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 £1.43 million (2012: £1.31m) 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 (2012: £0.09m), 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:

20132012
OptionsWeighted Average Exercise PriceOptionsWeighted Average Exercise
Price
Outstanding at beginning of year8,976,8590.138,948,7510.13
Granted during the year525,7540.3589,9420.45
Forfeited/lapsed during the year(185,621)0.35(61,834)0.71
Exercised during the year(1,363,202)0.17
Outstanding at the end of the year7,953,7900.138,976,8590.13
Exercisable at the end of the year6,047,7820.09161,5920.37

The options outstanding at 31 March 2013 had a weighted average remaining contractual life of 5.2 years (2012: 5.5 years) and exercise prices ranging from £0.085 to £0.825 (2012: £0.085 to £0.825).

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% ROCE.

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
2013
Share price
on date
of
grant
(£)
Exercise price
(£)
Expected
volatility
%
Vesting
period
(yrs)
Expected
life
(yrs)
Risk-
free
rate
%
Expected
annual
dividend
%
Fair
value
(£)
02/07/2003Share OptionsBinomial37,0000.6400.65048.213.003.003.502.500.20
27/09/2004Share OptionsBinomial40,0000.7600.73037.453.003.004.722.500.22
01/10/20057 year SAYEBinomial2,0420.7100.70028.817.007.004.332.500.21
15/03/2005Share OptionsBinomial7,0000.8300.83029.243.003.004.852.500.13
01/10/2006SAYE 7 yearBinomial2,7360.6000.50039.857.007.004.663.000.30
01/10/2007SAYE 5 yearBinomial9,6050.7400.75029.265.005.005.003.390.17
01/10/2007SAYE 7 yearBinomial6,0910.7400.75029.267.007.005.063.390.20
01/10/2008SAYE 5 YearBinomial36,8880.3700.45034.025.005.004.177.670.04
01/10/2008SAYE 7 YearBinomial17,8360.3700.45034.027.007.004.317.670.04
30/09/2009Share OptionsMonte Carlo5,950,0000.2800.08553.543.003.001.943.320.09
01/10/2009SAYE 3 YearBinomial2,1350.2800.17045.443.003.001.833.380.11
01/10/2009SAYE 5 YearBinomial631,1410.2800.17045.445.005.002.583.380.12
01/10/2009SAYE 7 YearBinomial304,3270.2800.17045.447.007.003.093.380.12
01/10/2010SAYE 3 YearBlack Scholes210,9600.3700.25047.863.003.001.111.360.16
01/10/2010SAYE 5 YearBlack Scholes103,8240.3700.25047.865.005.001.831.360.18
01/10/2010SAYE 7 YearBlack Scholes11,6820.3700.25047.867.007.002.431.360.20
01/10/2011SAYE 3 YearBlack Scholes61,7640.4100.45053.633.003.000.930.000.14
01/10/2011SAYE 5 YearBlack Scholes8,2260.4100.45047.645.005.001.510.000.17
01/10/2011SAYE 7 YearBlack Scholes7,9200.4100.45043.207.007.002.180.000.19
01/10/2012SAYE 3 YearBlack Scholes418,0920.4600.35053.633.003.000.791.090.18
01/10/2012SAYE 5 YearBlack Scholes64,2810.4600.35047.645.005.001.371.090.21
01/10/2012SAYE 7 YearBlack Scholes20,2400.4600.35043.207.007.001.931.090.24

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 total charges of £0.09 million and £0.23 million in relation to equity-settled share-based payment transactions in 2013 and 2012 respectively.

As at 31 March 2013, 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 / Executive37,000Jul 2006 – Jul 2013
27/09/04 / Executive40,000Sep 2007 – Sep 2014
15/03/05 / Executive7,000Mar 2008 – Mar 2015
01/10/05 / SAYE2,042Oct 2012
01/10/06 / SAYE2,736Oct 2013
01/10/07 / SAYE15,696Oct 2012, 2014
01/10/08 / SAYE54,724Oct 2013, 2015
01/10/09 / SAYE937,603Oct 2012, 2014, 2016
30/09/10 / Executive5,950,000Sep 2012 – Sep 2019
01/10/10 / SAYE326,466Oct 2013, 2015, 2017
01/10/11 / SAYE77,910Oct 2014, 2016, 2018
01/10/12 / SAYE502,613Oct 2015, 2017, 2019
7,953,790

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.