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Dixons Carphone plc Annual Report and Accounts 2014/15
Financial statements
Notes to the Group financial statements
104
5 Employee costs and share-based payments continued
b) Share-based payments continued
iv) Joint venture incentive schemes
Virgin Mobile France issued market-priced and nil-priced share options in Virgin Mobile France to certain employees of the
business. These options vested over periods of two to four years. Prior to completion of the disposal of Virgin Mobile France
on 4 December 2014, these share options were exercised.
v) 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 Carphone Warehouse and Old Carphone Warehouse shares and, for options issued subsequent
to the Merger on 6 August 2014, the historical performance of Dixons.
The weighted average fair value of options granted during the period was £1.62 (2013/14: £0.84). The following table lists the
inputs to the model:
13 months
ended
2 May
2015
Year
ended
29 March
2014
Exercise price £nil £nil
Dividend yield 2.2% 2.0%
Historical and expected volatility 33.7% 32.0%
Risk-free interest rate 2.8% 3.5%
Expected option life 10 yrs 10 yrs
Weighted average share price £3.75 £2.71
vi) Charge to the income statement and entries in reserves
During the 13 months ended 2 May 2015, the Group recognised a non-cash accounting charge to profit and loss of £10 million
(2013/14: £4 million) in respect of equity settled share-based payments, which is offset by an entry through reserves. This entry
is offset in reserves by the non-recourse element of loans provided to participants in the Carphone Warehouse Share Plan.
c) Employee Share Ownership Trust (ESOT)
2 May 2015 29 March 2014
Market
value
£million
Nominal
value
£million
Number
million
Market
value
£million
Nominal
value
£million
Number
million
Investment in own shares 4 — 0.9 16 — 4.9
Maximum number of shares held during the period 18 — 5.2 16 — 4.9
The Group has an ESOT for the purposes of satisfying potential awards to employees under the Group’s share plans. The
number of shares held by the Trust, which are shown in the table above, remain held for potential awards under outstanding
plans. The costs of funding and administering the Trust are charged to the income statement in the year to which they relate.
Shareholders’ funds are reduced by the net book value of shares held in the Trust.
The ESOT has waived its rights to receive dividends and its shares have not been allocated to specific schemes.