REG - ARGO Group Limited - Final Results <Origin Href="QuoteRef">ARGOA.L</Origin> - Part 2
16/07/2015 13:13
- Part 2: For the preceding part double click ID:nRSd5714Ra
of intersegment receivables (1,605)
Elimination of Company's cost of investments (29,598)
Group assets 26,369
Liabilities
Total liabilities for reportable segments 2,054
Elimination of intersegment payables (1,680)
Group liabilities 374
Argo Group Ltd Argo Capital Management (Cyprus) Limited Argo Capital Management Limited Argo Capital Management Property Limited Other Year ended31 December
2013 2013 2013 2013 2013 2013
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Total revenues for reportable segments 414 5,212 2,538 3,546 - 11,710
Intersegment revenues 408 - 2,538 - - 2,946
Total profit for reportable segments 964 445 260 493 - 2,162
Intersegment profit/(loss) 408 (2,933) 2,539 - - 14
Total assets for reportable segments 49,511 2,843 2,701 4,488 - 59,543
Total liabilities for reportable segments 69 975 193 164 - 1,401
Revenues, profit or loss, assets and liabilities may be reconciled as follows: Year ended
31 December
2013
US$'000
Revenues
Total revenues for reportable segments 11,710
Elimination of intersegment revenues (2,946)
Group revenues 8,764
Profit or loss
Total profit for reportable segments 2,162
Elimination of total intersegment losses (14)
Other unallocated amounts (51)
Profit on ordinary activities before taxation 2,097
Assets
Total assets for reportable segments 59,543
Elimination of intersegment receivables (997)
Elimination of Company's cost of investments (29,599)
Group assets 28,947
Liabilities
Total liabilities for reportable segments 1,401
Elimination of intersegment payables (949)
Group liabilities 452
4. EMPLOYEE COSTS
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
Wages and salaries 2,636 3,142
Social security costs 229 281
Other 70 58
2,935 3,481
5. KEY MANAGEMENT PERSONNEL REMUNERATION
Included in employee costs are payments to the following:
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
Directors and key management personnel 1,286 1,471
The remuneration of the Directors of the Company for the year was as follows:
Year ended Year ended
Salaries Fees Benefits Cash bonus 31 December2014 31 December2013
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Executive Directors
Kyriakos Rialas 240 - - - 240 239
Andreas Rialas 238 - 4 - 242 229
Non-Executive Directors
Michael Kloter - 84 - - 84 83
David Fisher - 58 - - 58 55
Ken Watterson - 59 - - 59 55
6. OPERATING (LOSS)/PROFIT
Operating (loss)/profit is stated after charging:
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
Auditors' remuneration 122 90
Depreciation 98 89
Directors' fees 1,079 1,185
Operating lease payments 243 230
7. TAXATION
Taxation rates applicable to the parent company and the Cypriot, UK,
Luxembourg and Romanian subsidiaries range from 0% to 21.5% (2013: 0% to
23.3%).
Income Statement
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
Taxation charge for the year on Group companies 39 115
Tax on (loss)/profit on ordinary activities 39 115
The tax charge for the year can be reconciled to the (loss)/profit on ordinary
activities before taxation shown in the Consolidated Statement of
Comprehensive Income as follows:
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
(Loss)/profit before tax (1,974) 2,097
Applicable Isle of Man tax rate for Argo Group Limited of 0% - -
Timing differences 2 (1)
Non-deductible expenses 14 68
Other adjustments (50) (108)
Tax effect of different tax rates of subsidiaries operating in other jurisdictions 73 156
Tax charge 39 115
Balance Sheet
At 31 December At 31 December
2014 2013
US$'000 US$'000
Corporation tax payable 53 64
8. EARNINGS PER SHARE
The Company presents basic and diluted earnings per share (EPS) data for its
ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the period. Diluted EPS is
determined by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares
outstanding, adjusted for the effects of all dilutive potential ordinary
shares (see note 21).
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
(Loss)/profit for the year after taxation attributable to members (2,013) 1,982
No. of shares No. of shares
Weighted average number of ordinary shares for basic earnings per share 67,428,494 67,428,494
Effect of dilution (note 21) 4,090,000 4,715,000
Weighted average number of ordinary shares for diluted earnings per share 71,518,494 72,143,494
Year ended Year ended
31 December 31 December
2014 2013
US$ US$
Earnings per share (basic) -0.03 0.03
Earnings per share (diluted) -0.03 0.03
9. FIXTURES, FITTINGS AND EQUIPMENT
Fixtures, fittings & equipment
US$'000
Cost
At 1 January 2013 372
Additions 46
Disposals (20)
Foreign exchange movement 10
At 31 December 2013 408
Additions 38
Disposals (161)
Foreign exchange movement (31)
At 31 December 2014 254
Accumulated Depreciation
At 1 January 2013 151
Depreciation charge for period 89
Disposals (16)
Foreign exchange movement 7
At 31 December 2013 231
Depreciation charge for period 98
Disposals (159)
Foreign exchange movement (23)
At 31 December 2014 147
Net book value
At 31 December 2013 177
At 31 December 2014 107
10. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
31 December 31 December
2014 2014
Holding Investment in management shares Total cost Fair value
US$'000 US$'000
10 The Argo Fund Ltd - -
100 Argo Distressed Credit Fund Ltd - -
1 Argo Special Situations Fund LP - -
1 Argo Local Markets Fund - -
- -
Holding Investment in ordinary shares Total cost Fair value
US$'000 US$'000
75,165 The Argo Fund Ltd 16,343 18,165
10,899,021 Argo Real Estate Opportunities Fund Ltd 988 199
115 Argo Special Situations Fund LP 115 71
17,446 18,435
31 December 31 December
2013 2013
Holding Investment in management shares Total cost Fair value
US$'000 US$'000
10 The Argo Fund Ltd - -
100 Argo Distressed Credit Fund Ltd - -
1 Argo Special Situations Fund LP - -
1 Argo Local Markets Fund - -
- -
Holding Investment in ordinary shares Total cost Fair value
US$'000 US$'000
75,165 The Argo Fund Ltd 16,343 19,109
10,899,021 Argo Real Estate Opportunities Fund Ltd 988 225
115 Argo Special Situations Fund LP 115 86
17,446 19,420
The Argo Fund Limited holds a concentrated portfolio of Level 2 and Level 3
assets that are valued based on inputs other than quoted prices in active
markets. Inherently the assumptions backing these valuations are subject to
additional risks that can have a positive or negative impact on valuation. The
audit report in respect of The Argo Fund Limited for the year ended 30 June
2014 was modified in respect of investment valuations.
On 3 March 2014 Argo Real Estate Opportunities Fund Limited ("AREOF") delisted
from AIM as a result of default notices on its loans creating uncertainty. At
the year end it is carried at a discount of the last quoted bid price on AIM
from August 2013. This investment is classified as level 3 under IFRS fair
value hierarchy reflecting the non-market observable inputs to their
valuation. The audit report in respect of AREOF for the year ended 30
September 2014 was modified in respect of going concern and qualified in
respect of investment property valuations.
The investments held by the Group have been made in support of the Group's
funds under management and in support of their liquidity profiles and as such
they may not be realisable in the immediate future. The valuations are subject
to uncertain events, for example, liquidity events or debt refinancing that
may not be wholly within the Group's control.
11. TRADE AND OTHER RECEIVABLES
At 31 December At 31 December
2014 2013
US$ '000 US$ '000
Trade receivables 2,359 2,705
Other receivables 65 60
Prepayments and accrued income 93 535
2,517 3,300
The directors consider that the carrying amount of trade and other receivables
approximates their fair value. All trade receivable balances are recoverable
within one year from the balance sheet date.
The Group has provided Argo Real Estate Opportunities Fund Limited ("AREOF")
with a notice of deferral in relation to the amounts due from the provision of
investment management services, under which it will not demand payment of such
amounts until the Group judges that AREOF is in a position to pay the
outstanding liability. These amounts accrued or receivable at 31 December 2014
total US$Nil (2013: US$1,265,791, E919,505) after a bad debt provision of
US$5,554,234 (E4,569,505) (2013: US$2,753,200, E2,000,000). AREOF continues to
meet part of this obligation to the Argo Group as and when liquidity allows.
In November 2013 AREOF offered Argo Group Limited additional security for the
continued support in the form of debentures and guarantees by underlying
intermediate companies. In the Directors' view these amounts are fully
recoverable although they have concluded that it would not be appropriate to
continue to recognise income from these investment management services going
forward, as the timing of such receipts may be outside the control of the
Company and AREOF.
At the year end The Argo Fund Limited, Argo Special Situations Fund LP, Argo
Distressed Credit Fund Limited and Argo Local Markets Fund Limited owed the
Group total management fees of US$2,361,599 (2013: US$1,861,967) after a bad
debt provision of US$1,300,000 (2013: US$650,000). These Funds have a
substantial asset base with few liabilities. They are currently facing
liquidity issues which management continue to work to remedy and whilst a bad
debt provision has been raised against these management fees the Directors are
confident that they may be recovered in the future.
In the audited financial statements of AREOF at 30 September 2014 a material
uncertainty surrounding the refinancing of bank debts was referred to in
relation to the basis of preparation of the financial statements. In the view
of the directors of AREOF, discussions with the banks are continuing
satisfactorily and they have therefore concluded that it is appropriate to
prepare those financial statements on a going concern basis.
12. CASH AND CASH EQUIVALENTS
Included in cash and cash equivalents is a balance of US$79,000 (2013:
US$83,000) which represents a bank guarantee in respect of credit cards issued
to Argo Capital Management Property Limited. Due to the nature of this balance
it is not freely available.
13. LOANS AND ADVANCES RECEIVABLE
At 31 December At 31 December
2014 2013
US$'000 US$'000
Deposits on leased premises - current 6 34
Deposits on leased premises - non-current 96 88
Other loans and advances receivable - current 126 183
Other loans and advances receivable - non-current (see below) 2,261 2,019
2,489 2,324
The non-current other loans and advances receivable comprise:
At 31 December At 31 December
2014 2013
US$'000 US$'000
Loan to Bel Rom Trei (see note (a) below) 1,456 1,484
Loan to AREOF (see note (b) below) 552 535
Loan to The Argo Fund Limited (see note (c) below) 150 -
Loans to other AREOF Group entities (see note (d) below) 102 -
Other loans 1 -
2,261 2,019
The deposits on leased premises are retained by the lessor until vacation of
the premises at the end of the lease term as follows:
At 31 December At 31 December
2014 2013
US$'000 US$'000
Current:
Lease expiring within one year 6 34
At 31 December At 31 December
2014 2013
US$'000 US$'000
Non-current:
Lease expiring in third year after balance sheet date 96 -
Lease expiring in fourth year after balance sheet date - 88
96 88
(a) During the prior year Argo Group advanced US$1,215,500 (E1,000,000) to
Bel Rom Trei ("Bel Rom"), an AREOF Group entity based in Romania that owns
Sibiu Shopping City, in order to assist with its operational cash
requirements. Challenging trading conditions have impacted Bel Rom's cash flow
and its ability to meet payments due to lending banks as and when they fall
due. The situation is being remedied by way of discussions with the lending
banks with a view to restructuring these loans. While these discussions are
on-going to find an agreeable solution for both parties, Bel Rom continues to
enjoy the support of its banks. The loan is repayable on demand and accrues
interest at 12%. The full amount of the loan and accrued interest amounting to
USD1,456,069 (E1,197,918) remains outstanding at the year end. The Directors
consider this loan to be fully recoverable on the basis that conditional
offers to buy the centre have been received that indicate a value in excess of
the debt attached to the project. Notwithstanding its repayable on demand
terms, the Directors have classified this amount as non-current within the
financial statements as it is not their intention to demand repayment in the
immediate future and it is unlikely that Bel Rom will repay the amount in the
next 12 months even if it were demanded. Refer to notes 10 and 11 for further
information regarding the financial position of AREOF.
(b) On 21 November 2013 the Argo Group provided a loan of US$472,781
(E388,960) to AREOF to enable the company to service interest payments under a
bank loan agreement. The loan is repayable on demand and accrues interest at
10%. The full amount of the loan and accrued interest amounting to USD525,369
(E432,225) remains outstanding at the year end.
The Argo Group provided further loans of US$26,543 (E21,837) to AREOF to
assist with its operational cash requirements. These loans are repayable on
demand and accrue interest at 7%. The full amount of these loans remain
outstanding at the year end.
(c) On 5 December 2014 the Argo Group provided a loan of USD150,000 to The
Argo Fund Limited to assist with its operational cash requirements. The loan
is repayable on demand and accrues interest at 5%. The full amount of this
loan remains outstanding at the year end.
(d) During the year the Argo Group provided total loans of USD101,856
(E83,798) to various AREOF Group entities to assist those entities with their
operational cash requirements. The loans are repayable on demand and accrue
interest at 7%. The full amount of these loans remains outstanding at the year
end.
14. SHARE CAPITAL
The Company's authorised share capital is unlimited ordinary shares with a
nominal value of US$0.01.
31 December 31 December 31 December 31 December
2014 2014 2013 2013
No. US$'000 No. US$'000
Issued and fully paid
Ordinary shares of US$0.01 each 67,428,494 674 67,428,494 674
67,428,494 674 67,428,494 674
The directors do not recommend the payment of a final dividend for the year
ended 31 December 2014 (31 December 2013: Nil). The final dividend of 2.1
cents (1.3 pence) for the year ended 31 December 2012 totalling US$1,348,288
(GBP876,570) was paid on 26 April 2013 to ordinary shareholders who were on
the Register of Members on 2 April 2013. Going forward, the Company intends,
subject to its financial performance, to pay a final dividend each year.
15. TRADE AND OTHER PAYABLES
At 31 December At 31 December
2014 2013
US$ '000 US$ '000
Trade and other payables 91 63
Other creditors and accruals 230 325
321 388
Trade and other payables are normally settled on 30-day terms.
16. OBLIGATIONS UNDER OPERATING LEASES
Operating lease payments represent rentals payable by the Group for certain of
its business premises. The leases have no escalation clauses or renewal or
purchase options and no restrictions imposed on them.
As at the balance sheet date, the Group had outstanding future minimum lease
payments under non-cancellable operating leases, which fall due as follows:
At 31 December At 31 December
2014 2013
US$ '000 US$ '000
Operating lease liabilities:
Within one year 234 179
In the second to fifth years inclusive 565 370
Present value of minimum lease payments 799 549
17. RECONCILIATION OF NET CASH OUTLOW FROM OPERATING ACTIVITIES TO
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
Year ended Year ended
31 December 31 December
2014 2013
US$ '000 US$ '000
(Loss)/profit on ordinary activities before taxation (1,974) 2,097
Interest income (218) (115)
Depreciation 98 89
Loss on disposal of fixed assets 2 4
Decrease in payables (67) (79)
Decrease/(increase) in receivables 618 (1,080)
Decrease/(increase) in fair value of current asset Investments 985 (942)
Net foreign exchange (gain)/loss (24) 41
Income taxes paid (50) (252)
Net cash outflow from operating activities (630) (237)
18. RELATED PARTY TRANSACTIONS
All Group revenues derive from funds or entities in which two of the Company's
directors, Andreas Rialas and Kyriakos Rialas, have an influence through
directorships and the provision of investment advisory services.
At the balance sheet date the Company holds investments in The Argo Fund
Limited, Argo Real Estate Opportunities Fund Limited ("AREOF") and Argo
Special Situations Fund LP. These investments are reflected in the accounts at
a fair value of US$18,164,902, US$198,716 and US$71,000 respectively.
The Group has provided AREOF with a notice of deferral in relation to the
amounts due from the provision of investment management services, under which
it will not demand payment of such amounts until the Group judges that AREOF
is in a position to pay the outstanding liability. These amounts accrued or
receivable at 31 December 2014 total US$Nil (2013: US$1,265,791, E919,505)
after a bad debt provision of US$5,554,234 (E4,569,505) (2013: US$2,753,200,
E2,000,000). AREOF continues to meet part of this obligation to the Argo Group
as and when liquidity allows. In November 2013 AREOF offered Argo Group
Limited additional security for the continued support in the form of
debentures and guarantees by underlying intermediate companies. The AREOF
management contract has a fixed term expiring on 31 July 2018.
At the year end Argo Group was owed US$1,456,069 (E1,197,918) including
interest of US$240,570 (E197,918) by Bel Rom Trei Srl, an AREOF Group entity
based in Romania that owns Sibiu Shopping City. The loan is repayable on
demand and accrues interest at 12%.
At the year end Argo Group was owed a total balance of US$551,912 (E454,062)
including interest of US$52,589 (E43,265) by AREOF. This balance comprises
various loans that are all repayable on demand and accrue interest at 7% and
10%. Of this balance US$525,369 (E432,225) is secured by debentures and
guarantees from underlying intermediate companies in the AREOF Group. At the
year end the Argo Group was owed a further USD101,856 (E83,798) by various
other AREOF Group entities. This balance comprises loans that are all
repayable on demand and accrue interest at 7%.
At the year end the Argo Group was owed USD150,000 by The Argo Fund Limited.
The loan is repayable on demand and accrues interest at 5%.
In the audited financial statements of AREOF at 30 September 2014 a material
uncertainty surrounding the refinancing of bank debts was referred to in
relation to the basis of preparation of the financial statements. In the view
of the directors of AREOF, discussions with the banks are continuing
satisfactorily and they have therefore concluded that it is appropriate to
prepare those financial statements on a going concern basis.
David Fisher, a non-executive director of the Company, is also a non-executive
director of AREOF.
19. FINANCIAL INSTRUMENTS RISK MANAGEMENT
(a) Use of financial instruments
The wider Group has maintained sufficient cash reserves not to use alternative
financial instruments to finance the Group's operations. The Group has various
financial assets and liabilities such as trade and other receivables, loans
and advances, cash, short-term deposits, and trade and other payables which
arise directly from its operations.
The Group's non-subsidiary investments in funds were entered into with the
purpose of providing seed capital, supporting liquidity and demonstrating the
commitment of the Group towards its fund investors.
(b) Market risk
Market risk is the risk that a decline in the value of assets adversely
impacts on the profitability of the Group, either as a result of an asset not
meeting its expected value or through the decline of assets under management
generating lower fees. The principal exposures of the Group are in respect of
its seed investments in its own funds (refer to note 10). Lower management fee
and incentive fee revenues could result from a reduction in asset values.
(c) Capital risk management
The primary objective of the Group's capital management is to ensure that the
Company has sufficient cash and cash equivalents on hand to finance its
ongoing operations. This is achieved by ensuring that trade receivables are
collected on a timely basis and that excess liquidity is invested in an
optimum manner by placing fixed short-term deposits or using interest bearing
bank accounts.
At the year-end cash balances were held at Royal Bank of Scotland, Bank of
Cyprus and Bancpost.
(d) Credit/counterparty risk
The Group will be exposed to counterparty risk on parties with whom it trades
and will bear the risk of settlement default. Credit risk is concentrated in
the funds under management as detailed in notes 10, 11 and 13. As explained
within these notes the Group is experiencing collection delays with regard to
management fees receivable and monies advanced. Additionally investments in
funds under management (note 10) are illiquid and may be subject to events
materially impacting recoverable value.
The Group's principal financial assets are bank and cash balances, trade and
other receivables and investments held at fair value through profit or loss.
These represent the Company's maximum exposure to credit risk in relation to
financial assets and are represented by the carrying amount of each financial
asset in the balance sheet.
At the reporting date, the financial assets past due but not impaired amounted
to USD4,465,756 (2013:USD4,522,121 ).
e) Liquidity risk
Liquidity risk is the risk that the Group may be unable to meet its payment
obligations. This would be the risk of insufficient cash resources and liquid
assets, including bank facilities, being available to meet liabilities as they
fall due.
The main liquidity risks of the Group are associated with the need to satisfy
payments to creditors. Trade payables are normally on 30-day terms (note 15).
As disclosed in note 2(a), Accounting Convention: Going Concern, the Group has
performed an assessment of available liquidity to meet liabilities as they
fall due during the forecast period. The Group has concluded that it has
sufficient resources available to manage its liquidity risk during the
forecast period.
(f) Foreign exchange risk
Foreign exchange risk is the risk that the Group will sustain losses through
adverse movements in currency exchange rates.
The Group is subject to short-term foreign exchange movements between the
calculation date of fees in currencies other than US dollars and the date of
settlement. The Group holds cash balances in US Dollars, Sterling, Romanian
Lei and Euros.
If there was a 5% increase or decrease in the exchange rate between the US
dollar and the other operating currencies used by the Group at 31 December
2014 the exposure would be a profit or loss to the Consolidated Statement of
Comprehensive Income of approximately US$40,000 (2013: US$45,000).
(g) Interest rate risk
The interest rate profile of the Group at 31 December 2014 is as follows:
Total as per balance sheet Variable interest rate instruments* Fixed interest rate instruments Instruments on which no interest is receivable
US$ '000 US$ '000 US$ '000 US$ '000
Financial Assets
Financial assets at fair value through profit or loss 18,435 - - 18,435
Loans and receivables 5,006 83 1,456 3,467
Cash and cash equivalents 2,821 160 2,011 650
26,262 243 3,467 22,552
Financial liabilities
Trade and other payables 321 - - 321
* Changes in the interest rate may cause movements.
The average interest rate at the year end was 0.02%. Any movement in interest
rates would have an immaterial effect on the profit/(loss) for the period.
The interest rate profile of the Group at 31 December 2013 is as follows:
Total as per balance sheet Variable interest rate instruments* Fixed interest rate instruments Instruments on which no interest is receivable
US$ '000 US$ '000 US$ '000 US$ '000
Financial Assets
Financial assets at fair value through profit or loss 19,420 - - 19,420
Loans and receivables 5,624 88 2,019 3,517
Cash and cash equivalents 3,726 107 1,489 2,130
28,770 195 3,508 25,067
Financial liabilities
Trade and other payables 388 - - 388
* Changes in the interest rate may cause movements.
The average interest rate at the year end was 0.02%. Any movement in interest
rates would have an immaterial effect on the profit/(loss) for the period.
(h) Fair value
The carrying values of the financial assets and liabilities approximate the
fair value of the financial assets and liabilities and can be summarised as
follows:
At 31 December At 31 December
2014 2013
US$ '000 US$ '000
Financial Assets
Financial assets at fair value through profit or loss 18,435 19,420
Loans and receivables 5,006 5,624
Cash and cash equivalents 2,821 3,726
26,262 28,770
Financial Liabilities
Trade and other payables 321 388
Financial assets and liabilities, other than investments, are either repayable
on demand or have short repayment dates. The fair value of investments is
stated at the redemption prices quoted by fund administrators and are based on
the fair value of the underlying net assets of the funds because, although the
funds are quoted, there is no active market for any of the investments held.
Fair value hierarchy
The table below analyses financial instruments measured at fair value at the
end of the reporting period by the level of the fair value hierarchy (note
2p).
At 31 December 2014
Level 1 Level 2 Level 3 Total
US$ '000 US$ '000 US$ '000 US$ '000
Financial assets at fair value through profit or loss - - 18,435 18,435
At 31 December 2013
Level 1 Level 2 Level 3 Total
US$ '000 US$ '000 US$ '000 US$ '000
Financial assets at fair value through profit or loss - 19,195 225 19,420
20. EVENTS AFTER THE BALANCE SHEET DATE
The directors consider that there has been no event since the year end that
has a significant effect on the Group's position.
21. SHARE-BASED INCENTIVE PLANS
On 14 March 2011 the Group granted options over 5,900,000 shares to directors
and employees under The Argo Group Limited Employee Stock Option Plan. All
options are exercisable in four equal tranches over a period of four years at
an exercise price of 24p per share.
The fair value of the options granted was measured at the grant date using a
Black-Scholes model that takes into account the effect of certain financial
assumptions, including the option exercise price, current share price and
volatility, dividend yield and the risk-free interest rate. The fair value of
the options granted is spread over the vesting period of the scheme and the
value is adjusted to reflect the actual number of shares that are expected to
vest.
The principal assumptions for valuing the options were:
Exercise price (pence) 24.0
Weighted average share price at grant date (pence) 12.0
Weighted average option life (years) 10.0
Expected volatility (% p.a.) 2.11
Dividend yield (% p.a.) 10.0
Risk-free interest rate (% p.a.) 5.0
The fair value of options granted is recognised as an employee expense with a
corresponding increase in equity. The total charge to employee costs in
respect of this incentive plan is nil due to the differential in exercise
price and share price.
The number and weighted average exercise price of the share options during the
period is as follows:
Weighted average exercise price No. of share options
Outstanding at beginning of period 24.0p 4,715,000
Granted during the period - -
Forfeited during the period 24.0p (625,000)
Outstanding at end of period 24.0p 4,090,000
Exercisable at end of period 24.0p 3,067,500
The options outstanding at 31 December 2014 have an exercise price of 24p and
a weighted average contractual life of 10 years, with the third tranche of
shares being exercisable on or after 1 May 2014. Outstanding share options are
contingent upon the option holder remaining an employee of the Group. They
expire after 10 years.
No share options were issued during the period.
This information is provided by RNS
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