Employee incentive schemes

Provisions for employee incentive schemes relate to HMRC unapproved equity settled schemes and the Cash-Based Long Term Incentive Plan ("Cash LTIP"). For all unapproved schemes and the Cash LTIP, the Company is liable to pay employer's NIC upon allotment of the share awards.

Unapproved schemes are the 2013 and 2014 Long Term Incentive Plan ("LTIP"), the Chairman's Share Matching Award and the Growth Incentive Plan ("GIP"). For more details on these schemes, refer to Note 4.12.

During the year, the Company established the Cash LTIP in order to incentivise selected high performing employees of the Group. At the end of the three-year vesting period, employees will be paid a cash amount equal to the notional number of awards at the prevailing share price, adjusted for the achievement of the performance conditions.

Provisions

Employee
incentive
schemes
£m
Total
£m
As at 2 December 2012
Charged/(credited) to the Income statement
— additional provision
Unused during the period
Unwind of discount
As at 1 December 2013
Charged/(credited) to the Income statement
— additional provision1.61.6
— unused amounts reversed
Used during the period
Unwind of discount
As at 30 November 20141.61.6

Analysis of total provisions as at 30 November 2014

Employee
incentive
schemes
£m
Total
£m
Current
Non-current1.61.6
1.61.6

Employee incentive schemes

The provision consists of the Cash LTIP and employers' NIC on HMRC unapproved equity-settled schemes. The Cash LTIP provision represents the expected cash payments to participants upon vesting of the awards. It has been calculated using various assumptions regarding liquidity, participants' retention and achievability of the performance conditions. If at any point following initial valuation any of these assumptions are revised, the charge will need to be amended accordingly. In addition to the base cost, since this is a cash benefit, the Company will be liable to pay employer's NIC on the value of the cash award upon vesting, which is included in the above employer's NIC provision.

To calculate the employer's NIC provision, the applicable employer's NIC rate is applied to the number of share awards which are expected to vest, valued with reference to the year-end share price. The number of share awards expected to vest is dependent on various assumptions which are determined by management; namely participants' retention rate, the expectation of meeting the performance criteria, if any, and the liquidity discount. All assumptions are supported by historical trends and internal financial forecasts, where appropriate.

For the GIP, an external valuation was carried out to determine the fair value of the awards granted (see Note 4.12 (g)).

If at any point during the life of each share award, any non-market conditions are subject to change, such as the retention rate or the likelihood of the performance condition being met, the number of share awards likely to vest will need to be recalculated which will cause the value of the employer's NIC provision to change accordingly.

Once the share awards under each of the schemes have vested, the provision will be utilised when they are exercised by participants. Vesting will occur between 2016 and 2019.