Annual report 2008, 1.19 MB - Telenor

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NOTES TO THE FINANCIAL STATEMENTS Telenor Group PAGE 84 37 SHARE-BASED PAYMENTS Share-based transactions DiGi entered into a defi nitive agreement in early 2008 with Time dotCom Bhd for the proposed transfer of the 3G spectrum, to be satisfi ed via a share issuance of 27.5 million new DiGi shares. On 7 May 2008, following the approval from all relevant authorities in Malaysia, DiGi obtained the 3G spectrum assignment and the new shares was allotted and issued to Time dotCom Bhd accordingly. With the new shares issued, Telenor’s ownership interest in DiGi was reduced from 50.8% to 49.0% (see note 3). The new shares were quoted on Bursa Malaysia Securities Berhad on 12 May 2008. The fair value of the 3G license was estimated with the assistance of independent valuation experts. The quoted market price of the shares in DiGi issued as consideration for the 3G license was within the range of fair values estimated for the 3G license, and accordingly, the 3G license was recorded at the market price for the shares issued. Share-based compensation Telenor had option programmes until 2007 for managers and key personnel. The programme was terminated in 2007, but the individual outstanding option agreements are still effective. In 2007 Telenor introduced a Long Term Incentive for managers and key personnel based on fi xed monetary compensation which shall be used to purchase Telenor shares. In addition, Telenor has a Share Programme for all employees in selected subsidiaries. Share Programme for employees Every year since Telenor was listed on Oslo Stock Exchange in 2000 it has offered all employees in selected subsidiaries to purchase shares with a discount and potential for bonus shares. In 2008 the programme included all employees in Norway, Sweden, Denmark, Finland, Hungary, Serbia and Montenegro. In 2007 the programme was changed from a fi xed investment amount with bonus shares depending on Telenor’s absolute share price development to investment in % of Base Salary and bonus shares depending on relative performance. The new programme offers employees to purchase Telenor shares for 1, 2, 3, or 4 per cent of the gross annual Base Salary with a discount of 20 per cent, maximum NOK 1,500. If the Telenor-share performs better than the Dow Jones Stoxx Telecom Index over the next 2 years, the employees will be granted bonus shares matching the number of purchased shares still hold by the end of the performance period and assuming the individual is still employed. The bonus shares expected to be granted at the end of the performance period are expensed over the vesting period (see also note 8). Participation in the programme introduced in 2008 was approximately 27% and approximately 31% in the programme introduced in 2007. The employees signed up for programme introduced in December 2008 and the shares are purchased in 2009. For the program introduced in 2007 the employees signed up for shares in December 2008 and the shares were purchased during 2008. Long Term Incentive The current Long Term Incentive (LTI) is a fi xed monetary compensation of 15 to 30 percent of the annual Base Salary, depending on role. The net amount shall be used to purchase Telenor shares with a lock-in period of three years. For the 2008 programme the lock in period ends 1 July 2011 and for the 2007 programme it ends 1 July 2010. Approximately 100 employees in 2008 and 2007 holding national and international managerial positions participated in the programme. The managers acquired the shares at the volume-weighted average of the fi ve calendar days from 28 July 2008 (5 November 2007), NOK 78.94 (NOK 127.03), in total 203,706 shares (127,044 shares). The total amount received by the employees under the LTI, which will be the fair value, is recorded as an asset in the balance sheet and will be expensed over the vesting period (see also note 8). EDB has a similar LTI in 2008 and 2007 for executive management with a fi xed annual monetary compensation of NOK 1 million for chief executive offi cer and NOK 350,000 for the Executive Vice Presidents which shall be used to purchase EDB shares with a lock-in period of three years. The managers acquired the shares at NOK 27.20 on 22 July 2008. In the 2007 programme the shares were acquired at NOK 55.49 on 18 July 2007 and 35.54 on 31 January 2008. Share Option Programme in Telenor ASA In 2006, 2.66 million options were granted to around 130 managers and key personnel. All these options vest after 3 years and have a total life time of 7 years. The exercise price corresponds to the average closing price at Oslo Stock Exchange ten trading days prior to the grant date, NOK 74.90. Maximum gain on the options is subject to a cap at 42% share price increase prior to July 2010 and at 60% share price increase in July 2010. These levels correspond to NOK 31.46 and NOK 44.94, respectively. After July 2010 the maximum gain per option is NOK 44.94 plus share price increase from July 2010 until time of exercise. 85 managers and key personnel were granted options in 2002 and 110 managers and key personnel were granted options in 2003. 12 new managers and key personnel were granted options in 2004. In 2005 there were no options granted. One third of the options vest each of the three years subsequent to the date of grant. The latest possible exercise date is seven years subsequent to the grant date. The options may only be exercised four times a year, during a ten-day period after the publication of the company’s quarterly results. For options granted in 2002: The exercise price corresponds to the average closing price at Oslo Stock Exchange fi ve trading days prior to the grant date, increasing with an interest per commenced month corresponding to 1/12 of 12 months NIBOR (Norwegian Inter Bank Offered Rate). For options granted in 2003 and 2004: The options are exercisable if the share price at the time of exercise is higher than the average closing price at the Oslo Stock Exchange fi ve trading days prior to the date of grant, adjusted with 5.38% per year. The exercise price corresponds to the average closing price at Oslo Stock Exchange fi ve trading days prior to the grant date, which was NOK 26.44 for options granted in 2003 and NOK 48.36 for options granted in 2004. ANNUAL REPORT 2008
NOTES TO THE FINANCIAL STATEMENTS Telenor Group The share option plans are considered equity-settled programmes. Telenor ASA’s option programmes include the option for Telenor to settle in cash. Options Telenor ASA Average exercise price at the Share options end of option life (NOK) 1) Balance as of 31 December 2006 3 959 632 61.26 Options granted in 2007 - - Options forfeited in 2007 315 000 71.53 Options exercised in 2007 343 000 45.32 Balance as of 31 December 2007 3 301 632 62.29 Options granted in 2008 - - Options forfeited in 2008 285 000 73.20 Options exercised in 2008 8 333 26.44 Balance as of 31 December 2008 3 008 299 61.37 1) Exercise price for the 2002 programmes are calculated at the latest possible date of exercise, and based on 12 month NIBOR (as of 20 February 2008), implied forward rates calculated of the spot curve. For the share option programmes of 2003, 2004 and 2006, the exercise prices are fi xed through the options’ term. For share options exercised during 2008 the weighted average share price at the date of exercise was NOK 105.35 (NOK 117.77 in 2007). The table below details Telenor’s options outstanding by related option exercise price as of 31 December 2008 and is based on the latest possible exercise price. All options may be exercised prior to the end of the lifetime of the options. Weighted average Options outstanding as of Options exercisable as of Weighted average remaining life as of Programme exercise price (NOK) 31 December 2008 31 December 2008 31 December 2008 2002 43.67 1) 268 333 268 333 0.15 2003 26.44 664 966 664 966 1.14 2006 74.90 2) 2 075 000 - 4.52 Weighted average Options outstanding as of Options exercisable as of Weighted average remaining life as of Programme uexercise price (NOK) 31 December 2007 31 December 2007 31 December 2007 2002 43.20 1) 268 333 268 333 1.1 2003 26.44 683 299 683 299 2.1 2006 74.90 2) 2 350 000 - 5.6 1) Exercise price for the 2002 programmes are calculated at the latest possible date of exercise, and based on 12 month NIBOR (as of 20 February 2008 and 2007 respectively), implied forward rates calculated of the spot curve. For the share option programmes of 2003, 2004 and 2006, the exercise prices are fi xed throughout the options’ terms. 2) Assumes that the cap as described above is not reached. If the cap is reached, the exercise price will be adjusted up. The fair value of share-based compensation at the grant date is expensed over the vesting period (see also note 8). Telenor uses a Black & Scholes valuation model to calculate the fair value. Option programme for shares in EDB Business Partner ASA In June 2006 EDB granted 1,500,000 share options to key personnel. The exercise price for the CEO’s 250,000 options was set at NOK 51.14 per share. Other key personnel were granted 1,250,000 options at an exercise price of NOK 52.10. The exercise price is equivalent to the volume-weighted average closing price on the Oslo stock exchange fi ve days before and fi ve days after the options were granted. In 2007 another 360,000 options were granted, whereof 260,000 options on 30 January at an exercise price of 58.07 and 100,000 options on 1 March at an exercise price of NOK 53.03. Exercise of the options is conditional on the share price at the time of exercise being at least equal to the exercise price plus interest equivalent to 5.38% per annum or 0.483% per month. Maximum gain on the option is subject to a cap at 250% of the exercise price. The vesting period for the options is three years, and once vested the options can be exercised on a quarterly timetable. Exercise of the options will take place either by transfer from the company’s holdings of its own shares or by cash payment. In the 2004 programme 1,369,994 options, were granted to other management and key employees whereof 999,994 were granted in April 2004 at an exercise price of NOK 45.55, 25,000 options were granted in November 2004 at an exercise price of NOK 44.83, and 345,000 options were granted in 2005: 220,000 in January 2005 at an exercise price of NOK 48.27, 100,000 on 1 October 2005 at an exercise price of NOK 49.04 and 25,000 on 10 October 2005 at an exercise price of NOK 49.06. Options were granted at an exercise price corresponding to the average stock price fi ve days before and fi ve days after the options are granted and the options vested each of the two years subsequent to the grant date and were exercisable the following year if the stock price at the time of exercise is higher than the exercise price adjusted with 5.38% annually. 600,000 options at an exercise price of NOK 15.94 per share were granted to the CEO for EDB Business Partner ASA at the time of appointment in 2003. One third of the options were vested each of the three years subsequent to the grant date and were exercisable if the stock price at time of exercise was higher than the exercise price adjusted with 5.38% annually. All 600,000 options were exercised in 2006 and the Company, by the Board of Directors, pursuant to the option agreement elected to fulfi l its obligations by payment of the balance between stock price at end of trade on 5 May 2006 and the exercise price. ANNUAL REPORT 2008 PAGE 85
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Annual report 2008 2008 was a busy
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Dear shareholder, 2008 was a busy y
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outlook for 2008 as outlined in the
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from the fourth quarter of 2007. Du
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Telenor Group through development o
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Telenor derives an increasingly hig
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OUTLOOK FOR 2009 Based on the profo
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CONSOLIDATED BALANCE SHEET Telenor
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CONSOLIDATED STATEMENTS OF CHANGES
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02 IFRS 3R Business Combination - (
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control. That is when the strategic
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Rentals payable under operating lea
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Telenor includes deductions for unc
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DiGi is listed at Bursa Malaysia Se
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04 BUSINESS COMBINATIONS AND DISPOS
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The initial purchase price allocati
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The carrying values at the acquisit
Page 35 and 36: NOTES TO THE FINANCIAL STATEMENTS T
Page 37 and 38: 05 KEY FIGURES SEGMENTS NOTES TO TH
Page 39 and 40: Segment Information 2006 EBITDA Dep
Page 41 and 42: 08 09 SALARIES AND PERSONNEL COSTS
Page 43 and 44: 13 Details of impairment losses: NO
Page 47 and 48: 15 Changes in net deferred taxes NO
Page 49 and 50: 17 NOTES TO THE FINANCIAL STATEMENT
Page 51 and 52: Average EBITDA margin - The EBITDA
Page 55 and 56: 21 As of 31 December 2008, future m
Page 57 and 58: 22 The Group’s share of assets, l
Page 59 and 60: 24 ADDITIONAL CASH FLOW INFORMATION
Page 61 and 62: Employee equity benefi ts reserve T
Page 65 and 66: 27 PROVISIONS AND OBLIGATIONS Non-c
Page 75 and 76: Fair values of fi nancial instrumen
Page 77 and 78: 33 RELATED PARTIES As of 26 March 2
Page 85: Options and shares 2008 NOTES TO TH
Page 89 and 90: 38 39 NUMBER OF SHARES, OWNERSHIP E
Page 91 and 92: BALANCE SHEET Telenor ASA as of 31
Page 93 and 94: STATEMENT OF CHANGES IN EQUITY Tele
Page 95 and 96: 03 PENSION OBLIGATIONS Telenor ASA
Page 97 and 98: 07 contribution to be received and
Page 99 and 100: 10 11 2007 Depreciation Acc. depre-
Page 101 and 102: 15 16 CONTRACTUAL OBLIGATIONS NOTES
Page 105 and 106: AUDITOR’S REPORT FOR 2008 AUDITOR
Page 108: Annual report 2008 Published by Tel
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Annual report 2008, 1.19 MB - Telenor

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