Shares based payments for employees share schemes
The Company has granted share options to certain employees and to one non-employee consultant. These options must be measured at fair value and recognised as an expense in the profit and loss account with a corresponding increase in shareholders funds. The fair value of the options has been estimated at the date of grant using the Black-Scholes option-pricing model. The fair value will be charged as an expense in the profit and lost account over the vesting period. The charge is adjusted each year to reflect the expected and actual level of vesting. The credit entry is contained within a separate reserve called the Share-Based Payment Reserve in the company’s reserves and is shown in the Movement in Shareholders Funds.
Employee Share Trust
The Company is the settler and sponsor of The IT Solution Services Employee Share Trust, a discretionary trust which was executed as a trust deed on 28th November 2018. Since that time, for accounting purposes, the company has had de facto control of the assets and liabilities of the trust and, consequently, the assets and liabilities of the trust are recognised in the company accounts. The policy is that any consideration paid or received by the trust in respect of Company shares is shown in the Movement of Shareholders Funds.
During the year, the trust entered into a transaction with shareholders for the purchase of 80,645 Ordinary Shares (2023 - 80,645) for which the trust paid a total consideration of £250,000 (2023 - £250,000) to shareholders with funds that were settled into the trust by the company. As a consequence of the purchase of shares from existing shareholders during the current financial year and previous financial years, the trust is the owner of 31.18% of the issued share capital of the company.
Share-based payment for employee share schemes
On 1st August 2018, the company granted options over 57,000 shares through the tax-advantaged Enterprise Management Incentives employee share option scheme to a total of twelve employees on a discretionary basis at an option price of £3.00 per share. The period over which the outstanding options are capable of subsisting is the period of ten years from August 2018 to July 2028. The period over which the outstanding options are capable of being exercised is the period of five years from August 2023 to July 2028, during the period of the employment of the scheme participants or at any exit event at any time in the full ten year period.
On 30th April 2019, the company granted options over 59,000 shares through the tax-advantaged Enterprise Management Incentives employee share option scheme to a total of thirteen employees on a discretionary basis at an option price of £3.20 per share. The period over which the outstanding options are capable of subsisting is the period of ten years from April 2019 to March 2029. The period over which the outstanding options are capable of being exercised is the period of five years from April 2024 to March 2029, during the period of the employment of the scheme participants or at any exit event at any time in the full ten year period.
On 31st March 2021, the company granted an options over 32,000 shares through the tax-advantaged Enterprise Management Incentives employee share option scheme to a total of seven employees on a discretionary basis at an option price of £2.80 per share. The period over which the outstanding options are capable of subsisting is the period of ten years from March 2021 to February 2031. The period over which the outstanding options are capable of being exercised is the period of five years from March 2026 to February 2031, during the period of the employment of the scheme participants or at any exit event at any time in the full ten year period.
Except in the case of retirement, in the event that an individual employee who is a scheme participant leaves the company, the exercise of the option by the employee is fully at the discretion of the Board of Directors that must notify the employee of its decision within three months of the date of leaving and in the event that the Board of Directors does not give its permission to exercise the option then the option will lapse immediately following the decision. In the event that the individual employee leaves the employment of the company as a consequence of retirement with the agreement of the Board of Directors then the employee will have the opportunity to exercise the option within the period of six months following the date of leaving.
Share-based payments for consultants share schemes
On 1st August 2018, the company granted options over 3,000 shares through a non-tax-advantaged consultant share option scheme to one consultant on a discretionary basis at an option price of £3.00 per share. The period over which the outstanding option is capable of subsisting is the period of ten years from August 2018 to July 2028. The period over which the outstanding option is capable of being exercised is the period of five years from August 2023 to July 2028, during the period of the continued involvement of the scheme participant or at any exit event at any time in the full ten year period.
On 30th April 2019, the company granted option over 3,000 shares through a non-tax-advantaged consultant share option scheme to one consultant on a discretionary basis at an option price of £3.20 per share. The period over which the outstanding option are capable of subsisting is the period of ten years from April 2019 to March 2029. The period over which the outstanding option are capable of being exercised is the period of five years from April 2024 to March 2029, during the period of the continued involvement of the scheme participant or at any exit even at any time in the full ten year period.
Except in the case of retirement, in the event that an individual consultant ceases to be involved with the company, the exercise of the option by the consultant is fully at the discretion of the Board of Directors that must notify the consultant of its decision within three months of the date of ceasing involvement and in the event that the Board of Directors does not give its permission to exercise the option then the option will lapse immediately following the decision. In the event that the individual consultant ceases to be involved with the company as a consequence of retirement as recognised by the Board of Directors then the consultant will have the opportunity to exercise the option within the period of six months following the date of leaving.
The expense calculation for the options granted on 1st August 2018, 30th April 2019 and 31st March 2021, used the Black-Scholes option-pricing valuation model.