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Annual Report & Accounts 2005 - Notes to the Financial Statements
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The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured on a Black-Scholes valuation model. The contractual life of the option (10 years) is used as an input into this model. Expectations of early exercise are incorporated into the Black-Scholes model. The option exercise price for individuals who were employed at 21 December 2004 was the market price on admission to AIM of GBP 4.20 and for all other individuals the average market price on 28 September 2005 of GBP 5.50. 28 September 2005 2004 Fair value of share options and assumptions GBP GBP GBP Fair value at measurement date 1.95 1.58 1.33 Share price 5.50 5.50 4.20 Exercise price 4.20 5.50 4.20 Expected volatility (expressed as weighted average volatility used in the modelling under Black-Scholes model) 45% 45% 45% Option life (expressed as weighted average life used in the modelling under Black-Scholes model) 4.8 4.8 4.8 Expected dividends 5% 5% 4% Risk-free interest rate (based on national government bonds) 4.22% 4.22% 4.51% The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility due to publicly available information. There are no market conditions associated with the share option grants. 13 Trade and other payables 31 December 31 December In thousands of euro 2005 2004 Other trade payables 1,140 731 Accrued expenses 1,316 252 Taxation 18 5 2,474 988 14 Related parties Identity of related parties The Group has a related party relationship with its subsidiaries (see note 15) and with its directors and executive officers. Transactions with key management personnel Directors of the Company and their immediate relatives control 22.7% of the voting shares of the Company as detailed below: 31 December 31 December In shares 2005 2004 Steve Barlow 2,251,927 2,551,927 Scott Miller 2,265,927 2,551,927 Dr Robert Willis 2,551,927 2,551,927 In addition to their salaries, the Group also contributes to a post-employment defined contribution benefit plan on their behalf.