Carphone Warehouse 2009 Annual Report Download - page 65

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www.cpwplc.com 61
Financial Statements
The options outstanding at 31 March 2009 had a weighted average remaining contractual life of 8.2 years (2008: 2.1 years).
The options exercised during the year were exercised at a weighted average market price of £1.87 (2008: £3.33).
The summary above includes 0.6m (2008: 0.6m) options that were granted before 7 November 2002. In accordance with IFRS 2,
no cost has been recognised in respect of these options.
Within options outstanding at 31 March 2009 were 4m options (2008: 4m) held by employees of discontinued operations,
of which none (2008: none) were exercisable at the end of the year.
f) Fair value models:
Nil cost options with internal performance targets were 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 have
been estimated at the date of grant using a Binomial model. The inputs into the Binomial model were as follows:
2009 2008
Expected volatility (%) 35.0 29.2
Risk free rate (%) 3.1 5.8
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 were 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 reects a volatility of 27.4%. A dividend
yield of 2.0% was assumed in the model.
g) Charge to income statement:
During the year the Group recognised a charge of £6m (2008: £9m) within continuing operations in respect of equity settled
share-based payments. The net charge in the year for share-based payments in relation to discontinued operations was
£nil (2008: £nil).
8 Interest expense and income (finance costs)
Interest expense for continuing operations is analysed as follows:
Restated
2009 2008
£m £m
Interest on bank loans and overdrafts 29 49
Amortisation of facility fees and similar charges 1 2
Foreign exchange losses (see note 4) 85 –
115 51
Interest income for continuing operations is analysed as follows:
Restated
2009 2008
£m £m
Interest on cash and cash equivalents 7 4
Interest element of forward currency contracts – 1
Interest on loans to joint ventures and associates 13 1
Other interest receivable 6 –
26 6