Carphone Warehouse 2008 Annual Report Download - page 65

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6 Share-based payments (continued)
The options outstanding at 29 March 2008 had a weighted average remaining contractual life of 8.5 years (2007 – 7.7 years). The options exercised
during the period were exercised at a weighted average market price of £3.07 (2007 – £3.14). Of the 5.7m options outstanding at 29 March 2008,
there were 1.5m with an option price between £1.00 and £2.00; 0.7m between £2.01 and £3.00 and 3.5m above £3.01.
d) Other employee share option schemes:
The savings-related share option scheme permits the grant to employees of options linked to a bank save-as-you-earn contract for a term of three or
five years with contributions from employees of between £5 and £250 per month. Options may be exercised at the end of the three or five year period
at a subscription price not less than 80% of the middle market quotation on the date of grant.
In addition, options were granted to UK employees at the time of the Group’s admission to the London Stock Exchange.
The following table summarises the number and WAEP of share options for the scheme:
2008 2007
Number WAEP Number WAEP
million £ million £
Outstanding at the beginning of the period 8.8 1.60 8.9 1.09
Granted during the period 3.1 2.59 3.1 2.66
Forfeited during the period (1.7) 2.26 (1.4) 1.76
Exercised during the period (2.3) 1.07 (1.8) 0.78
Outstanding at the end of the period 7.9 2.00 8.8 1.60
Exercisable at the end of the period 0.5 0.88 0.7 0.87
The options outstanding at 29 March 2008 had a weighted average remaining contractual life of 2.1 years (2007 – 2.2 years). The options exercised
during the period were exercised at a weighted average market price of £3.33 (2007 – £2.81).
The summary above includes 0.6m (2007 – 1.1m) options that were granted before 7 November 2002. In accordance with IFRS2, no cost has been
recognised in respect of these options.
e) Fair value models:
Nil cost options with internal performance targets are valued using the market price of a share at the date of grant, discounted for expected future
dividends to the date of exercise. The fair values of other options with internal performance targets are estimated at the date of grant using a Binomial
model. The inputs into the Binomial model are as follows:
2008 2007
Expected volatility (%) 29.2 28.6
Risk free rate (%) 5.8 5.3
Dividend yield (%) 2.0 2.0
Expected volatility has been arrived at by using the historical volatility of the Group’s share price, and the volatility of the share price of similar companies,
whose shares have been listed for longer than those of the Group, over a period comparable with the expected lives of the options. The assumptions
made in relation to the timing of exercises are based on historical exercise patterns for each option scheme.
The fair values of options with external performance targets are estimated at the date of grant using a Monte Carlo model. The model combines the
market price of a share at the date of grant with the probability of meeting performance criteria, based on the historical performance of the Group’s
shares. The historical performance period reflects a volatility of 27.4%. A dividend yield of 2.0% has been assumed in the model.
f) Charge to income statement:
During the period the Group recognised a charge of £9.6m (2007 – £10.4m) in respect of equity settled share-based payments.
7Interest payable and receivable
Interest payable is analysed as follows:
2008 2007
£m £m
Interest on bank loans and overdrafts 51.2 30.2
Amortisation of facility fees and similar charges 2.0 0.7
Interest element of forward currency contracts –0.7
Other interest payable 0.3 0.8
53.5 32.4
Financial Statements