Dagang NeXchange Berhad Annual Report 2018

15. CAPITAL AND RESERVES (CONTINUED) Share option reserve The share option reserve comprises the cumulative value of employee services received for the issue of share options. When the option is exercised, the amount from the share option reserve is transferred to share capital. When the share option expire, the amount from the share option reserve is transferred to retained earnings. At an extraordinary general meeting held on 27 January 2016, the Company’s shareholders approved the establishment of an Employee Share Option Scheme (ESOS) of up to 5% of the issued and paid-up share capital of the Company, to eligible Directors and employees of the Company and of its subsidiaries (“Eligible Persons”). A total of 38,912,800 ESOS options were offered to Eligible Persons as defined in the ESOS By-Laws to subscribe for new ordinary shares in the Company under its ESOS. On 14 September 2016, the Group granted share options to qualified employees and Executive Directors to purchase shares in the Company. The salient features of the above ESOS are, inter alia, as follows: i) The ESOS shall be in force for a period of five (5) years from the implementation date of 25 August 2016. The unexercised ESOS will become null and void after the date of expiry on 24 August 2021. ii) Subject to compliance with the Listing Requirements, guidelines or directives issued by Bursa Malaysia Securities Berhad and/or any of the relevant authorities, the Company may at any time during the duration of the ESOS terminate the ESOS and shall immediately announce to Bursa Malaysia Securities Berhad the effective date, number of ESOS and reasons for the termination. The options offered to take up unissued ordinary shares and the exercise price is as follows: Number of options over ordinary shares Exercise At At Date of offer price 1.1.2018 Exercised Forfeited 31.12.2018 14 September 2016 RM0.245 16,241,414 (2,663,200) (55,600) 13,522,614 The fair values of the share options granted were estimated using the Binomial Option pricing model, taking into account the terms and conditions upon which the options were granted. The fair values of the share options measured at grant date and the assumptions used are as follows: Fair value of share options at the grant date RM0.063 Weighted average ordinary share price RM0.275 Exercise price of share option RM0.245 Expected volatility 39.85% Expected life 5 years Risk free rate 3.25% Expected dividend yield 11.13% 145 Annual Report 2018 Notes to the Financial Statements (CONTINUED) FINANCIAL STATEMENTS