FORWARD TOGETHER Notes to the Consolidated Financial Statements 31 December 2022 218 42. SHARE-BASED COMPENSATION PLAN (continued) A. Share Option Plan issued by the Company (continued) The fair value of share options granted during the years ended 31 December 2022 and 2021 was estimated as at the date of grant using a binomial model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used: As at 31 December 2022 As at 31 December 2021 Dividend yields (%) — — Volatility (%) 25.06 25.59 Risk-free interest rate (%) 2.87 1.13 Expected life of options (year) 10.00 10.00 The expected life of the options is based on the historical data over the past three years and is not necessarily indicative of the exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other feature of the options granted was incorporated into the measurement of fair value. The 19,396,448 share options exercised during the year resulted in the issue of 14,955,955 ordinary shares of the Company and new share capital of US$14,956 (before issue expenses), as further detailed in note 41. At 31 December 2022, the Company had 44,391,293 share options outstanding under the Plans. The exercise in full of the outstanding share options by the conventional exercise method would, under the present capital structure of the Company, result in the issue of 44,391,293 additional ordinary shares of the Company and additional share capital and share premium of US$83,120,000 (before issue expenses). At the date of approval of these financial statements, the Company had 44,391,293 share options outstanding under the Plans, which represented approximately 1.0% of the Company’s shares in issue as at that date. B. Share Option Plan by a subsidiary of the Company On 20 January 2022, the Group completed the acquisition of 100% equity interests in ARA Group. ARA Group has the following share-based payment arrangement held by its subsidiary. In 2021, the subsidiary established an employee share option plan ("ESOP Plan"), subject to the subsidiary’s board of directors’ discretion, which entitles employees to purchase shares in the company. The ESOP Plan is intended to motivate, reward and retain certain members of the management team and the purpose is to promote the long-term growth of the subsidiary and drive strategic and economic alignment with shareholders. Under the ESOP Plan, subject to the subsidiary’s board of directors’ discretion, holders of vested options are entitled to purchase shares at an exercise price determined by the board of directors of the subsidiary having regard to the market value of an ordinary share at the date on which the options were granted. The ESOP Plan shall expire in September 2031.
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