2011
CSOP JSOP SAYE
Black Black Black
Option pricing model used Scholes Scholes Scholes
Weighted average share price at grant date (£) 2.50 2.50 2.50
Exercise price (£) 2.50 3.20 2.57
Expected life of options (years) 3 years 3 years 3 years
Expected volatility 80% 80% 80%
Expected dividend growth rate 3.90% 3.90% 3.90%
Risk free interest rate 3.50% 3.50% 3.50%
The total cost recognised for equity settled transactions is as follows:
2012 2011
£’000 £’000
Share-based payment charged during the year 647 787
A charge of £81,000 (2011: £273,000) relates to employees of the Company.
The volatility assumption, measured at the standard deviation of expected share price returns, is based on statistical analysis of historical share price.
The dividend yield assumption is based on the fact that the shares awarded are not eligible to receive dividends until the end of the vesting period.
Cash-settled
As stated in note 21, in 2007 the Group issued shares in a subsidiary undertaking to certain employees of that subsidiary. The shares transferred are
subject to restrictions on transferability if the concerned employees are not in continuous employment in the Group. The Group had a ‘call option’
on these shares and the exercise price for the call option is based on future profitability of the subsidiary. The Group has accounted for this share
transfer as a cash-settled share-based payment due to the nature of the transaction. In 2010, the Group acquired the shares in the subsidiary for
a total consideration of £328,000 of which £143,000 was paid in 2010. The remaining £185,000 was outstanding at 31st December 2012 (2011:
£185,000) and is payable in March 2013.
13. taxation
a. tax on profit on ordinary activities
The major components of income tax charge in the Group income statements are:
2012 2011
Financial Statements
£’000 £’000
UK corporation tax – current year 2,997 5,383
– adjustment in respect of prior years (1,407) 160
1,590 5,543
Deferred tax:
Origination and reversal of temporary differences (1,718) (764)
Adjustment in respect of prior year (156) (422)
Total deferred tax credit (1,874) (1,186)
Total tax (benefit)/charge in the income statement (284) 4,357
Income tax charged directly to equity is £2,456,000 (2011: £nil) and relates to the revaluation of financial assets (note 16).
In March 2012, the UK government announced proposals to reduce the main rate of corporation tax to 22% from 1st April 2014. As of 31st December
2012 reductions to the main rate of corporation tax to 23% had been enacted. Accordingly this is the rate at which deferred tax has been provided.
If the subsequent reductions in the tax rate to 22% had been substantively enacted at 31st December 2012 the deferred tax liability would have
reduced by £239,000.
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