Annual Report 2007 in PDF - Cairn Energy PLC

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NOTES TO THE ACCOUNTS CONTINUED 7. Staff Costs 92 CAIRN ENERGY PLC ANNUAL REPORT 2007 2007 2006 $’000 $’000 Wages and salaries 77,909 57,733 Redundancy costs 1,254 1,667 Social security costs and other taxes 4,876 2,792 Pension costs 2,455 2,612 Share-based payments charge 32,235 18,527 ––––––––––– ––––––––––– 118,729 83,331 ––––––––––– ––––––––––– Staff costs are shown gross before amounts recharged to Joint Ventures and include the costs of share-based payments. The share-based payments charge includes amounts in respect of both equity and cash-settled phantom options and associated National Insurance contributions. The share-based payments charge also includes the cost of Fringe Benefits Tax, payable to the Indian Government on the exercise of share options held by Cairn India employees. The effective date of Cairn India’s liability to Fringe Benefits Tax was 1 April 2007. The average number of full-time equivalent employees, including executive directors and individuals employed by the Group working on Joint Venture operations, was: Number of employees 2007 2006 Uk 86 110 India 464 431 Bangladesh 97 83 ––––––––––– ––––––––––– Group 647 624 ––––––––––– ––––––––––– The Group operates a number of share-based schemes for the benefit of its employees. Cairn Group and Company No difference in the schemes below apply for Group and Company other than charges for these schemes that are made to Cairn India and the Cairn Bangladesh companies where their staff are members of these schemes. Share options Pre-2006 Plans Under the 1996 Second Share Option Scheme (the ‘1996 Scheme’), at 1 January 2007, certain executive directors and employees had been granted options to subscribe for ordinary shares which are exercisable between 2003 and 2012, at prices between £1.950 and £2.675. At 31 December 2007, there were 19,000 options outstanding (2006: 60,500 options outstanding) with a weighted average remaining contractual life of 3.85 years (2006: 4.97 years) (options exercised in 2007: 41,500; 2006: 96,100). All awards under the 1996 scheme were granted prior to 7 November 2002. Under the 2002 Unapproved Share Option Plan (the ‘2002 Plan’), at 1 January 2007, certain executive directors and employees had been granted options to subscribe for ordinary shares which are exercisable between 2006 and 2016, at prices between £3.055 and £21.530. At 31 December 2007, there were 961,003 options outstanding (2006: 1,548,584 options outstanding) with a weighted average remaining contractual life of 7.94 years (2006: 8.51 years) (options exercised in 2007: 443,431; 2006: 225,382). The options outstanding at the end of the year under the 2002 Plan can be broken down into the following weighted average exercise price (WAEP) variants: 2007 2006 Exercisable between Number WAEP (£) Number WAEP (£) 2006–2013 15,000 3.06 64,550 3.06 2007–2014 50,439 8.74 359,659 8.74 2007–2015 313,684 11.52 416,226 11.56 2009–2016 581,880 21.53 708,149 21.53 ––––––––––– ––––––––––– 961,003 1,548,584 ––––––––––– –––––––––––
NOTES TO THE ACCOUNTS CONTINUED Under the 2003 Approved Share Option Plan (the ‘2003 Plan’), at 1 January 2007, certain executive directors and employees had been granted options to subscribe for ordinary shares which are exercisable between 2006 and 2016, at prices between £3.095 and £21.530. At 31 December 2007, there were 77,809 options outstanding (2006: 196,399 options outstanding) with a weighted average remaining contractual life of 7.26 years (2006: 7.76 years) (options exercised in 2007: 104,829; 2006: 198,889). The options outstanding at the end of the year under the 2003 Plan can be broken down into the following WAEP variants: 2007 2006 Exercisable between Number WAEP (£) Number WAEP (£) 2006–2013 10,250 3.10 46,500 3.10 2007–2014 8,699 8.74 52,385 8.74 2007–2015 38,578 11.52 67,479 11.66 2009–2016 20,282 21.53 30,035 21.53 ––––––––––– ––––––––––– 77,809 196,399 ––––––––––– ––––––––––– The above share option schemes are subject to performance conditions on exercise. The option holder may only exercise options if Cairn’s share price has increased by 5% on a compound basis over the period from the date of grant of options up to the date they are exercised. In addition, the percentage increase in Cairn’s share price over the period must be at least equal to or greater than the percentage movement in the FTSE Oil and Gas Index. The following table details the number and WAEP of share options for the various Cairn Energy PLC share option schemes at the Balance Sheet date: 1996 Scheme 2002 Plan 2003 Plan Number WAEP (£) Number WAEP (£) Number WAEP (£) Outstanding at the beginning of the year 60,500 2.55 1,548,584 15.11 196,399 10.36 Lapsed during the year – – (144,150) 18.54 (13,761) 17.85 Exercised during the year (41,500) 2.59 (443,431) 9.24 (104,829) 7.64 ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– Outstanding at the end of the year 19,000 2.48 961,003 17.30 77,809 12.71 ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– Exercisable at the end of the year 19,000 65,439 18,949 There were no options granted in the year. The following table details the number and WAEP of share options for the various share option schemes as at 31 December 2006: 1996 Scheme 2002 Plan 2003 Plan Number WAEP (£) Number WAEP (£) Number WAEP (£) Outstanding at the beginning of the year 161,600 2.54 1,144,872 8.58 380,766 5.76 Granted during the year – – 723,287 21.53 31,429 21.53 Lapsed during the year (5,000) 2.68 (94,193) 11.92 (16,907) 11.28 Exercised during the year (96,100) 2.52 (225,382) 3.88 (198,889) 3.24 ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– Outstanding at the end of the year 60,500 2.55 1,548,584 15.11 196,399 10.36 ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– Exercisable at the end of the year 60,500 125,725 50,211 Weighted average fair value of options granted in year – £8.70 £8.70 Cairn Energy PLC share options were exercised on a regular basis throughout the year. The weighted average share price during the year was £18.88 (2006: £20.19). CAIRN ENERGY PLC ANNUAL REPORT 2007 93
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ANNUAL REPORT & ACCOUNTS 2007 CAIRN
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CAIRN is an edinburgh based oil and
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CAIRN INDIA performance First comme
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2000 lakshmi disCovery 2001 sarasWa
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THE RESTRUCTURING OF THE GROUP INTO
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ajasthan midstream the government o
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Cambay Basin, India CAIRN ENERGY PL
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Cairn india assets 30% 30% 49% 40%
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Rajasthan, India the increased reso
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Detail heading here relore min ullu
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uk (West Of shetland) Block 214/19
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nePal the security situation in nep
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angladesh reserves sangu gross 2p r
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activities in all operated blocks.
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2007 marked the beginning of a new
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key financial performance indicator
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CAIRN INDIA CAPITAL EXPENDITURE FOR
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3 9 12 4 8 1 Sir Bill Gammell, Chie
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2007 ACCOUNTS Risk Factors 36 Corpo
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RISk FACTORS CONTINUED The developm
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RISk FACTORS CONTINUED Corporate Re
Page 43 and 44: CORPORATE GOVERNANCE STATEMENT CONT
Page 53 and 54: DIRECTORS’ REPORT CONTINUED At 31
Page 55 and 56: DIRECTORS’ REPORT CONTINUED Elect
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Page 59 and 60: DIRECTORS’ REMUNERATION REPORT Re
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Page 71 and 72: INDEPENDENT AUDITOR’S REPORT TO T
Page 73 and 74: PRINCIPAL LICENCE INTERESTS ASIA In
Page 75 and 76: GROUP INCOME STATEMENT For the year
Page 77 and 78: BALANCE SHEETS As at 31 December 20
Page 79 and 80: NOTES TO THE ACCOUNTS For the year
Page 81 and 82: NOTES TO THE ACCOUNTS CONTINUED Net
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Page 131 and 132: RESERVES Direct Direct working enti
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Page 137 and 138: GLOSSARY OF TERMS CONTINUED TECHNIC
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