Carphone Warehouse 2016 Annual Report Download - page 112

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Notes to the Group financial statements
110
5 Employee costs and share-based payments continued
b) Share-based payments continued
iv) Fair value model
The fair value of options was 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
Carphone Warehouse and, for options issued subsequent to the Merger on 6 August 2014, the historical performance of Dixons.
The weighted average fair value of options granted during the period was £0.74 (2014/15: £1.34). The following table lists the
inputs to the model:
Year ended
30 April
2016
13 months
ended
2 May
2015
Exercise price
£nil –
£3.77
£nil –
£3.44
Dividend yield 2.3% 2.2%
Historical and expected volatility
27% –
28%
31% –
35%
Expected option life
4 –
10 yrs
4 –
10 yrs
Weighted average share price £4.35 £4.14
v) Charge to the income statement and entries in reserves
During the year ended 30 April 2016, the Group recognised a non-cash accounting charge to profit and loss of £10 million
(13 months ended 2 May 2015: £10 million) in respect of equity settled share-based payments, with a corresponding credit
through reserves.
c) Employee Share Ownership Trust (ESOT)
30 April 2016 2 May 2015
Market
value
£million
Nominal
value
£million
Number
million
Market
value
£million
Nominal
value
£million
Number
million
Investment in own shares 3 — 0.7 4 — 0.9
Maximum number of shares held during the period 10 — 2.2 18 — 5.2
The Group has two ESOTs for the purposes of satisfying potential awards to employees under the Group’s share plans. The
number of shares held by the trusts, which are shown in the table above, remain held for potential awards under outstanding
plans. The costs of funding and administering the ESOTs are charged to the income statement in the year to which they relate.
Shareholders’ funds are reduced by the net book value of shares held in the ESOTs.
During the year, 1.9 million shares were purchased by the Dixons Retail plc ESOT for net cash consideration (after the receipt
of the exercise price from employees) of £5 million.
The ESOTs have waived their rights to receive dividends and the shares have not been allocated to specific schemes.
00_DC 2016 Annual Report.pdf 110 11/07/2016 18:34