Note 27 - Share-Based Payment and Equity Settled Share Option Schemes

12 Months Ended

Mar. 31, 2018

Statement Line Items [Line Items]

Disclosure of share-based payment arrangements [text block]

27 SHARE-BASED PAYMENTS AND EQUITY SETTLED SHARE OPTION SCHEMES

On the demerger from Autonomy Corporation plc the Company has established the following share options schemes:

• The blinkx 2007 Enterprise Management Incentive Plan (the ‘RhythmOne EMI Scheme’)

• The blinkx US Share Option Plan (the ‘RhythmOne US Plan’)

• The blinkx Autonomy Employee Discretionary Share Option Scheme 2007 (the ‘Autonomy Discretionary Scheme’)

• The blinkx Autonomy Employee US Share Option Plan (the ‘Autonomy US Plan’)

• The 2017 International Equity Incentive Plan (the ‘2017 Equity Plan’)

The RhythmOne EMI Scheme and the RhythmOne US Plan allow for the grant of options over ordinary shares to employees of the Company and its subsidiaries. At the time of demerger

two

special grants were made under these plans. The

first

allowed a fully vested grant at nominal value and the

second

was a grant at nominal value but with a

three

-year vesting period. Since then grants have been made at market value and with a

three

or

four

-year vesting period with options vesting in varying sized tranches over that period.

No

option

may

be granted for a term in excess of

10

years. Vested options are exercisable following termination of employment for a period ranging from

40

to

90

days. Vesting criteria are based on continued employment with the Company.

On

September 16, 2013,

the Board of Directors approved the amendment of RhythmOne Plc US Share Option Plan to allow the grant of Restricted Stock Units to be made under its terms.

On

July 3, 2015

the Board of Directors approved the amendment of RhythmOne Plc US Share Option to allow for Market Value Share Options (MVSOs) that vest quarterly with an additional performance component. The equity awards require a minimum stock price threshold for options to vest and have a further accelerated vesting schedule when the stock price reaches a certain predetermined threshold above the stock price at grant.

The Autonomy Discretionary Scheme and the Autonomy US Plan allowed a

one

-time grant of RhythmOne plc options to certain Autonomy employees who at the time of the demerger had vested Autonomy options. Options granted under this plan were granted at market price and vest over a period of

three

years. This plan and outstanding options related to this plan expired on

May 

21,

2017.

On

May 21, 2017,

the RhythmOne EMI Scheme and the RhythmOne US Plans expired and

no

future options will be granted under these plans. Options outstanding under these plans will expire

10

years from the date of grant.

On

July 14, 2017,

the Board of Directors approved the

2017

International Equity Incentive Plan (

‘2017

Equity Plan’) which allows for grants of options, RSUs and MVSOs to employees, directors and contractors of the Company and its subsidiaries.

Share-based compensation charges have been charged in the income statement within the following line:

	YEAR ENDED MARCH 31, 2018 $000’s		YEAR ENDED MARCH 31, 2017 $000’s		YEAR ENDED MARCH 31, 2016 $000’s
Operating expenses		2,164		2,015		4,415

The following table summarizes options outstanding at

March 31, 2018

and

March 31, 2017

relating to the RhythmOne EMI scheme and the RhythmOne US plan. All option exercise prices are quoted in sterling.

The

2017

comparative information has been adjusted to reflect the share consolidation as referred in note

22.

	NUMBER			2018 WEIGHTED AVERAGE (in pound sterling)		NUMBER			2017 WEIGHTED AVERAGE (in pound sterling)		NUMBER			2016 WEIGHTED AVERAGE (in pound sterling)
Outstanding balance at beginning of year		3,047,296		£	3.70		2,926,966		£	3.80		2,369,015		£	5.00
Granted during the year		941,500			3.63		810,250			2.40		1,274,750			2.70
Exercised during the year		(255,382	)		2.66		(158,830	)		0.70		(25,598	)		1.00
Forfeited during the year		(658,166	)		3.95		(531,090	)		3.50		(691,201	)		5.90
Outstanding balance at end of year		3,075,248			3.68		3,047,296			3.70		2,926,966			3.80
Exercisable at end of year		2,057,684			2.62		1,801,393			4.40		1,166,997			5.20

The weighted average share price at the date of exercise for share options exercised during the period was

£2.66

(

FY2017:

£0.70

). The options outstanding at

March 31, 2018

had a weighted average exercise price of

£3.68

(

FY2017:

£3.70

). The weighted average remaining contractual life of the options was

7

years (

FY2017:

8

years).

The inputs to the Black-Scholes and Monte Carlo models were as follows:

	2018				2017				2016
Weighted average share price (in pound sterling)			£3.72				£2.50				£2.70
Weighted average exercise price (in pound sterling)			£2.66				£0.70				£1.00
Expected volatility		32	-	57%		39	-	74%		51	-	85%
Expected life (in years)		6	,	10		6	,	10		6	,	10
Risk free rate		2.19	-	2.36%		1.57	-	2.41%		2.17	-	2.37%
Expected dividend			—				—				—

Expected volatility was determined by calculating the historical volatility of the Group’s share price for the last

90

days prior to grant. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioral considerations.

Options were granted on

July 14, 2017,

August 17, 2017

and

December 13, 2017.

The weighted average of the fair value of the options granted in the year was

£3.63

 per share, (

2017:

£2.40

 per share).

The following table summarizes options outstanding as of

March 31, 2018

in relation to the Autonomy Discretionary Share Scheme and Autonomy US Plan options.

	NUMBER			2018 WEIGHTED AVERAGE (in pound sterling)		NUMBER			2017 WEIGHTED AVERAGE (in pound sterling)		NUMBER			2016 WEIGHTED AVERAGE (in pound sterling)
Outstanding balance at beginning of year		22,889		£	4.50		48,114		£	4.50		54,394		£	4.50
Lapsed during the year		(22,889	)		4.50		(25,225	)		4.50		(6,280	)		4.50
Outstanding balance at end of year		—			—		22,889			4.50		48,114			4.50
Exercisable at end of year		—			—		22,889			4.50		41,114			4.50

No

options were exercised during the year from the Autonomy plan. (

2017:

No

options were exercised during the year from the Autonomy plan). These stock options expire on

May 21, 2017.

No

options were granted during the current or prior period.

The following table summarizes RSUs outstanding as of 

March 31, 2018

and

2017.

	NUMBER OF RSUs 2018			NUMBER OF RSUs 2017			NUMBER OF RSUs 2016
Outstanding balance at beginning of year		6,667			132,541			293,318
RSUs granted		2,760,500			5,000			—
RSUs vested		(61,578	)		(80,736	)		(136,750	)
RSUs forfeited		(347	)		(50,138	)		(24,027	)
Outstanding balance at end of year		2,705,241			6,667			132,541

RSUs were granted on

July 14, 2017,

September 2, 2017,

January 25, 2018,

February 2, 2018

and

March 21, 2018

totaling

2,760,500

(

2017:

5,000

).

The RSUs that vested in fiscal year

2018

were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The weighted average vesting share price during the period was

£2.36

(

2017:

£3.20

).