annual report 2007 - the Admiral Group plc

84 FINANCIAL STATEMENTSStaff share schemes:Analysis of share scheme costs (per income statement):31 December200731 December2006£000 £000SIP charge (note i) 1,268 495DFSS charge (note ii) 1,703 438Total share scheme charges 2,971 933The share scheme charges reported above are net of the co-insurance share and therefore differfrom the gross charge reported in note 10 (2007: £5,560,000, 2006: £2,667,000) and the grosscredit to reserves reported in note 26.The consolidated cashflow statement also shows the gross charge in the reconciliation between‘profit after tax’ and ‘cashflows from operating activities’. The co-insurance share of the charge isincluded in the ‘change in trade and other payables’ line.(i) The Approved Share Incentive Plan (the SIP)Eligible employees qualify for awards under the SIP based upon the performance of the Groupin each half-year against budget. The current maximum award for each half-year amounts to600,000 shares (or a maximum annual award of £3,000 per employee if smaller).The awards are made with reference to the Group’s performance against its budget. Employeesmust remain in employment for the holding period (three years from the date of award),otherwise the shares will be forfeited.The fair value of shares awarded is either the share price at the date of award, or is estimatedat the latest share price available when drawing up the financial statements for awards not yetmade (and later adjusted to reflect the actual share price on the award date). Awards under theSIP are entitled to receive dividends, and hence no adjustment has been made to this fair value.(ii) The Discretionary Free Share Scheme (the DFSS)Under the scheme, details of which are contained in the remuneration report, individuals receivean award of free shares at no charge. A total of 1,645 employees received awards under thisscheme during 2007. Staff must remain in employment until the vesting date in order to receiveshares. The maximum number of shares that can vest relating to the 2007 scheme is 964,000.Individual awards are calculated based on the growth in the Group's earnings per share (EPS)relative to a risk free return (RFR), for which LIBOR has been selected as a benchmark. Thisperformance is measured over the same three-year period.