NewWorld Development Company Limited
FINANCIAL SECTION
152
14 STAFF COSTS
(continued)
(b) Share options
(continued)
Notes:
(i)
A share option scheme was adopted by the Company on 24 November 2006 and amended on 13 March 2012 which
will be valid and effective for a period of ten years from the date of adoption. On 19 March 2012, 16 November 2012,
22 January 2014 and 27 October 2014, 107,300,000, 9,400,000, 30,100,000 and 34,400,000 share options were
granted to Directors and certain eligible participants at the exercise price of HK$9.770, HK$11.996, HK$10.400 and
HK$9.510 per share respectively.
The Company declared final dividend for the year ended 30 June 2014 and interim dividend for the six months ended
31 December 2014 in cash (with scrip option) during the year. Accordingly, adjustments were made to the number
of outstanding share options and the exercise price. The exercise price per share of the share options granted on 19
March 2012 was adjusted from HK$9.176 to HK$9.172 on 30 December 2014, and further to HK$9.161 on 22 May
2015. The exercise price per share of the share options granted on 16 November 2012 was adjusted from HK$11.267
to HK$11.262 on 30 December 2014, and further to HK$11.249 on 22 May 2015. The exercise price per share of the
share options granted on 22 January 2014 was adjusted from HK$9.781 to HK$9.777 on 30 December 2014, and
further to HK$9.766 on 22 May 2015. The exercise price per share of the share options granted on 27 October 2014
was adjusted from HK$9.510 to HK$9.506 on 30 December 2014, and further to HK$9.495 on 22 May 2015.
The share options granted on 19 March 2012 were divided into 4 tranches and exercisable from 19 March 2012, 19
March 2013, 19 March 2014 and 19 March 2015 respectively to 18 March 2016.
The share options granted on 16 November 2012 were divided into 4 tranches and exercisable from 16 November
2012, 16 November 2013, 16 November 2014 and 16 November 2015 respectively to 15 November 2016.
The share options granted on 22 January 2014 were divided into 4 tranches exercisable from 22 January 2014, 22
January 2015, 22 January 2016 and 22 January 2017 respectively to 21 January 2018.
The share options granted on 27 October 2014 were divided into 4 trenches exercisable from 27 October 2014, 27
October 2015, 27 October 2016 and 27 October 2017 respectively to 26 October 2018.
The fair value of the share options granted during the year is estimated at HK$1.780 (2014: HK$2.054) per share using
the Binomial pricing model. Value is estimated based on the risk-free rate of 1.026% (2014: 1.192%) per annum with
reference to the market yield rates of the Hong Kong Government Bond (maturing 10 December 2018) as of the value
date, a historical volatility of 31.73% (2014: 31.90%) calculated based on the historical price with period equals to the
life of the options, assuming dividend yield of 3.82% (2014: 3.29%) based on the average dividend yield in the past
five years and an expected option life of four years.
For the year ended 30 June 2015, the weighted average share price at the time of exercise was HK$10.465 per share.
(ii) On dates of grant, the share options are divided into 3 to 5 tranches and exercisable within a period of 3 to 5 years
commencing on the expiry of one month after the dates on which the options were accepted.
The fair value of options granted during the year determined using the Binomial pricing model was HK$21.8 million
(2014: HK$9.0 million). The significant inputs to the model was share price ranging from HK$4.42 to HK$5.36 (2014:
HK$3.97 to HK$4.01) at the grant dates, exercise prices ranging from HK$4.42 to HK$5.42 (2014: HK$3.97 to HK$4.01),
volatility of the share ranging from 37.94% to 40.52% (2014: 44.49% to 51.49%), expected life of options of 5 years
(2014: 5 years), expected dividend yield ranging from 0.57% to 1.68% (2014: 1.24% to 1.89%), risk-free interest rate
ranging from 1.17% to 1.40% (2014: 1.19% to 1.51%) per annum and suboptimal exercise factor ranging from 1.90
to 1.91 times (2014: 1.91 to 1.93 times) of the exercise prices (which accounts for the early exercise behaviour of the
option holders). The volatility measured at the standard deviation of expected share price returns is based on statistical
analysis of daily share prices of NWCL over the past 5 years.
For the year ended 30 June 2015, the weighted average share price at the time of exercise was HK$4.931 per
share and HK$5.166 per share under the NWCL 2002 Share Option Scheme and NWCL 2011 Share Option Scheme
respectively.
