Share Option Plans
Options have been granted under the Company's Approved Share Option Schemes. The number of shares outstanding, subscription prices and exercise periods are as follows:
| Number of shares | Exercise Price (pence) | Grant Date | Expiry Date |
| 129,750 | 946 | 10 October 2012* | 10 October 2022 |
| 381,000 | 1,543 | 23 February 2016# | 23 February 2026 |
| 510,750 | | | |
* 2012 Approved option scheme has been fully vested.
# 50% of 2016 Approved option scheme will vest in 2019 and 50% will vest in 2020.
| 2018 | 2017 |
| Number of share options | Weighted average exercise price (pence) | Number of share options | Weighted average exercise price (pence) |
| Outstanding at beginning of the year | 568,550 | 1,350 | 687,650 | 1,278 |
| Granted during the year | – | – | – | – |
| Forfeited during the year | (3,000) | - | (9,000) | 1,543 |
| Exercised during the year | (54,800) | 957 | (110,100) | 883 |
| Outstanding at the end of the year | 510,750 | 1,391 | 568,550 | 1,350 |
| Exercisable at the end of the year | 129,750 | 946 | 183,550 | 946 |
The weighted average share price at the date of exercise for the share options exercised during the period was £34.89 (2017: £25.68). The options outstanding at 31 December 2018 had a weighted average exercise price of £13.91 (2017: £13.50), and a weighted average remaining contractual life of 6.3 years.
For options granted in 2016, the Group has taken a charge of £0.2 million (2017: £0.2 million). The fair value of options was determined using the Black–Scholes Model with a share price of £15.425 and a weighted average exercise price of £15.425, standard deviation of expected share returns of 0.292, and an annual risk free interest rate of 0.28%.
The volatility measured as the standard deviation of expected share price returns was based on statistical analysis of the Company's share price over the last year.
Long-Term Incentive Plan ("LTIP")
The Group has introduced a LTIP scheme to replace the Share Option Plan. Under the scheme, conditional awards of share options are made to the scheme participants at nil or nominal cost or deferred cash.
| Number of shares | Exercise Price (pence) | Grant Date | Expiry Date |
| 39,400 | 1 | 30 May 2017 | 30 May 2022 |
| 2,250 | 1 | 12 October 2017 | 12 October 2022 |
| 8,000 | 1 | 1 November 2017 | 1 November 2022 |
| 54,199 | 1 | 16 May 2018 | 16 May 2023 |
| 800 | 1 | 4 September 2018 | 4 September 2023 |
| 104,649 | | | |
At the vesting date, the share award will either vest, in full or in part, or lapse depending on the outcome of the performance conditions. The performance conditions of the awards made in 2018 are based on the growth in Earnings Per Share ("EPS") and the Total Shareholder Return ("TSR") of the Group measured against that of the FTSE 250 over the Performance Period. For LTIP granted in 2018, the Group has taken a charge of £0.2 million. For LTIP granted in 2017, the Group has taken a charge of £0.2 million (2017: £0.1 million). The fair value of the equity-settled LTIP options was calculated at the grant date using the Monte Carlo model and the Black–Scholes model based on the assumptions below.
| LTIP |
|---|
| 2018 | 2017 |
| Options granted | 54,999 | 49,650 |
| Fair value at grant date | £24.84 | £17.13 |
| Assumption used: | | |
| Share price | £35.50 | £26.77 |
| Exercise price | £0.01 | £0.01 |
| Expected volatility | 27.66% | 27.69% |
| Expected option life | 3 years | 3 years |
| Expected dividend yield | 2.59% | 3.75% |
| Risk free interest rate | 1.50% | 0.99% |
Volatility was estimated based on the historical volatility of the shares over a three year period prior to grant date.
| 2018 | 2017 |
|---|
| Number of
LTIP
options | Weighted
average
exercise price
(pence) | Number of
LTIP options | Weighted
average
exercise price
(pence) |
| Outstanding at beginning of the year | 49,650 | 1 | – | – |
| Granted during the year | 54,999 | 1 | 49,650 | 1 |
| Forfeited during the year | – | – | – | – |
| Exercised during the year | – | – | – | – |
| Outstanding at the end of the year | 104,649 | 1 | 49,650 | 1 |
| Exercisable at the end of the year | – | – | – | – |
50% of the share awards will vest after the third year and the remaining 50% of the share awards will vest after the fourth year. Upon vesting, employees will receive one share for each vested share award.