United Energy Group Limited - HKExnews

Annual Report 2009
Notes to the Financial Statements
For the nine months ended 31 December 2009
24. DERIVATIVE FINANCIAL INSTRUMENTS
At 31 At 31
December 2009 March 2009
HK$’000
HK$’000
Call options granted, at fair value – 7,727
On 6 June 2008, the Company entered into option deeds pursuant to which the Company is granted a put option
to sell and the shareholders of Glimmer Stone (the “Purchasers”) is granted a call option to acquire the remaining
26.3% of equity interests of Glimmer Stone within a specified period according to the relevant terms of the
agreements.
On 20 August 2009, the Company entered into termination agreement with the Purchasers for which the Company
had agreed to cancel the aforesaid option arrangement upon the completion of the disposal of Glimmer Stone. The
termination was completed on 27 August 2009.
The derivative is measured at fair value valued by a firm of independent professional valuers in Hong Kong by
using the Binomial Option Pricing Model. The significant inputs into the model were as follows:
At 31 March
2009
Spot price
HK$123,957,000
Exercise price
HK$116,256,000
Risk-free rate 0.110%
Expected life of the options
74 days
Expected price volatility 4.57%
Expected price volatility was based on the expected price volatility of the two convertible bonds of Kaisun Energy
Group Limited (formerly known as Challenger Group Holdings Limited) that are held by Glimmer Stone and its
subsidiary and are their major assets in accounts. The expected life of the options represents the remaining
exercise period of the options.
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