Sinclair - 26. Share based payments

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26 Share based payments All employees of the Group are awarded share options subject to qualifying conditions. Options are granted to employees under the “2003 scheme”. Options granted under the scheme have a fixed exercise price based on the market price at the date of the grant. The contractual life of all options and warrants is ten years with the exception of ICL warrants, three years and GEM warrants, 5 years. Options cannot normally be exercised before the third anniversary of the date of grant. Options were valued using the Black‑Scholes option‑pricing model where no market conditions were attached and the Monte Carlo Model where market conditions applied. Directors and other senior employees of the group are normally granted options with market performance conditions. The Group has taken the exemption provided in IFRS 1, which allows the charge for share‑based payment to be calculated only in respect of options granted to employees after 7 November 2002, which had not yet vested by 1 July 2005. For each relevant option grant, individual valuation assumptions were assessed based upon conditions at the date of the grant. The range of assumptions in the calculations is as follows:
Award	Grant date	Expected term	Expected dividend yield	Expected volatility	Risk free rate	Performance conditions	Valuation Method
2003 scheme	20 October 2004	3 years	0%	53.5%	4.52%	None	Black Scholes
2003 scheme	20 October 2004	5 years	0%	53.5%	4.61%	Market	Monte Carlo
2003 scheme	1 June 2005	3 years	0%	33.6%	4.21%	None	Black Scholes
2003 scheme	6 October 2005	3 years	0%	29.8%	4.25%	None	Black Scholes
2003 scheme	4 October 2006	3 years	0%	26.9%	4.86%	None	Black Scholes
2003 scheme	4 October 2006	5 years	0%	26.9%	4.77%	Market	Monte Carlo
EIP scheme	25 July 2007	3 years	0%	25.2%	5.69%	None	Black Scholes
EIP scheme	25 July 2007	3 years	0%	25.2%	5.69%	Market	Monte Carlo
EIP scheme	9 December 2008	3 years	0%	46.3%	2.83%	None	Black Scholes
EIP scheme	9 December 2008	3 years	0%	46.3%	2.83%	Market	Monte Carlo
GEM warrants	15 May 2009	3 years	0%	58.9%	2.80%	None	Black Scholes
The fair values per option granted are set out in the tables below. The expected lapse rate for the above awards is 7% evenly over the 3 three year vesting period, other than GEM warrants which have no vesting period and therefore 0% lapse rate.

Award	Grant date	Number of options/ awards granted	Share price on grant date (pence)	Fair value price on grant date (pence)	Fair value £
2003 scheme	20 October 2004	21,987	96p	87p	19,129
2003 scheme	20 October 2004	288,526	96p	38p	109,640
2003 scheme	20 October 2004	810,033	96p	31p	251,110
2003 scheme	1 June 2005	37,500	115p	34p	12,750
2003 scheme	6 October 2005	30,000	115p	39p	11,700
2003 scheme	4 October 2006	668,148	101p	25p	166,168
2003 scheme	4 October 2006	1,295,189	101p	12p	152,185
EIP scheme	25 July 2007	1,157,420	118.7p	118p	1,364,019
EIP scheme	25 July 2007	721,146	118.7p	71p	510,716
EIP scheme	9 December 2008	2,505,740	17.25p	13p	325,746
EIP scheme	9 December 2008	2,505,740	17.25p	16.3p	408,436
GEM warrants	15 May 2009	900,000	30.25p	9.6p	86,400

A reconciliation of share option and warrant movements for the years ended 30 June 2009 and 30 June 2008 is set out below:
	Number	2009 Weighted average exercise Number	Number	2008 Weighted average exercise price (pence)
Outstanding at 1 July	12,065,076	52.2p	11,488,472	64.7p
Granted	5,911,480	6.5p	1,878,566	1.0p
Forfeited	(540,951)	46.4p	(1,251,901)	88.1p
Lapsed	(364,077)	187.5p	(50,061)	79.5p
Exercised	(66,257)	1.0p	–	–
Outstanding at 30 June	17,005,271	33.8p	12,065,076	52.2p
Exercisable at 30 June	8,048,696	45.9p	8,452,407	52.2p
Exercisable and market price exceeds exercise price at 30 June	4,827,900	1.0p	4,827,900	1.0p

The following table summarises information about the range of exercise prices for share options and warrants outstanding at 30 June 2009 and 30 June 2008.
	2009				2008
Range of exercise prices	Weighted average exercise price
			Weighted average remaining life (years)		Weighted average exercise price	Weighted average remaining life (years)
		Number of of shares	Weighted average remaining life (years)			Weighted average remaining life (years)
		Number of of shares	Expected	Contractual		Number of shares	Expected	Contractual
Under 40p	3.7p	12,147,355	1.3	5.5	1.0p	6,592,547	0.9	6.4
41p to 80p	67.0p	101,214	–	3.8	67.0p	117,414	0.3	4.7
81p to 120p	109.3p	4,616,673	0.6	5.5	108.9p	4,851,009	1.1	6.5
121p to 160p	133.0p	140,029	–	2.7	133.0p	140,029	–	4.4
Over 160p	–	–	–	–	187.5p	364,077	0.6	0.6
		17,005,271				12,065,076

The total charge for the year relating to employee share based payment plans and GEM warrants was £573,000 (2008: £678,000) all of which related to the above equity based transactions.