Adcock Ingram Integrated Report 2018

ANNUAL FINANCIAL STATEMENTS 114 ADCOCK INGRAM  Integrated Report 2018 Annexure B – Share-based payment plans continued CASH-SETTLED 2018 2017 Number WAOP (Rand) Number WAOP (Rand) Outstanding at the beginning of the year 1 016 193 57.85 1 615 893 57.85 Forfeited (757 269) 59.13 (356 142) 61.35 Exercised (201 771) 55.89 (243 558) 57.75 Outstanding at the end of the year 57 153 56.63 1 016 193 57.85 Vested and exercisable at the end of the year 57 153 56.63 757 113 57.24 2018 2017 Weighted average share price of exercised options: R68.24 R61.14 Weighted average remaining contractual life for the share options outstanding at reporting date: 0.65 years 1.27 years Range of offer prices for options outstanding at the end of the year: R53.52 – R60.55 R53.52 – R60.70 Carrying amount of the liability relating to the cash-settled options at reporting date (million): R0.41 R7.38 Expense recognised for employee services received during the year (million): R4.66 R5.36 Share price volatility is based on the historical volatility of the Adcock Ingram share price matching the remaining life of each option. The valuation is measured at fair value (excluding any non-market vesting conditions) and is the sum of the intrinsic value plus optionality. The fair value of each option is estimated using an actuarial binomial option pricing model. All options are valued with a single exercise date at maturity. B BLACK MANAGERS SHARE TRUST In terms of the Tiger Brands Limited BEE transaction implemented on 17 October 2005, 4 381 831 Tiger Brands shares were acquired by the Tiger Brands Black Managers Share Trust. Allocation of vested rights to these shares was made to black managers. The allocation of vested rights entitles beneficiaries to receive Tiger Brands and Adcock Ingram shares (after making capital contributions to the Black Managers Share Trust) at any time after the defined lock-in period, i.e. from 1 January 2015. These vested rights are non-transferable. 2018 2017 Number of shares Adcock Ingram Tiger Brands Adcock Ingram Tiger Brands Outstanding at the beginning of the year 460 575 395 385 533 318 503 687 Forfeited – – (2 739) (4 534) Exercised (77 821) (52 933) (70 004) (103 768) Outstanding at the end of the year 382 754 342 452 460 575 395 385 Vested and exercisable at the end of the year 426 197 354 855 426 197 354 855 Weighted average exercise price R61.97 R392.38 R 50.89 R 390.71 2018 2017 Weighted average remaining contractual life for the share options outstanding at reporting date: 9.25 years 10.25 years Expense recognised for employee services received during the year (million): R7.26 R14.32 Participation rights were valued using the Monte-Carlo simulation approach to estimate the average, optimal pay-off of the participation rights using 5 000 permutations. The pay-off of each random path was based on: • the projected Tiger Brands/Adcock Ingram share price; • outstanding debt projections; and • optimal early exercise conditions.