58
AVESCO GROUP PLC ANNUAL REPORT 2011
www.avesco.com
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED 30 SEPTEMBER 2011
27. Share capital 2011 Group and company
Allotted, called up and fully paid Ordinary shares of 10p each
number 2010 number 25,985,899 25,985,899 2011 £000s 2,599 2010 £000s 2,599
Following the adoption of new Articles of Association by the Company at the Annual General Meeting in March 2010, the Company has taken advantage of the abolition of the requirement for companies to have an authorised share capital.
28. Share based payment Long Term Incentive Plan (“LTIP”) The Company operates a long term incentive plan (“LTIP”), established in 2007.
In any 10 year period no more than 15 percent of Avesco's issued share capital from time to time may be issued or put under option to be issued for the purposes of the LTIP scheme. No awards may be made under the scheme more than 10 years after its adoption.
Under the LTIP, which is operated in conjunction with an employee trust, awards are made to employees under which they can receive Avesco shares at no cost to themselves based on the achievement of a pre-determined and stretching performance condition. No individual may receive awards in any financial year with an aggregate value at the time of grant in excess of 100 per cent of the employee's annual basic salary although this limit may increase to 200 per cent of the employee's basic annual salary if the remuneration committee decides that exceptional circumstances exist.
Awards of 1,250,000 rights to shares were made in the year ending 30 September 2010. The performance condition applicable to these awards is based on the Group achieving a cumulative consolidated trading EBITDA target over the period of three years ending 30 September 2012. The remuneration committee has discretion to adjust the trading EBITDA for exceptional and/or non-recurring events. Subject to the rules of the LTIP and the fulfilment of the performance condition, 50 per cent of the shares will be released on the date of the preliminary announcement of the results of the Company for the year ending 30 September 2012 and, subject to continuing service of the award holder, 50 per cent of the shares will be released on the first anniversary of that announcement date or, if later, the date of the announcement by the Company of its results for the year ending 30 September 2013.
Further awards of 1,200,000 rights to shares were made in the year ending 30 September 2011. The performance condition applicable to these awards is based on the Group achieving a cumulative consolidated trading EBITDA target over the period of three years ending 30 September 2013. The remuneration committee has discretion to adjust the trading EBITDA for exceptional and/or non-recurring events. Subject to the rules of the LTIP and the fulfilment of the performance condition, 50 per cent of the shares will be released on the date of the preliminary announcement of the results of the Company for the year ending 30 September 2013 and, subject to continuing service of the award holder, 50 per cent of the shares will be released on the first anniversary of that announcement date or, if later, the date of the announcement by the Company of its results for the year ending 30 September 2014.
For shares granted to employees under the LTIP, the fair value of the shares is measured at the market price of the entity’s shares, adjusted to take into account the terms and conditions upon which the shares were granted. As the performance conditions attached to the shares are not market performance related, the best estimate of fair value is considered to be market value at date of grant. No changes are subsequently made for changes in the share price after the grant date. The charge is spread over the term to vesting date.
The table below presents the awards outstanding with an analysis of the movements in the number of awards during the year and the charge to the income statement.
Fair value
Date of grant 24/02/2010
18/01/2011 Share option scheme
In the year ended 30 September 2011, the Company settled share options issued under an executive share option scheme in 2004. These options were exercisable between 24 February 2007 and 24 February 2011. The right to exercise these options was subject to a performance condition which was satisfied and the options were exercised on 20 January 2011. The share price at the time was 115.5p. The options were settled by the issue of 348,151 shares out of the shares held in treasury.
At 30 September 2011, there were no further options outstanding (2010: 1,142,141) under the 1997 unapproved executive share option scheme.
Number of instruments granted
1,250,000 1,200,000
Share per granted price instrument
at date of grant
47.5p 119.5p
47.5p 119.5p
Granted instruments
at date outstanding of grant at 1/10/2010
1,250,000 -
Forfeitures - 6,000 Granted instruments
during outstanding the year at 30/09/2011
1,250,000 1,194,000
Charge to
the income statement for the year ended
30/09/2011 30/09/2010 £’000
125 288
£’000 170
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