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CARPHONE WAREHOUSE GROUP PLC ANNUAL REPORT 201366
NOTES TO THE FINANCIAL STATEMENTS continued
5 EMPLOYEE COSTS AND SHAREBASED PAYMENTS continued
The following table summarises the number and weighted average exercise price (“WAEP”) of share options for the schemes:
2013 2012
Number WAEP Number WAEP
million £million £
Outstanding at the beginning of the year — — 6.1 0.70
Exercised during the year — — (6.1) 0.70
Outstanding at the end of the year — — — —
Exercisable at the end of the year — — — —
No options were exercised during the year. The options exercised in the year ended 31 March 2012 were exercised at a weighted
average market price of £3.29.
c) JOINT VENTURE INCENTIVE SCHEMES
Best Buy Europe has a share option scheme, under which participants receive options over A shares in New BBED and each of Best Buy
and theCompany has an obligation to acquire 50% of these shares at a value based on the Headline PBT of CPW Europe over the vesting
period. The pool is based onearnings in excess of minimum growth targets, against the earnings for the year ended 31 March 2009.
TheCompany and Best Buy agreed a minimum value of the pool, in recognition of the value that had already accrued in the scheme
inrelation to Best Buy Mobile.
In order to align the interests of participants with those of the Company, the value of the A shares in New BBED areassessed at defined
points during the vesting period, and nil-priced options over shares in the Company are granted to participants through the Participation
Plan to match this value, so that participants benefit from any growth in the market capitalisation of the Company during the vesting period.
The following table summarises the number and WAEP of share options for this scheme:
2013 2012
Number WAEP Number WAEP
million £million £
Outstanding at the beginning of the year — — — —
Granted during the year 6.9 —— —
Lapsed during the year (1.5) —— —
Outstanding at the end of the year 5.4 —— —
Exercisable at the end of the year — — — —
Virgin Mobile France has issued market-priced and nil-priced share options in Omer Telecom Limited, the parent company of Virgin
Mobile France, to certain employees of the business. These options vest over periods of two to four years.
d) FAIR VALUE MODEL
The fair value of options with external performance targets was estimated at the date of grant using a Monte Carlo model. The model
combines the market price of a share at the date of grant with the probability of meeting performance criteria, based on the historical
performance of Old Carphone Warehouse shares.
The Best Buy Europe share option scheme described above was valued based on market perception of the likely future earnings
ofCPWEurope with appropriate discounts made for lack of marketability, lack of control and the volatility of the Company’s share price.
e) CHARGE TO INCOME STATEMENT AND ENTRIES IN RESERVES
During the year ended 31 March 2013, the Group recognised a non-cash accounting charge to the income statement of £0.1m
(2012:£14.9m) in respect of equity settled share-based payments, which is offset by an entry through reserves. As detailed in note 4,
the charge in the year ended 31 March 2012 relates principally to a gift of shares to Best Buy Europe executives (£11.4m) and the
accelerated vesting of other incentive schemes (£2.0m).
f) SHARE GIFT
During the year 0.2m shares were gifted to senior management of the Group. Loans of £0.1m were advanced to cover the tax arising
onthis gift. These loans attract interest at market rates.
g) EMPLOYEE SHARE OWNERSHIP TRUST
The Group has an ESOT, which held 0.04m shares in the Company at 31 March 2013 (2012: 0.2m) for the benefit of the employees of the
Group. The maximum number of shares held by the Group’s ESOT during the year was 0.2m, from April to August 2012 (2012: 10.3m,
inNovember 2011), which represented 0.04% (2012: 2.3%) of the Group’s issued share capital. The ESOT has waived its rights to receive
dividends and its shares have not been allocated to specific schemes. At 31 March 2013 the shares had a market value of £0.1m (2012: £0.3m).