92 Dialog Semiconductor Plc | Annual report and accounts 2012  |  Section 4 | Consolidated financial statements and notes Notes to the consolidated financial statements 18. Convertible bond  Redemption at the option of Dialog  Final Redemption  Optional Redemption Redemption for Taxation Reasons  Redemption at the Option of Bondholders upon a Change of Control  Earnings per share  The equity component is presented under additional paid-in capital in equity. The financial liability rises over the 5 year lifetime to the principal amount  of the bonds. Transaction costs related to the issue of the instrument were allocated to the debt and equity components of the convertible bonds in  proportion to the capital extended to the Group by the instrument. Of the total transaction costs an amount of US$814,000 was allocated to equity and  an amount of US$3,555,000 was allocated to financial liabilities.  Unless previously purchased and cancelled, redeemed or converted, the Bonds will be redeemed at their principal amount on the final maturity date. The Bonds may only be redeemed at the option of Dialog prior to the final maturity date in the following cases:  The Company will have the option to call all outstanding Bonds from approximately 3 years after the Closing Date until maturity, in the event that the  value of the Shares underlying a Bond exceeds 130% of the principal amount over a certain period. Dialog will also have the option to redeem all  outstanding bonds if redemptions have been effected in respect of 85% or more of the bonds originally issued. In these cases the bonds will be  redeemed at their principal amount, together with accrued interest to such date.  In the event that Dialog will become obliged to pay additional amounts as a result of any change in, or amendment to, the laws or regulations of the  United Kingdom or any political subdivision or any authority thereof or therein having power to tax, and such obligation cannot be avoided by Dialog by  taking reasonable measures, Dialog will have the option to call all outstanding bonds. In this case the bonds will be redeemed at their principal amount,  together with accrued interest to such date.  Following the occurrence of a Change of Control, the holder of each Bond will have the right to require Dialog to redeem the Bond at its principal  amount, together with accrued and unpaid interest to such date. In 2012 the potential ordinary shares of the convertible bond were antidilutive as their conversion to ordinary shares would increase earnings per share. .  The net proceeds of issuing the Bonds, after deducting US$4,369,000 of commission and other costs incurred in connection with the bond issuance  were US$196,631,000. In accordance with IAS 32, US$163,607,000 of gross proceeds was allocated to financial liabilities and US$37,393,000 was  allocated to equity. The debt component of convertible bonds is measured using the market interest rate obtainable on a similar debt instrument but  one that is not convertible. This debt component is measured as liabilities at amortised cost until it is converted into equity or becomes due for  repayment. The component of the net proceeds allocated to equity represents the fair value of the conversion right. During Q1-2012, the Company launched a 5 year Convertible Bond Offering raising gross proceeds of US$201 million. The offering closed on  12 April 2012. The bonds, which are listed on the Luxembourg Stock Exchange’s Euro MTF market, will be convertible into ordinary shares of Dialog  Semiconductor Plc., listed on the Regulated Market of the Frankfurt Stock Exchange. 1,005 Bonds with a principal amount of US$200,000 each were  issued at 100% with a coupon of 1.0% per-annum payable semi-annually in arrear s. The initial conversion price is US$29.5717 (€22.367), representing  a premium of 35 per cent above the volume-weighted average price on XETRA of Dialog Semiconductor Plc’s ordinary shares to the time of pricing on  8 March 2012. Liability component US$000 Conversion right  embedded in  Convertible Bond  US$000  Total US$000 Gross proceeds  163,607 37,393  201,000 Issue costs (allocated pro rata to gross proceeds)  (3,555) (814) (4,369) Net proceeds  160,052 36,579  196,631 For the year ended 31 December 2012 