ESR AR 2019 EN

Notes to the Consolidated Financial Statements 31 December 2019 221 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ESR Annual Report 2019 42. SHARE OPTION PLAN (continued) The fair value of the share options granted during 2018 and 2019 was approximately USD36,456,000 (USD0.68 each) and USD2,640,000 (USD0.46 each), respectively. The fair value of equity-settled share options granted during the years ended 31 December 2019 and 31 December 2018, 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 As at 31 December 2019 2018 USD’000 USD’000 Dividend yields (%) – – Volatility 20.09 32.70-34.41 Risk-free interest rate (%) 2.26-2.77 2.33-3.11 Expected life of options (year) 10.00 8.8-10 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 42,897,000 share options exercised during the year resulted in the issue of 18,452,806 ordinary shares of the Company and new share capital of USD19,000 (before issue expenses), as further detailed in note 41. Shares to be issued for 5,705,000 share options exercised during the year will be issued after 1 May 2020 as a result of a delayed settlement arrangement. The exact number of shares to be issued is subject to calculation (by considering any income tax and social security contribution), which shall not be more than the number of options exercised in any event. At the 31 December 2019, the Company had 82,174,000 share options outstanding under the Plans. The exercise in full of the outstanding share options by conventional exercise method would, under the present capital structure of the Company, result in the issue of 82,174,000 additional ordinary shares of the Company and additional share capital and share premium of USD60,266,000 (before issue expenses). At the date of approval of these financial statements, the Company had 82,174,000 share options outstanding under the Plans, which represented approximately 2.71% of the Company’s shares in issue as at that date.