Annual Report 2019

206 Transport International Holdings Limited 2019 Annual Report Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 20 Equity-settled share-based transactions (continued) (b) The number and weighted average exercise prices of share options are as follows: 2019 2018 Weighted average exercise price Number of share options Weighted average exercise price Number of share options ’ 000 ’ 000 Outstanding at the beginning of the year $23.45 3,580 $23.45 4,300 Exercised during the year $23.45 (383) $23.45 – Forfeited during the year $23.45 (884) $23.45 (720) Outstanding at the end of the year $23.45 2,313 $23.45 3,580 Exercisable at the end of the year $23.45 2,313 $23.45 2,148 The weighted average share price at the date of exercise for shares exercised during the year was $23.45 (2018: $23.45). The options outstanding at 31 December 2019 had an exercise price of $23.45 (2018: $23.45) and a weighted average remaining contractual life of 1.83 years (2018: 2.83 years). (c) Fair value of share options and assumptions The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. The estimate of the fair value of the share options granted is measured based on the binomial model. The contractual life of the share option is used as an input into this model. Expectations of early exercise are incorporated into the binomial model. Fair value of share options and assumptions for share options granted on 31 October 2016 Fair value at measurement date $1.7937-$1.8457 Share price at the date of grant $23.45 Exercise price $23.45 Expected volatility 18% Option life (expressed as weighted average life used in the modelling under binomial model) 5 years Expected dividends 4.18% Risk-free interest rate (based on Hong Kong Exchange Fund Notes) 0.709% The expected volatility is based on the historic volatility and is assumed to remain unchanged during the weighted average remaining life of the share options (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility based on publicly available information. Expected dividends are based on historical dividends. Changes in the subjective input assumptions could materially affect the fair value estimate. Share options were granted under a service condition. This condition has not been taken into account in the grant date fair value measurement of the services received. There were no market conditions associated with the share option grants.