18. SHARE CAPITAL    
  2006
£’000		 2005
£’000
Authorised:    
50,000,000 Ordinary shares of 50 pence (2005: 50,000,000 Ordinary shares of 50 pence) 25,000 25,000
     
Issued, called up and fully paid:    
40,711,652 Ordinary shares of 50 pence (2005: 36,722,286 Ordinary shares of 50 pence) 20,356 18,361
     
     
  Number of shares
Shares in issue at the date of this report   40,711,652
     
On 29th November 2006, 3,700,000 Ordinary shares were allotted following a Placing at 625 pence per share, raising £23,125,000 principally to fund the Company’s share of the consideration payable for the purchase of a 1.4 million sq. ft site at Curzon Park, Birmingham in an equal joint venture with Grainger PLC.

In addition, during the year, £913,224 cash consideration was also received following the allotment of 289,366 Ordinary shares as a consequence of the exercise of share options.

The Company has one class of Ordinary shares which carry no right to fixed income.

Share option schemes
As at 31st December 2006 and at the date of this report, the options outstanding under the Company’s share option schemes were exercisable as follows (price stated in pence per share):
 
Executive share option scheme 1995:          
           
Date of grant 31.12.06 Number
30.03.07		   Number
Exercise Dates		 Price
19th May 1997 20,189 20,189   19th May 2000 to 18th May 2007 248.0
21st May 1998 20,190 20,190   21st May 2001 to 20th May 2008 325.5.5
27th March 2001 50,327 50,327   27th March 2004 to 26th March 2011 338.0
30th April 2001 55,518 55,518   30th April 2004 to 29th April 2011 397.0
19th April 2004 66,979 66,979   19th April 2007 to 18th April 2014 360.0
30th April 2004 151,424 151,424   30th April 2007 to 29th April 2014 361.0
9th November 2004 50,000 50,000   9th November 2007 to 8th November 2014 392.5
  414,627 414,627      
           
Executive share option plan 2005:          
Date of grant 31.12.06 Number
30.03.07		   Number
Exercise Dates		 Price
27th October 2005 40,000 40,000   27th October 2008 to 26th October 2015 445.75
28th April 2006 40,000 40,000   28th April 2009 to 27th April 2016 580.0
  80,000 80,000      
           
Savings related share option scheme 1995:          
Date of grant 31.12.06 Number
30.03.07		   Number
Exercise Dates		 Price
20th May 2004 28,259 28,259   1st July 2007 to 31st December 2007 289.0
           
Save as you earn option plan 2005:          
Date of grant 31.12.06 Number
30.03.07		   Number
Exercise Dates		 Price
22nd May 2006 24,562 24,562   1st July 2009 to 31st December 2009 464.0
 
Share-based payments – Group and Company        
The expense recognised for equity-settled share-based payments in respect of employee services received during the year is £142,000 (2005: £110,000).

The following table illustrated the number and weighted average exercise prices of, and movements in, share options during the year.
         
  Number 2006
Weighted
average
exercise
price
(pence)		 Number 2005
Weighted
average
exercise
price
(pence)
At 1st January 779,122 339.7 796,496 329.6
Options granted 65,368 534.9 40,000 445.8
Options exercised (289,366) 315.6 (54,978) 297.5
Options expired/lapsed (7,676) 307.3 (2,396) 289
At 31st December 547,448 382.9 779,122 339.7
 
All of the options exercised during the year were not recognised in accordance with IFRS 2 as these options were granted on or before 7th November 2002. These options have not been subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2.

The weighted average fair value of options granted during the year was £1.32 (2005: £1.04). The weighted average share price during the year was 575.6 pence (2005: 481.9 pence). Of the 547,448 (2005: 779,122) outstanding options at 31st December 2006, 146,224 were exercisable (2005: 434,634).

The options outstanding at 31st December 2006 were exercisable between 248.0 pence and 580.0 pence per share and have a weighted average remaining contractual life of 6.0 years (2005: 4.6 years).

The fair value of grants is measured at the grant date using a Black-Scholes pricing model, taking into account the terms and conditions upon which the instruments were granted. The services received and a liability to pay for those services are recognised over the expected vesting period. The main assumptions of the Black-Scholes pricing model are as follows:
     
Grant date 22.05.06 28.04.06
Exercise price (p) 580.0 464.0
Term (years) 7 7
Expected volatility 22 28
Expected dividend yield p.a. 1.5% 1.5%
Risk free rate 4.5% 4.5%
Expected forfeiture p.a. Nil Nil
     
Expected volatility was determined by calculating the historical volatility of the Development Securities PLC share price over multiple
time periods. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the actual outcome.

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur.