New Image Annual Report 2012 concept.indd - NZX

Notes to and forming part of the financial
statements (continued)
For the year ended 30 June 2012
Options
On 19 June 2008, the Company issued to Protocol Limited 3.2 million options to purchase ordinary
shares in the Company at an exercise price of 17 cents per share. The exercise of these options was
based on certain performance criteria being met pursuant to an agreement between the Company
and Protocol Limited in relation to the manufacture and sale of colostrum shots associated with the
joint venture company Primary Nutrition Limited.
On 20 December 2011, the Company reached a settlement agreement with Protocol Ltd in relation to
the termination of the Management Services Agreement (refer Note 31), whereby the options granted
to Protocol Ltd were cancelled, at no further cost to the Company.
The 30 June 2011 fair value of the equity settled options was estimated as at the date of grant using a
Black-Scholes Model taking into account the terms and conditions upon which the options were
granted. The model took into account the historic dividends, share price volatilities and co-variances
of the Company to produce a predicted distribution of relative share performance. This was applied
to the grant of options to give an expected value, which was recognised over the vesting period. The
weighted average fair value of the options granted was $0.05 per option. The Company did not assign
any value to these options as it was not expected that the performance criteria would be met and
therefore the options were unlikely to be exercised. Expenses arising from the equity settled share
based payments for 2011 were therefore $Nil.
Employee
Options
Share Scheme
No. of Options WAEP No. of Options WAEP
Balance 1 July 2011 3,200,000 0.17 8,730,000 0.27
Cancelled (3,200,000) 0.17 (8,730,000) 0.27
Balance 30 June 2012 - - - -
Employee
Options
Share Scheme
No. of Options WAEP No. of Options WAEP
Balance 1 July 2010 - - 7,095,000 0.29
Granted/Reinstated 3,200,000 0.17 2,000,000 0.28
Forfeited - - (365,000) 0.67
Balance 30 June 2011 3,200,000 0.17 8,730,000 0.27
The Weighted Average Exercise Price (WAEP) is the price at which each tranche of the options and
share scheme options are exercisable, multiplied by the number of options and share scheme options
remaining to achieve a total weighted average exercise price. No options were exercisable at year end.
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The following table lists the inputs to the models used for 30 June 2011:
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Employee
Share Scheme
Employee
Share Scheme
Employee
Share Scheme
2011 2011 2011
Tranche 1 Tranche 2 Tranche 3
Dividend Yield (%) 2.94 4.90 8.87
Expected Volatility (%) 50.00 50.00 50.00
Risk-free Interest Rate (%) 5.48 5.51 5.49
Expected Life (Years) 4.00 4.00 4.00
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Going Concern
The Board has considered forecast information relating to the operational profitability and cash flow
requirements. The Board is satisfied there are sufficient cash flows generated from the operating
activities to meet the investing and financing cash flow requirements of the Group.
Exercise Price ($) 0.19 0.97 0.41
Weighted Average Share Price at Measurement Date ($) 0.13 0.67 0.28
Weighted Average Remaining Life (Years) as at 30 June
2011 3.93 3.42 3.00
Model Used Black-Scholes Black-Scholes Black-Scholes
The expected volatility was determined using an historical sample of month end Company share
prices. The resulting expected volatility therefore reflects the assumption that the historical volatility
is indicative of future trends, which may also not necessarily be the actual outcome.
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Commitments
Operating Lease Commitments – Group as lessee
Operating lease commitments are commitments in respect of non cancellable operating leases and
property leases contracted for at the reporting date but not recognised as liabilities payable.
NEW IMAGE GROUP ANNUAL REPORT
NEW IMAGE GROUP ANNUAL REPORT