Notes to the financial statements

21 SHARE CAPITAL AND SHARE PREMIUM

Group and Company	Number of shares millions	Ordinary shares £m	Share premium £m	Total £m
At 1 April 2006	118.3	14.5	34.7	49.2
Shares issued	–	–	–	–
At 31 March 2007	118.3	14.5	34.7	49.2
Shares issued	5.8	0.7	5.7	6.4
At 31 March 2008	124.1	15.2	40.4	55.6

The total authorised number of ordinary shares is 196,363,620 shares (2007: 196,363,620 shares) with a par value of 12.2 pence per share (2007: 12.2 pence per share). All issued shares are fully paid.

On 26 July 2007 the Company successfully placed 5,814,610 new ordinary shares at a price of 115.0 pence per share raising £6.7 million before expenses (£6.4 million net of expenses). The funds raised will be used to help the Company grow the business both organically and by acquisition and will provide greater financial flexibility. The shares were admitted to the Official List and commenced trading on 1 August 2007.

Warrants
The placing of new ordinary shares in July 2007 entitled the holders of the Company’s warrant instruments to additional shares on exercise of those warrants. The Company has in issue 5,987,560 warrants (2007: 5,707,047) giving the holders the right to subscribe in cash for shares in the Company.

Holders of individual ‘A’ warrants may subscribe for one ordinary share in the Company at a price of 65 pence and these warrants may be exercised at any time prior to 8 July 2008 (1,620,761 warrants) and any time prior to 8 July 2010 (3,056,760 warrants). Holders of individual ‘B’ warrants may subscribe for one ordinary share in the Company at a price of 109 pence and these warrants may be exercised at any time prior to 31 May 2009 (1,310,039 warrants). The fair value of these warrants as at 31 March 2008, calculated by reference to a closing market price of 70.00 pence per share is £0.2 million (2007: £1.8 million, calculated by reference to the closing market price of 106.25 pence).

Employee share schemes – all employee share plans
The Group operates UK Save As You Earn (“SAYE”) schemes whereby employees are given the opportunity to apply for options in ordinary shares of the Company. Options are granted at a price 20% below the market price ruling at the date of grant. Grants are exercisable after three or five years of savings by the employees. All options will be equity settled.

Period of option	Number of shares 2008	Number of shares 2007	Subscription price per share Pence
1 March 2007 to 31 August 2007	–	48,660	196
1 April 2007 to 30 September 2007	–	84,458	187
1 April 2008 to 30 September 2008	48,981	77,432	127
1 April 2008 to 30 September 2008	118,752	144,371	125
1 April 2009 to 30 September 2009	20,273	22,196	187
1 April 2009 to 30 September 2009	241,377	357,919	96
1 April 2010 to 30 September 2010	46,898	59,852	125
1 April 2010 to 30 September 2010	351,369	422,001	80
1 April 2011 to 30 September 2011	52,183	109,201	96
1 April 2011 to 30 September 2011	391,756	–	70
	1,271,589	1,326,090

Employee share schemes – discretionary share plans
The Group operates long–term incentive plans for senior managers and Directors. Details of the Company Share Option Plans (“CSOP”) and Performance Share Plans (“PSP”) are given below and in the Report on Directors’ remuneration. All CSOP options will be equity settled. For the PSP scheme the exercise price is nil.

CSOP Scheme	Performance period	Outstanding options at 31 March 2008	Outstanding options at 31 March 2007	Option price Pence
2001	1 April 2001 to 31 March 2004	256,647	596,011	296.5
2001	1 April 2001 to 31 March 2004	–	94,537	238.0
		256,647	690,548

PSP Scheme	Performance period	Outstanding options at 31 March 2008	Outstanding options at 31 March 2007
2004	18 August 2004 to 17 August 2007	–	738,757
2005	8 July 2005 to 7 July 2008	875,902	918,024
2005	19 July 2005 to 18 July 2008	194,037	194,037
2005	8 December 2005 to 7 December 2008	14,791	14,791
		1,084,730	1,865,609

Options outstanding – SAYE

	2008		2007
	Options No.	Average exercise price Pence	Options No	Average exercise price Pence
At 1 April	1,326,090	108.2	3,686,223	124.2
Granted in year	397,241	70.0	431,215	80.0
Exercised in year	(20,672)	95.3	(32,688)	97.0
Forfeited in year	(431,070)	127.2	(2,758,660)	125.3
At 31 March	1,271,589	68.4	1,326,090	108.2
Exercisable as at 31 March	–	–	123,774	126.6

Options outstanding – CSOP

	2008		2007
	Options No.	Average exercise price Pence	Options No	Average exercise price Pence
At 1 April	690,548	288.5	1,694,556	276.0
Lapsed in year	(433,901)	283.8	(1,004,008)	267.1
At 31 March	256,647	296.5	690,548	288.5
Exercisable as at 31 March	256,647	296.5	690,548	288.5

No CSOP options were exercised during the years ended 31 March 2007 and 2008.

Options outstanding – PSP

	2008		2007
	Options No.	Average exercise price Pence	Options No	Average exercise price Pence
At 1 April	1,865,609	–	3,152,819	–
Lapsed in year	(780,879)	–	(1,287,210)	–
At 31 March	1,084,730	–	1,865,609	–
Exercisable as at 31 March	–	–	–	–

The fair value of SAYE options granted during the year was 43.7 pence (2007: 59.2 pence), as determined using the Black–Scholes model. The inputs into the model for the SAYE schemes are as follows:

	2008	2007
Weighted average share price at the grant date	87p	112p
Exercise price	70p	80p
Expected volatility	60.0%	56.0%
Expected life	3.0 years	3.0 years
Risk-free interest rate	4.3%	5.4%
Expected dividend yield	0.0%	0.0%

Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous 3 years. The expected life used in the model has been adjusted, based on management’s best estimates, for the effects of non–transferability, exercise restrictions and behavioural considerations.

The Group recognised total expenses of £0.1 million (2007: £0.2 million) related to equity–settled share based payment transactions.