- Part 2: For the preceding part double click ID:nRSA6287Qa
788 748
12,976 9,720
Revenue from three of the Group's customers individually represented more than 10 per cent of Group revenue (2015: three), equating to £3,644,000, £3,267,000 and £3,003,000 (2015: equating to £4,387,000, £2,447,000 and £3,502,000).
Revenue includes £21,034,000 (2015: £19,293,000) from related parties.
2. OPERATING COSTS
The Group's largest operating cost is staff costs. Other significant costs include premises costs (rent payable on office building leases, rates, service charge), IT and telecommunications costs.
2016 2015
£000 £000
Staff costs 12,640 12,214
Premises costs 1,061 1,108
IT and communications 1,008 805
Depreciation and amortisation 198 273
Other costs 2,008 2,216
16,915 16,616
3. STAFF COSTS AND EMPLOYEES
2016 2015
£000 £000
Salaries and variable bonuses 9,523 8,731
Social security costs 1,207 1,097
Pensions 416 356
Share-based payment charge 512 437
Other staff costs 982 1,593
12,640 12,214
Staff costs include salaries, a variable bonus and the associated social security cost (principally UK Employers' National Insurance ("NIC")), the cost of contributions made to employees' pension schemes and share-based payment charges. Further details of the Group's remuneration policies, including how the total variable bonus pool is determined, are provided in the Remuneration Report. Charges in respect of share-based payments are offset against the total cash bonus pool paid to
employees.
The Group contributes to private pension schemes. The assets of the schemes are held separately from those of the Group in independently administered funds. The pension cost represents contributions payable by the Group to the funds. Contributions totalling £37,000 (2015, £35,000) were payable to the funds at the year end and are included in trade and other payables.
Employees
The average
number of
persons
(excluding
Non
-Executive
Directors
and
including
temporary
staff),
employed
during the
year was 69
(2015: 63).
2016 2015
Number Number
Listed 23 22
Equity
Private 12 12
Equity
Marketing 15 13
Group 19 16
69 63
4. SHARE
-BASED
PAYMENT
CHARGES
The total
expense
recognised
for the year
arising from
share-based
payment
transactions
was £512,000
(2015:
£437,000).
The charges
arose in
respect of
the Group's
Restricted
Share Scheme
and the
Group's
Employee
Share Option
Plan which
are
described
below.
Options are
also
outstanding
in respect
of the
Group's Long
-Term
Incentive
Plan
("LTIP")
which fully
vested on 30
September
2012.
Details of
all
outstanding
options are
provided at
the end of
this note.
Restricted
Share Scheme
("RSS")
Restricted
shares were
granted to
employees
under the
2014 and
2015 plan.
Details of
the awards
granted
along with
their
valuation
and the
inputs used
in the
valuation
are
described in
the table
below. The
valuation
was
determined
using the
Black
-Scholes
-Merton
model with
an
adjustment
to reflect
that
dividends
are received
during the
vesting
period.
Following
grant, the
shares are
held by a
nominee for
employees -
who are then
immediately
entitled to
receive
dividends.
After a
period of
three years
the
employees
will be able
to sell one
third of the
shares,
after four
years a
further
third and
after five
years the
final third.
2014 RSS 2015 RSS
Awards 1,250,000 3,140,000/
originally 1,000,000
granted
Exercise 0p 0p
price
In respect 1 Oct 2013 1 Oct 2014/
of services 9 Feb 2016
provided for
period from
Award value 49.9p 42.1p/41.5p
Weighted 52.5p 41.4p
average
share price
on grant
Expected 32% 32%/31%
volatility
Weighted 5.3yrs 4.9yrs
average
option life
Expected 3% 3%/4%
dividend
rate
Risk free 1.2% 1.2%/0.8%
interest
rate
Employee
share option
plan
("ESOP")
Under this
Plan options
over the
Group's
shares were
granted to
employees in
2011, 2012,
2013, 2014
and 2015.
The strike
price of
these
options was
set at a 10
per cent
premium to
the average
market price
of the
Company's
shares for
the 30
business
days (2015
ESOP: five
days)
following
the
announcement
of the
results for
each of the
respective
preceding
financial
years. The
2011 and
2012 ESOP
options have
vested. The
options do
not have
performance
conditions
but do have
a time
vesting
condition
such that
the options
vest subject
to continued
employment
on 31
December
2016 (2013
ESOP) and 31
December
2017 (2014
and 2015
ESOP).
The
valuation
was
determined
using the
Black
-Scholes
-Merton
model.
Options
outstanding
An analysis
of the
options over
the
Company's
shares is
provided
below:
Options 17,542,500 35.3
outstanding
at 1 October
2015
Options 1,000,000 45.4
granted
Options - -
forfeited
Options (503,000) 31.2
exercised
Options (630,000) 49.2
expired
Options 17,409,500 35.5
outstanding
at 30
September
2016
Options 10,599,500 26.1
exercisable
at 30
September
2016
For the
options
outstanding
at the end
of the
period the
exercise
prices were
49.6 pence
for the ESOP
2011, 37.6
pence for
the ESOP
2012, 47.9
pence/54.0
pence for
the ESOP
2013, 56.9
pence for
the ESOP
2014 and
45.4 pence
for the ESOP
2015 and the
weighted
average
remaining
contractual
life was
3.19 years.
Restricted
shares
outstanding
2016
Outstanding 750,000
at 1 October
2015
Granted 4,140,000
during the
year
Forefeited -
during the
year
Restrictions -
lapsed -
shares vest
unconditiona
lly to the
employee
Outstanding 4,890,000
at 30
September
2016
5.
CREDITS/(CHA
RGES)
RELATED TO
LEGACY LONG
-TERM
INCENTIVE
SCHEMES
2016 2015
£000 £000
LTIP NIC (3) 5
credit/(char
ge)
LTIP 55 10
additional
payments
credit
EBT 2004 - 1,360
taxation
Advisory (25) (90)
fees
incurred on
EBT
settlement
27 1,285
LTIP NIC CHARGE
The Group made option awards under its LTIP plan in 2011. These awards
vested in 2012 but 4,484,500 remained outstanding at 30 September 2016.
The Group pays Employer's NIC when individuals exercise their options and
accordingly accrues for the estimated amount that would be payable on
exercise using the year-end share price. The amount accrued therefore
varies from period to period in line with the Group's share price with
any adjustment recorded through the income statement.
LTIP ADDITIONAL PAYMENTS
Individuals receiving LTIP options are eligible for a retention payment
payable after the end of the financial year in which each employee
exercises his or her LTIP options. The payments are equal to the
corporation tax benefit realised by the Group on the exercise of the LTIP
options minus the amount of the Employer's NIC suffered by the Group on
the exercise of the LTIP options. Payments totalling £222,000 were made
during the year leaving £180,000 accrued at the year end.
EBT 2004 TAXATION
The EBT 2004 holds Impax shares and other assets in sub-funds for the
benefit of certain of the Group's past and current employees. The Impax
shares were awarded under the Group's Employee Incentive Arrangement
Schemes in 2011 and prior years. Taxation of these schemes has
historically been subject to uncertainty. In prior years the Group
accrued for Employer's NIC payments that would have been payable on the
value of any assets transferred out of the Trust, but did not recognise a
deferred tax asset for the corporation tax deduction that would be
available in the event the assets transferred out of the EBT were in the
form of Impax shares. During 2015 the Group reached agreement with HMRC
whereby it made a payment of £715,000 to HMRC in full settlement of
income tax, NIC and corporation tax credits considered payable/due in
respect of the awards. The EBT 2004 agreed to pay the Company £894,000
in respect of this settlement. The credit of £1,360,000 recorded in 2015
is made up of the release of the amounts previously accrued for
Employer's NIC, payment of the £715,000 and the re-imbursement of the
£894,000.
6. TAXATION
The Group is subject to taxation in the countries in which it operates (the UK, the US and Hong Kong) at the rates applicable in those countries. The total tax charge includes taxes payable for the reporting period (current tax) and also charges relating to taxes that will be payable in future years due to income or expenses being recognised in different periods for tax and accounting periods (deferred tax).
2016 2015
£000 £000
(a) Analysis of charge for the year
Current tax expense:
UK corporation tax 2,226 101
Foreign taxes 108 164
Adjustment in respect of prior years 347 536
Total current tax 2,681 801
Deferred tax expense/(credit):
Charge for the year (1,253) 984
Adjustment in respect of prior years (406) (281)
Total deferred tax (1,659) 703
Total income tax expense 1,022 1,504
(b) Factors affecting the tax charge for the year
The weighted average tax rate for the year is 20 per cent. The tax assessment for the period is lower than this rate (2015: higher).
The differences are explained below:
2016 2015
£000 £000
Profit before tax 5,199 5,137
Effective tax charge at 20% (2015: 20.5%) 1,040 1,054
Effects of:
Non-deductible expenses and charges 24 169
Adjustment in respect of prior years (59) 255
Effect of higher tax rates in foreign jurisdictions 59 48
Change in UK tax rates (42) (22)
Total income tax expense 1,022 1,504
(c) Deferred Tax
The deferred tax (liability) included in the consolidated statement of financial position is as follows:
Accelerated capital allowances Income not yet taxable Share-based payment scheme Other temporary differences Total
£000 £000 £000 £000 £000
As at 1 October 2014 49 (2,503) 510 247 (1,697)
Credit to equity - - - 39 39
Exchange differences on consolidation - 124 - - 124
Credit/(charge) to the income statement (8) (557) 74 (212) (703)
As at 30 September 2015 41 (2,936) 584 74 (2,237)
Credit/(charge) to equity - - - 38 38
Exchange differences on consolidation - (216) - - (216)
Credit/(charge) to the income statement 3 2,112 77 (533) 1,659
As at 30 September 2016 44 (1,040) 661 (421) (756)
Reductions in the UK corporation tax rate to 19 per cent (effective from 1 April 2017) and to 18 per cent (effective 1 April 2020) were substantively enacted on 26 October 2015, and an additional reduction to 17 per cent (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the Group's future tax charge accordingly. the deferred tax liability at 30 September 2016
has been calculated based on these rates.
7. EARNINGS PER SHARE
Basic earnings per share ("EPS") is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year, less the weighted average number of own shares held. Own shares are held in Employee Benefit Trusts.
Diluted EPS includes an adjustment to reflect the dilutive impact of option awards and restricted share plan awards.
Earnings for the year Shares Earnings per share
£000 £000
2016
Basic 4,043 111,794 3.62p
Diluted 4,177 114,399 3.62p
2015
Basic 3,633 115,133 3.16p
Diluted 3,633 115,909 3.13p
Earnings are reduced by £134,000 for the year ended 30 September 2016 for basic EPS to reflect the profit attributable to holders of restricted shares, which are treated as contingently returnable shares. This adjustment is not made for diluted EPS but instead the dilutive restricted shares are included in the number of shares used for the dilutive calculation. Where the resulting
- More to follow, for following part double click ID:nRSA6287Qc