SHARE OPTIONS AND SHARE WARRANTS

12 Months Ended

Dec. 31, 2017

Disclosure of share options and share warrants [Abstract]

SHARE OPTIONS AND SHARE WARRANTS

21. SHARE OPTIONS AND SHARE WARRANTS

Warrants

There were no warrants outstanding at the beginning of 2017, and there were no warrants granted in either 2017 or 2016. As there were no warrants outstanding, the warrant reserve was transferred to the accumulated surplus reserve during 2017.

Options

Under the terms of the Company’s Employee Share Option Plans, options to purchase 10,727,376‘A’ Ordinary Shares (2,681,844 ADSs) were outstanding at December 31, 2017. Under these Plans, options are granted to officers, employees and consultants of the Group at the discretion of the Compensation Committee (designated by the board of directors), under the terms outlined below.

Certain options have been granted to consultants of the Group and, where this is the case, the Group has measured the fair value of the services provided by these consultants by reference to the fair value of the equity instruments granted. This approach has been adopted in these cases as it is impractical for the Group to reliably estimate the fair value of such services.

The terms and conditions of the grants are as follows, whereby all options are settled by physical delivery of shares:

Vesting conditions

The options vest following a period of service by the officer or employee. The required period of service is determined by the Compensation Committee at the date of grant of the options (usually the date of approval by the Compensation Committee) and it is generally over a three to four year period. There are no market conditions associated with the share option vesting periods.

Contractual life

The term of an option is determined by the Board, Compensation Committee and Remuneration Committee provided that the term may not exceed a period of between seven to ten years from the date of grant. All options will terminate 90 days after termination of the option holder’s employment, service or consultancy with the Group (or one year after such termination because of death or disability) except where a longer period is approved by the Board of Directors. Under certain circumstances involving a change in control of the Group, the Compensation Committee may accelerate the exercisability and termination of options.

The number and weighted average exercise price of share options and warrants per ordinary share is as follows (as required by IFRS 2, this information relates to all grants of share options and warrants by the Group):

	Options andwarrants			Weighted-average exerciseprice US$		Range US$
	‘A’ OrdinaryShares			Per ‘A’ Ordinary Share		Per ‘A’ OrdinaryShare
Outstanding January 1, 2015		9,291,652			3.20		0.66 –4.79
Granted		976,000			3.20		2.71 –4.47
Exercised		(1,602,000	)		1.95		1.07 –4.21
Forfeited		(507,200	)		3.96		2.50 –4.79
Outstanding at end of year		8,158,452			3.36		0.66 –4.47
Exercisable at end of year		4,679,323			3.03		0.66 –4.23
Outstanding January 1, 2016		8,158,452			3.36		0.66 –4.47
Granted		2,160,000			2.39		1.67 –2.80
Exercised		(322,272	)		2.09		0.66 –2.65
Forfeited		(165,997	)		3.39		2.52 –3.61
Outstanding at end of year		9,830,183			3.19		0.66 –4.47
Exercisable at end of year		5,838,851			3.31		0.75 –4.23
Outstanding January 1, 2017		9,830,183			3.19		0.66 –4.47
Granted		5,630,000			1.31		1.24 –1.44
Exercised		-			-		-
Forfeited		(4,732,807	)		3.86		0.75 –4.47
Outstanding at end of year		10,727,376			1.92		1.24 –4.36
Exercisable at end of year		3,268,707			2.57		1.66 –4.36

	Options andwarrants			Weighted-average exerciseprice US$		Range US$
	‘ADS’ Equivalent			Per ‘ADS’		Per ‘ADS’
Outstanding January 1, 2015		2,322,913			12.80		2.63 –19.15
Granted		244,000			12.80		10.84 –17.88
Exercised		(400,500	)		7.80		4.28 –16.84
Forfeited		(126,800	)		15.84		10.00 –19.16
Outstanding at end of year		2,039,613			13.44		2.63 –17.88
Exercisable at end of year		1,169,831			12.12		2.63 –16.92
Outstanding January 1, 2016		2,039,613			13.44		2.63 –17.88
Granted		540,000			9.57		6.69 –11.20
Exercised		(80,568	)		8.35		2.64 –10.61
Forfeited		(41,499	)		13.58		10.08 –14.44
Outstanding at end of year		2,457,546			13.43		2.64 –17.88
Exercisable at end of year		1,459,713			13.24		3.00 –16.92
Outstanding January 1, 2017		2,457,546			12.74		2.64 - 17.88
Granted		1,407,500			5.25		4.95 – 5.75
Exercised		-			-		-
Forfeited		(1,183,202	)		10.26		3.00 –17.88
Outstanding at end of year		2,681,844			7.69		4.96–17.44
Exercisable at end of year		817,179			10.29		6.64 –17.45

There were no share options exercised during 2017. The weighted average share price per ‘A’ Ordinary share at the date of exercise for options exercised in 2016 was: US$2.96 per ‘A’ Ordinary share (US$11.84 per ADS) and 2015: US$4.25 per ‘A’ Ordinary share (US$17.00 per ADS).

The opening share price per ‘A’ Ordinary share at the start of the financial year was US$1.73 or US$6.93 per ADS (2016: US$2.92 or US$11.69 per ADS) (2015: US$4.38 or US$17.50 per ADS) and the closing share price at December 31, 2017 was US$1.28 or US$5.10 per ADS (2016: US$1.73 or US$6.92 per ADS) (2015: US$2.94 or US$11.76 per ADS). The average share price for the year ended December 31, 2017 was US$1.42 per ‘A’ Ordinary share or US$5.66 per ADS.

A summary of the range of prices for the Company’s stock options for the year ended December 31, 2017 follows:

	Outstanding						Exercisable
Exercise price range	No. ofoptions‘A’ ordinaryshares		Weighted–averageexerciseprice		Weighted-averagecontractualliferemaining(years)		No. ofoptions‘A’ ordinaryshares		Weighted–averageexerciseprice		Weighted-averagecontractualliferemaining(years)
US$1.00-US$2.05		6,075,644		1.38		6.52		215,652		1.69		2.57
US$2.06- US$2.99		4,333,732		2.52		3.20		2,861,061		2.53		2.20
US$3.00 -US$4.47		318,000		4.21		3.95		192,002		4.21		3.92
		10,727,376						3,268,715

	Outstanding						Exercisable
Exercise price range	No. ofoptions‘ADSequivalent’		Weighted–averageexerciseprice		Weighted-averagecontractualliferemaining(years)		No. ofoptions‘ADSequivalent’		Weighted–averageexerciseprice		Weighted-averagecontractualliferemaining(years)
US$4.00-US$8.20		1,518,911		5.52		6.52		53,913		6.76		2.57
US$8.24- US$11.96		1,083,433		10.08		3.20		715,265		10.12		2.20
US$12.00 -US$17.88		79,500		16.84		3.95		48,001		16.84		3.92
		2,681,844						817,179

The weighted-average remaining contractual life of options outstanding at December 31, 2017 was 5.10 years (2016: 4.16 years).

A summary of the range of prices for the Company’s stock options for the year ended December 31, 2016 follows:

	Outstanding						Exercisable
Exercise price range	No. ofoptions‘A’ ordinaryshares		Weighted–averageexerciseprice		Weighted-averagecontractualliferemaining(years)		No. ofoptions‘A’ ordinaryshares		Weighted–averageexerciseprice		Weighted-averagecontractualliferemaining(years)
US$0.66-US$0.99		14,000		0.80		1.70		14,000		0.80		1.70
US$1.00-US$2.05		801,652		1.63		2.71		571,652		1.59		1.01
US$2.06- US$2.99		4,776,531		2.54		4.29		2,230,534		2.54		2.20
US$3.00 -US$4.47		4,238,000		4.22		4.21		3,022,665		4.21		3.89
		9,830,183						5,838,851

	Outstanding						Exercisable
Exercise price range	No. ofoptions‘ADSequivalent’		Weighted–averageexerciseprice		Weighted-averagecontractualliferemaining(years)		No. ofoptions‘ADSequivalent’		Weighted–averageexerciseprice		Weighted-averagecontractualliferemaining(years)
US$2.63-US$3.96		3,500		3.20		1.70		3,500		3.20		1.70
US$4.00-US$8.20		200,413		6.52		2.71		142,913		6.36		1.01
US$8.24- US$11.96		1,194,133		10.16		4.29		557,634		10.16		2.20
US$12.00 -US$17.88		1,059,500		16.88		4.21		755,666		16.84		3.89
		2,457,546						1,459,713

The recognition and measurement principles of IFRS 2 have been applied to share options granted under the Company’s Share Option Plans since November 7, 2002 which have not vested by January 1, 2005 in accordance with IFRS 2.

Charge for the year under IFRS 2

The charge for the year is calculated based on the fair value of the options granted which have not yet vested.

The fair value of the options is expensed over the vesting period of the option. US$928,000 was charged to the statement of operations in 2017, (2016: US$1,381,446), (2015: US$1,550,000) split as follows:

	December 31, 2017 US$‘000		December 31, 2016 US$‘000		December 31, 2015 US$‘000
Share-based payments – cost of sales		35		32		9
Share-based payments – selling, general and administrative		893		1,349		1,541
Total – continuing operations		928		1,381		1,550
Share-based payments – discontinued operations		-		33		—
Total		928		1,414		1,550

The total share based payments charge for the year was US$1,109,000 (2016: US$1,633,000) (2015: US$1,974,000). However, a total of US$181,000 (2016: US$219,000) (2015: US$424,000) of share based payments was capitalised in intangible development project assets during the year.

The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of services received is measured based on a trinomial model. The following are the input assumptions used in determining the fair value of share options granted in 2017, 2016 and 2015:

	Keymanagementpersonnel	Otheremployees	Keymanagementpersonnel	Otheremployees	Keymanagementpersonnel	Otheremployees
	2017	2017	2016	2016	2015	2015
Weighted average fair value at measurement date per ‘A’ share / (per ADS)	US$0.43 / (US$1.72)	US$0.44 / (US$1.76)	US$0.58 / (US$2.32)	US$0.57 / (US$2.28)	Nil	US$0.68 / (US$2.72)
Total ‘A’ share options granted / (ADS’s equivalent)	5,150,000 /(1,287,500)	480,000 / (120,000)	1,700,000 /(425,000)	460,000 / (115,000)	Nil	976,000 / (244,000)
Weighted average share price per ‘A’ share / (per ADS)	US$1.34 /(US$5.36)	US$1.31 /(US$5.24)	US$2.43 /(US$9.72)	US$2.25 /(US$9.00)	Nil	US$3.20 /(US$12.80)
Weighted average exercise price per ‘A’ share / (per ADS)	US$1.34 /(US$5.36)	US$1.31 /(US$5.24)	US$2.43 /(US$9.72)	US$2.25 /(US$9.00)	Nil	US$3.20 /(US$12.80)
Weighted average expected volatility	40.62%	40.48%	29.63%	36.73%	Nil	29.27%
Weighted average expected life	4.45	4.69	4.81	3.74	Nil	3.73
Weighted average risk free interest rate	1.59%	1.91%	1.21%	1.29%	Nil	1.46%
Expected dividend yield	0.81%	0.81%	1.14%	0.96%	Nil	1.14%

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility is based on the historic volatility (calculated based on the expected life of the options). The Group has considered how future experience may affect historical volatility.

The profile and activities of the Group are not expected to change in the immediate future and therefore Trinity Biotech would expect estimated volatility to be consistent with historical volatility.