MOL GROUP Annual Report

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2010 2009HUF millionHUF millionSalaries and other short-term employee benefits 964 1,575Termination benefits - -Post-employment benefits - -Other long-term benefits - -Share-based payments 3 -Total 967 1,575Loans to the members of the Board of Directors and Supervisory BoardNo loans have been granted to Directors or members of the Supervisory Board.Details of the share option rights granted during the year were as follows:Number ofshares inconversionoptionsWeightedaverage exercisepriceNumber ofshares inconversionoptionsWeightedaverageexerciseprice2010 2010 2009 2009share HUF/share share HUF/shareOutstanding at the beginning of the year 658,112 18,410 451,165 22,974Granted during the year 214,402 15,893 248,573 10,960Forfeited during the year (27,375) 17,506 (41,626) 23,392Exercised during the year (100,746) 20,170 - -Expired during the year (4,124) 20,170 - -Outstanding at the end of the year 740,269 17,465 658,112 18,410Exercisable at the end of the year 133,882 21,146 115,040 20,17039 Share-based payment plansThe expense recognized for employee services received during the year is shown in the following table:2010 2009HUF millionHUF millionExpense arising from equity-settled share-based payment transactions - -Expense / (reversal of expense) arising from cash-settled share-based payment transactions 2,197 1,960Total expense / (reversal of expense) arising from share-based payment transactions 2,197 1,960As required by IFRS 2, this share-based compensation is accounted for as cash-settled payments, expensing the fair value ofthe benefit as determined at vesting date during the vesting period. As a consequence of increasing share prices, HUF 2,197million expenses have been incurred in 2010, recorded as personnel-type expenses with a corresponding increase in Tradeand other payables. In 2009 HUF 1,960 million expenses was recorded with respect to this scheme. Liabilities in respect ofshare-based payment plans amounted to HUF 5,435 million as at 31 December 2010 (31 December 2009: HUF 2,742 million),recorded in Other non-current liabilities and Other current liabilities.Fair value as of the balance sheet date was calculated using the binomial option pricing model. The inputs to the model wereas follows:2010 2009Notes to the financialstatementsThe share-based payments are described below.The share-based payments serve the management’s long term incentive. The Complex long term managerial incentivesystem employs two incentive systems in parallel: profit sharing incentive – based on value added methodology – and theoption based incentive.Weighted average exercise price (HUF / share) 17,465 18,410Share price as of 31 December (HUF / share) 20,870 17,247Expected volatility based on historical data 44.79% 44.25%Expected dividend yield 1.26% 1.93%Estimated maturity (years) 2.72 2.82Risk free interest rate 1.46% 2.08%Share Option Incentive Schemes for managementThe incentive system based on stock options launched in 2006 ensures the interest of the management of the MOL Group inthe long-term increase of MOL stock price.Profit sharing incentiveThe profit sharing incentive relates to long-term, sustainable increase of profitability, based on the value added methodology,thus ensuring that the interest of the participants of the incentive system corresponds with that of shareholders of the Group.The incentive stock option is a material incentive disbursed in cash, calculated based on call options concerning MOL shares,with annual recurrence, with the following characteristics.It is a cash-settled annual net bonus calculated on the basis of increase in the value added. (Value added: recognises a profitperformance generated on top of the cost of capital invested)– covers a 5-year period starting annually, where periods split into:– a 3-year waiting period and a 2-year redemption period in case of managers staying in the previous systemfor 2009,– a 2-year waiting period and a 3-year redemption period in case of managers choosing the new systemalready for 2009, and it is valid for all of the entitled managers from 2010.– its rate is defined by the quantity of units specified by MOL job category– the value of the units is set annually (in each year since the initiation of the scheme, 1 unit equals to 100 MOLshares).Since the basis of determining one unit of the profit-sharing incentive for any given year is the audited financial statement forthat year approved by the Annual General Meeting of the parent company, the incentive should be disbursed subsequent tosuch Meeting closing the given year.No payment is expected with respect to 2010 based on this new incentive system.According to the new system it is not possible to redeem the share option until the end of the second year (waiting period);the redemption period lasts from 1 January of the 3rd year until 31 December of the 5th year.The incentive is paid in the redemption period according to the declaration of redemption. The paid amount of the incentiveis determined as the product of the defined number and price increase (difference between the redemption price and theinitial price) of shares.162 MOL Group annual report 2010 163
Historical SummaryHistorical Summary of Financial Information (IFRS)of Financial InformationConsolidated Income Statements for the Years Ended 31 December2006restated2007restated2008restated2009restated2009restated2010 2010HUF millions HUF millions HUF millions HUF millions USD millions* HUF millions USD millions***Net revenue and other operatingincome2,992,149 2,669,014 3,554,752 3,366,738 16,642 4,324,548 20,781Total operating expenses 2,582,577 2,313,509 3,355,528 3,134,359 15,494 4,085,490 19,632Profit from operations 409,572 355,505 199,224 232,379 1,149 239,058 1,149Profit for the year attributable toequity holders of the parentConsolidated Balance Sheets as at 31 December329,483 257,796 141,418 95,058 470 103,958 5002006restated2007restated2008restated2009restated2009restated2010 2010HUF millions HUF millions HUF millions HUF millions USD millions** HUF millions USD millions****Non-current assets 1,301,035 1,544,236 2,027,899 3,073,859 16,341 3,143,711 15,063Current assets 864,297 888,521 888,514 1,093,748 5,815 1,342,018 6,430Total assets 2,165,332 2,432,757 2,916,413 4,167,607 22,156 4,485,729 21,494Historical summary offinancial informationEquity attributable to equityholders of the parent1,079,666 792,164 1,112,981 1,294,005 6,879 1,435,070 6,876Minority interest 191,537 127,417 118,419 535,647 2,848 539,407 2,585Non-current liabilities 410,987 861,702 943,516 1,272,925 6,767 1,392,867 6,674Current liabilities 483,142 651,474 741,497 1,065,030 5,662 1,118,385 5,359Total equity and liabilities 2,165,332 2,432,757 2,916,413 4,167,607 22,156 4,485,729 21,494Consolidated Statements of Cash Flows for the Years Ended 31 December2006restated2007restated2008restated2009restated2009restated2010 2010HUF millions HUF millions HUF millions HUF millions USD millions* HUF millions USD millions***Net cash provided by operatingactivitiesNet cash provided by /(used in) investing activitiesNet cash provided by /(used in) financing activities(Decrease)/increasein cash and cash equivalents529,508 315,506 347,203 397,891 1,967 373,653 1,796111,669 (336,978) (474,792) (266,658) (1,318) (276,272) (1,328)(287,481) (245,951) 209,070 (169,173) (836) 26,794 129353,696 (267,423) 81,481 (38,480) (190) 124,175 597* 2009 average HUF/USD 202.3** 2009 year-end HUF/USD 188.1*** 2010 average HUF/USD 208.1**** 2010 year-end HUF/USD 208.7164 MOL Group annual report 2010 165
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MOL GROuP ANNuAL REPORT 2010MOL GRO
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Key financial and operating dataKey
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Overview of the environmentWorld ec
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Exploration and ProductionHIGHLIGHT
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OTHER RESuLTSSustainable developmen
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upstreaPortfolio EleentsRuSSIASPE 2
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ize MOL and INA sales channels in C
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PetrochemicalsPetrochemicalsPetroch
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Downstream portfolioelementsDomesti
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The most important events of 2010Th
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Gas and PowerGas and PowerThe Gas a
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Financial and Operational Performan
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1.) We have audited the accompanyin
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Moderating growth in world economy,
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Higher personal expenses due to ful
Page 32 and 33: Unit OPEX slightly increasedStronge
Page 34 and 35: …and in SPE P1 reserves2010 was t
Page 36 and 37: In Slovakia sales volumes recovered
Page 38 and 39: has been granted an IPPC and a Buil
Page 40 and 41: Refining & MarketingCAPEX down by 5
Page 42 and 43: INDEPENDENT AuDITOR’S REPORTMOL H
Page 44 and 45: Consolidated balance sheet31 Decemb
Page 46 and 47: Consolidated cash flow statement31
Page 48 and 49: Joint venturesA joint venture is a
Page 50 and 51: vi) HedgingFor the purpose of hedge
Page 52 and 53: off. Upon determination of economic
Page 54 and 55: At each balance sheet date, the Com
Page 56 and 57: IAS 1 Presentation of Financial Sta
Page 58 and 59: Exploration costsTransfers from exp
Page 60 and 61: 6 Subsidiaries and jointly controll
Page 62 and 63: The purchase price allocation for t
Page 64 and 65: 10 Investments in associated compan
Page 66 and 67: 15 Other current assets16 Cash and
Page 68 and 69: Changes in the number of ordinary,
Page 70 and 71: The following table summarises the
Page 72 and 73: 28 Financial (income) / expense30 I
Page 75 and 76: The Group may use cross currency sw
Page 77 and 78: Capital managementThe primary objec
Page 79 and 80: Operating leasesOperating lease lia
Page 81: 37 Notes to the consolidated statem
Page 85 and 86: Gross reserves (according to SPE ru
Page 87 and 88: Petrochmical production (kt) 2005 2
Page 89 and 90: InterviewwithGyörgy MosonyiThe str
Page 91 and 92: Objective Result Fulfillment of the
Page 93 and 94: effluents. We found that the persis
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Page 97 and 98: Employee engagementWe conduct a Gro
Page 99 and 100: Ethical notifications received and
Page 101 and 102: 4 Sustainability data (Performance
Page 103 and 104: 5 Notes on Non-Financial Reporting5
Page 105 and 106: 6 Assurance statements6.1 Independe
Page 107 and 108: CorporateCorporate GovernanceCorpor
Page 109 and 110: The Board of Directors prepares a f
Page 111 and 112: The chairman of the Supervisory Boa
Page 113 and 114: The main role of Financial Risk Man
Page 115 and 116: 7.10.11.8.9.7. Mr. József Molnár
Page 117 and 118: 6. Mr. József Simola (44)Corporate
Page 119 and 120: 7.Mr. József Kohán (59)Member of
Page 121 and 122: Ownership Structure31.12.2009 31.12
Page 123 and 124: GlossaryAverage production costTota
Page 125 and 126: Putting into productionAccomplishme
Page 127 and 128: Content tableTopic of interestCover
Page 129: Statementresponsibilityofundersigne
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