20. share option schemes continued
note c: these options were granted to certain directors and employees. the awards will vest in full (and become exercisable)
on the share price being equal to or exceeding £6.00 per share for a continuous period of 90 calendar days at any time from the
date of grant. if there is a change of control, the awards will vest in full immediately unless the share price is less than £5.00 per
share, in which case the awards will lapse in full. the awards have been treated as vesting over a 3 year period. the directors'
options under this scheme were cash cancelled after the year end on completion of the acquisition of bwin.party, and the aftertax
proceeds re-invested in new GVC shares at 422p per share, the placing price.
note d: these awards were issued on the same basis as the awards in Note c but were awarded as cash settled rather than
equity settled options. the director's options under this scheme were cash cancelled after the year end on completion of the
acquisition of bwin.party, and the after-tax proceeds re-invested in new GVC shares at 422p per share, the placing price.
the charge to the consolidated income statement in respect of these options in 2015 was €449,000 (2014: €736,000). of the
2015 charge, €509,000 related to equity settled options and a net credit of €60,000 to cash settled options. the deduction from
equity in respect of the cash payments to be made for the surrender of the vested equity instruments was €12,183,000.
20.1 Weighted average exercise price of options
the number and weighted average exercise prices of share options is as follows:
exercise number of exercise number of
price options price options
2015 2015 2014 2014
outstanding at the beginning of the year 94p 6,806,947 191p 3,801,667
Granted during the year - - 1p 3,450,000
exercised during the year - - 184p (369,720)
surrendered/bought out in the year 184p (3,200,000) 213p (75,000)
Forfeited in the year 1p (125,000) - -
outstanding at the end of the year 11p 3,481,947 94p 6,806,947
exercisable at the end of the year 156,947 3,356,947
the options outstanding at 31 december 2015 have a weighted average contractual life of 8.4 years (2014: 5.9 years).
20.2 Valuation of options
the fair value of services received in return for share options granted were measured by reference to the fair value of share
options granted. With the exception of the options granted in 2014 the estimate of the fair value of the services received is
measured on a Binomial valuation model. the contractual life of the option (10 years) is used as an input into this model.
expectations of early exercise are incorporated into the Binomial model. the option exercise price for all individuals was the
average market price on grant date, with the exception of the options granted to third parties as part of the sportingbet acquisition.
these were priced at the amount the Group offered as consideration for the purchase.
the 2014 options were valued using a monte Carlo model due to the performance conditions associated with the options. the
2014 cash-settled options have been revalued using a monte Carlo model at 31 december 2015.
Fair value of share options and assumptions:
price at exercise expected Fair value at
date of grant* price expected exercise dividend Risk free measurement
date of grant (in £) (in £) volatility multiple yield rate** date (in £)
21 may 10 1.85 2.13 60% 2 17% 2.75% 0.39
21 may 10 1.85 0.01 60% 2 17% 2.75% 0.05
21 may 10 1.85 1.50 60% 2 17% 2.75% 0.59
28 Jan 12 1.67 1.5479 58% 2 20% 2.19% 0.33
28 Feb 13 2.375 2.335 60% 2 12.15% 0.572% 0.61
02 Jun 14 - equity settled 4.49 0.01 24% n/a 10.00% 1.425% 0.41
02 Jun 14 - cash settled 4.49 0.01 21% n/a 9.40% 0.52% 0.28
* This is the bid price, not the mid-market price, at market close, as sourced from Bloomberg.
** The measurement of the risk-free rate was based on rate of UK sovereign debt prevalent at each grant date over the expected term of the
78 GVC HOLDINGS PLC ANNUAL REPORT 2015
notes to the consolidated financial statements continued
for the year ended 31 december 2015