
paid on 1 March 2009 and €1,250,000
(£926,000) will be paid on 1 March 2010.
It is not practical to include further
information in respect of this acquisition
at this time.
35. Contingent liabilities
As at 31 December 2007 the Group had
contingent liabilities in respect of contractual
performance guarantees and other matters
arising in the ordinary course of business
entered into, for or on behalf of certain
Group undertakings. It is not expected that
any material liability will arise in respect
thereof, and the Directors estimate that the
fair value of such guarantees is not material.