The conversion rate corresponds to 125 per cent of the volume-weighted trading price of the CDON Group share between 15 December 2010 and 14 January 2011 (the first 20 days of trading in the Group’s shares). The full conversion of the bond would result in an increase in the number of outstanding shares from 66,342,124 at 31 December 2010 to 72,921,071, and a 9.0% dilution effect.
The convertible bond is unsubordinated and bears a cash interest rate of 2.85 per cent per annum. The interest costs to be reported in the Group’s income statement are higher because the convertible bond is a compounded financial instrument, which, in accordance with IFRS, is reported partly as a liability and partly as equity in the Group’s balance sheet. The equity part is the value of the option to convert the bond into shares, which decreases over the period to maturity. This change in value between quarterly balance sheet dates is reported as a non-cash net financial item in the Group’s income statements.