ANNUAL REPORT 2005 TEXT MESSAGE

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1 WELCOME TO EDB MOBILE BANK Please activate the link below to retrieve a bookmark to your mobile bank.you will then be able to log on to your mobile bank service. h ttp://mobilebank/logon Select TEXT MESSAGE From: Your Bank Exit ANNUAL REPORT 2005 THE DIGITAL USER. IT is everywhere around us, almost as much as the air we breathe. More and more, it is the individual user who decides what should happen next. This makes understanding users needs all the more important for EDB. With this in mind, we took a number of steps in 2005 to bring us even closer to the industries, businesses and users that we serve.

2 CONTENTS EDB GROUP From the Chief Executive Officer 2 The year in brief 4 Key figures Company overview 6 Strategic agenda 10 INDUSTRIES AND SECTORS Bank and Finance 12 Public Sector 16 Trade and Industry 20 Telecom 24 Services for all industries 28 ANNUAL REPORT AND ACCOUNTS Report of the Board of Directors 32 Consolidated accounts and notes 38 Parent company accounts and notes 60 Auditor s report 67 INVESTOR INFORMATION Corporate governance 68 The EDB share 75 Executive management 80 Addresses 82

3 e-infrastructure IN NORWAY Number Pre-paid cards Mobile subscribers Population Fixed line subscribers Broadband subscribers Source: Norges Bank, Statistics Norway, The Norwegian Post and Telecommunications Authority. DEVELOPMENTS IN IT are increasingly being driven by the needs and preferences ofusers both at work and at home. This trend is accompanied by greater mobility and a need for users to access their systems and applications at any time and from any location. EDB meets these trends in most of the IT areas in which it operates: banking and finance, the public sector, trade and industry, and telecommunications. We also see the same trends in our role as an outsourcing partner and as a supplier of general services. Our future success is dependent on understanding these trends and successfully catering for them in the offer to our customers. In 2005 we took steps in a number of areas in order to become even stronger in this respect. We now meet the market with a new, customer-oriented organisational structure and a strengthened offer in all our major product areas and industry specialities.

4 2 EDB Business Partner Annual Report 2005 Dear EDB investor By Chief Executive Officer Endre Rangnes I have previously spoken about our objective to be a market leader in the Nordic countries and to double revenue to NOK 8 billion in We are in line with our timetable to achieve this. 25 percent of EDB s revenues now come from markets outside Norway. Moreover, our growth is profitable growth was the best year in EDB s 45-year history. Turnover reached NOK 4.8 billion with an EBITA margin of 10.4 percent. On the basis of the year s earnings, the Board has recommended a doubling of the dividend from the previous year. This is good news for shareholders and I include myself in this. EDB has undergone a major repositioning over the last three years. We have moved from being simply an IT operations business for the banking, finance and telecommunications sectors to become a total supplier of IT services including operations. Today s EDB is the clear market leader in Norway and number two within IT operations in the Nordic countries following the acquisitions in the first quarter of At the same time, we are one of the leading Nordic players for IT consulting and applications services, as well as a major supplier of industry-specific solutions areas with a history of good profitability. The changes we have made, which have included moving the group onto a significantly lower cost base and strengthening its market focus, provide a sound foundation for further growth both organic growth and through acquisitions. EDB will continue to be a driving force in the consolidation now underway in the Nordic market. At the same time we will continue to work systematically on developing new solutions for customers to ensure organic growth that is in line with or better than market growth. THE OUTLINE OF A NORDIC EDB The outline of a Nordic EDB is now clearly emerging. Following the recent acquisitions in Sweden, 25 percent of revenue will come from outside Norway, and almost of our employees are based in Sweden. Revenue from the Swedish market will help to strengthen the group s overall profitability by focusing on areas that traditionally offer high margins.

5 EDB Business Partner Annual Report DIGITAL USERS DRIVE DEVELOPMENTS. The communications society is sweeping over us at a pace we have never seen before. User behaviour, both at work and at home, is changing very quickly. Many people across the Nordic countries are now entirely used to paying their bills through an Internet bank and finding information about public services on the Internet. These opportunities simply did not exist a few years ago, but Internet access and new technology are now paving the way for an ever-increasing range of new services. This spring will see the launch of EDB s Mobile Bank and personalised payment cards. These are two examples of the solutions we provide for banks to offer to their customers. Close to professional users now rely on EDB s services in their everyday work. In addition, private individuals are becoming more and more reliant on services that originate from EDB s development departments. This does not mean that we will forget Norway. We have absolutely no intention of relinquishing our position as the market leader for IT operations. We are also growing rapidly in IT services, thanks not least to the acquisitions we have made and the talented new people who have joined us to fill out our existing activities. EDB now represents one of the largest centres of IT expertise in the Nordic countries, and operates from 25 locations. In order to succeed in our Nordic ambition we intend to devote sizeable resources to the training and development of all our employees. WELL POSITIONED FOR GROWTH EDB is now well positioned in the areas of the market identified as growth segments by analysts such as the Gartner Group and IDC. The number of digital users is increasing, and they are quick to adopt new solutions. This represents a major challenge for financial institutions, companies and the public sector, but also opens up exciting new opportunities for customer service. EDB s response has firstly been to develop a range of solutions to help Nordic businesses and organisations to meet these new challenges. Secondly, EDB offers a broad range of expertise in the form of IT consultancy and application services to support our customers in developing and delivering new services. Last but not least, rapid growth in the number of digital users makes ever-greater demands on uninterrupted access to services. EDB s offer to help its customers meet these demands is based on our many years of operations expertise and economies of scale. Close to professional users now rely on EDB s services in their everyday work. In addition, private individuals are becoming more and more reliant on services that originate from EDB s development departments. We have started the year with a total order backlog of NOK 12.3 billion. This is a unique starting point for our continuing growth but it is not a cushion. EDB s strategy for 2006 focuses on further growth, continuing improvement in profitability, close relationships with our customers and a strong and professional corporate culture. A corporate culture that stands ready for continuing change. There is no doubt that the last three years have been demanding and profitable. The next three will be more demanding, and according to our ambitions more profitable. ENDRE RANGNES Chief Executive Officer

6 4 EDB Business Partner Annual Report in brief The year in brief and key figures 2005 was EDB s best year ever. Post-tax profit was NOK 247 million, and turnover grew to NOK 4.8 billion. New contracts were signed for NOK 4.3 billion of business. A number of acquisitions were announced in 2005 and early 2006 to strengthen EDB s position in important areas. IN JANUARY EDB formally takes over the businesses purchased from IBM and Capgemini with almost 600 employees and over NOK 800 million of annual turnover. IN MAY, EDB acquires the Swedish software company BanqIT Business Applications with 30 employees and expected annual turnover of NOK 35 million. IN JUNE, EDB announces a strategic Nordic collaboration with i-flex, a world-leading supplier of IT solutions for banks and other financial institutions. IN SEPTEMBER, the Telecom business area is sold in accordance with EDB s approved strategy. IN OCTOBER, DnB NOR and EDB announce an agreement to establish a joint solution for e-invoicing in the Norwegian corporate market. The new solution can halve the cost of invoice management for companies. IN NOVEMBER, the IR 2005 Nordic Markets survey votes Endre Rangnes the best CEO among Norwegian listed companies. IN DECEMBER, EDB acquires the card company TAG Systems AS with 100 employees, strengthening the group s position in the card area. IN JANUARY 2006, EDB acquires the Swedish IT company Datarutin with 220 employees and expected turnover of SEK 220 million for EDB enters the applications services market by acquiring the consulting firms Avenir and Spring Consulting, adding 355 employees and turnover of NOK 350 million to EDB. IN FEBRUARY 2006 EDB acquires Software Technology Integration (STI), a company with core competence on Oracle. STI brings 15 employees and turnover og NOK 14 million to EDB. IN MARCH 2006 EDB acquires the Swedish market leader within IT consulting, Guide Konsult, with 520 employees and turnover of SEK 523 million in IMPORTANT CONTRACTS IN 2005 JANUARY: Terra-Gruppen extends its contract for banking solutions and operating services to 1 March 2006, representing business volume of around NOK 165 million. EDB signs an agreement with Computer Associates (CA) to purchase software for the group s operations. The order is worth around NOK 330 million over a 5-year period, and will help EDB to achieve extensive cost savings. Møbelringen signs a contract for ERP operations services from EDB. FEBRUARY/MARCH: Contract to operate IT solutions for the Swedish company Coor Service Management. Sparebanken Møre extends its contract through to 2009, representing business volume of NOK 200 million. Teller, Mesta and the Norwegian Booksellers Association sign new contracts with EDB. APRIL: SEB orders a new solution for its Internet banking service. Folksam in Sweden orders a mutual funds solution from EDB. Dun & Bradstreet renews its IT operations contract with EDB. MAY: Storebrand signs a five-year IT operations contract totalling NOK 250 million. Sparebanken Hedmark signs a new agreement through to 2010 totalling NOK 120 million. JUNE: Nordlandsbanken extends its contract with EDB through to The new agreement represents business volume in excess of NOK 100 million. JULY: The third largest municipality in Norway, Trondheim, chooses EDB as its supplier of IT operations and service development. The contract runs for three years and totals NOK 225 million. NOVEMBER: Linkon in Sweden signs a new operations services agreement with EDB representing business volume of NOK 125 million through to DECEMBER: SpareBank 1 extends its contract with EDB to the end of The new contract represents new turnover for EDB in 2008 of NOK 300 million. Handelsbanken signs a framework agreement to buy card solutions for the bank s overseas offices, and SEB Privatbanken signs a contract for operating services and solutions for its Norwegian activities. Sparebanken Øst signs a new overall contract that runs to 2012 representing total business volume of some NOK 180 million. EDB wins a contract for operations and support services from Samhall in Sweden. This is EDB s first contract for distributed operations in Sweden.

7 EDB Business Partner Annual Report Solutions 23% OPERATING REVENUE BY BUSINESS AREA IN 2005 (in percent) IT Operations 77% OPERATING PROFIT (EBITA) (NOK million) IFRS NGAAP PROFIT AND LOSS ACCOUNT (NOK million) Operating revenue Cost of goods sold Other operating costs Non-recurring items Operating profit before depreciation (EBITDA) Operating profit before amortisation of intangible assets (EBITA) EBITA margin 10.0% 9.3% 2.8% 2.4% 7.1% EBITA margin before non-recurring items 10.3% 9.3% 7.3% 5.3% 7.8% Operation profit (EBIT) Profit before tax Profit after tax before deconsolidated business SELECTED BALANCE SHEET ITEMS (NOK million) Goodwill and immaterial assets Tangible fixed assets Cash and bank deposits Total assets Equity (including minority interests) Interest-bearing liabilities KEY FIGURES PER SHARE (NOK) Earnings (befor tax, after goodwill) Cash flow Book equity Average numbers of shares OTHER KEY FIGURES Return on invested capital (ROIC) 19.6% 19.1% 14.6% 9.1% 10.9% Net interest-bearing liabilities (NOK mill) Cash from operations (NOK mill) Operational investment (NOK mill) Liquidity reserves (NOK mill) Equity ratio 44% 38% 48% 42% 46% Gearing Number of employees (See definitions of key figures on page 78)

8 6 EDB Business Partner Annual Report 2005 Company overview A powerhouse for added value from IT EDB is a well-resourced IT supplier with over 40 years experience of serving leading Nordic businesses. We help our customers to create added value both by cutting IT costs and realising the potential that new opportunities offer. The basis of all our activities is a fundamental belief that collaboration and sharing resources are key to creating value through the use of IT. EDB Business Partner ASA is one of the leading stock exchange quoted IT groups in the Nordic region, with turnover of NOK 4.8 billion in 2005 and 3,900 employees at the outset of EDB operates as a unified group, with EDB Business Partner Norge AS and EDB Business Partner Sverige AB as its two operational companies CASH FLOW FROM OPERATIONS (NOK million) Cash flow from operations reached about the same high level in 2005 as the previous year OPERATING REVENUE BY COUNTRY (percent) Sweden 13% Other 1% EDB structured its activities in 2005 into two business areas Solutions and IT Operations. Solutions offers an extensive portfolio of software and services for the public sector and the bank and finance industry. This business area also included EDB s software solutions for the telecommunications sector, which was sold in autumn 2005 in accordance with EDB s strategy. IT Operations is one of the largest operating services businesses in the Nordic region, and delivers operational solutions for many of the largest Nordic companies as well as smaller and medium-sized businesses. This business area is also involved in high-volume document printing and electronic document services. At the close of 2005, IT Operations accounted for 77 percent of EDB s turnover, with Solutions generating the balance of 23 percent. During the course of the year EDB integrated new activities taken over from Telenor, IBM and Capgemini, involving some 1,000 employees was the best year ever for EDB, and new contracts signed during the course of the year represent future business volume of NOK 4.3 billion. EDB starts 2006 well positioned to realise its Nordic ambition. A FINE-TUNED ORGANISATION EDB introduced changes to its organisational structure in January 2006 to fine-tune its activities in line with the company s growth targets and the business objectives for its core areas. The new structure divides the business areas into four industry specialist areas and two areas defined by their activities rather than target industry. The four industry specialist areas of Bank and Finance, Trade and Industry, Public Sector and Telecommunications each have dedicated responsibility for their respective area. The areas of IT Advisory and Applications Services and IT Operations and Network Services are responsible for delivering their product areas to all industries and sectors. Each of the six areas reports directly to EDB s executive management, which ensures rapid and efficient decision-making and close collaboration between the areas. IT Operations and network services will continue to be the largest single area of EDB, although the industry-specialist areas and application services represent an increasing share of turnover. EDB s objective to strengthen its position in the applications services area is reflected in its focus on this segment of the VISION: EDB shall be a Nordic powerhouse for gaining added value from IT. CORPORATE VALUES: Resourceful, inspiring and attentive Norway 86% Norway is still EDB s dominant geographic market, but Sweden s share is growing as a result of acquisitions and other major growth initiatives. BUSINESS CONCEPT: EDB believes that collaboration and sharing resources are key to creating added value from IT. We have unique expertise in making optimal use of IT, and the solutions and infrastructure we offer represent important economies of scale. We can therefore create added value for our customers by developing and operating their IT solutions.

9 EDB Business Partner Annual Report NORDIC IT SERVICES MARKET, BY SEGMENT Average annual growth /Relative market size NORDIC IT SERVICES MARKET, BY INDUSTRY Average annual growth /Relative market size 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Hosting utililty services Network and desktop outsourcing Application development Application management Software support Hardware support Systems/network integration Outsourcing EDB s core competencies The chart shows the relationship between average market The chart shows the relationship between average market growth and relative market size by services segment for the Nordic market. EDB is well positioned in the segments with the largest volume as well as the strongest growth. Source: IDC 2006 growth and relative market size by industry segment for the Nordic market. EDB is well positioned in the industries with the largest volume as well as the strongest growth. Source: IDC % 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Healthcare Telecom Distribution Manufacturing Finance Government market. Following these changes, EDB is now well represented in all the attractive areas of the market for IT services. On the solutions side of the group s business, extensive work is underway to develop new and forward-looking products. Bank and Finance and the Public Sector will continue to be the largest market segments for applications development and applications services, and both these areas offer attractive prospects. In addition, Trade and Industry represents a major segment of the IT services market. EVEN CLOSER TO THE DIGITAL USER As a strong and attentive IT partner, EDB strives to offer a range of products and services that reflects the changes that our customers and in turn their customers are experiencing. EDB s customers are making ever-increasing use of electronic and IT-managed interfaces within their own organisations as well as in their dealings with suppliers and customers. In addition, we are seeing the rapid development of the digital user, who is extremely quick to take full advantage of new services, and this creates major challenges for EDB as an IT supplier. In the years ahead, the digital user will make even greater use of mobile services, electronic payments and the Internet. As these areas become an ever more important part of people s everyday activities, EDB recognises the need to respond by developing solutions in areas such as mobile Internet banking and even more secure payment solutions, as well as robust communications and network solutions, as part of its total offer of IT services. EDB is well positioned in the IT services market, which is expected to grow by between 5 percent and 6 percent annually through to Outsourcing represents the largest segment of the market. The market for IT outsourcing will continue to grow. However, there will be fewer very large contracts. There is an increasing trend for outsourcing projects to be split into a number of smaller contracts and a growth in the market for small and medium sized businesses. EDB is the third-largest supplier of outsourcing services in the Nordic region. We also expect to see many developments in the areas of systems integration and network services. Our focus on application services will give EDB a strong position in the segment. EDB has built a strong position in the applications market through its 40 years of experience, particularly in the Bank and Finance area. Over recent years, the group has also significantly strengthened its position for applications for the Public Sector and Trade and Industry, both in terms of customer applications and consulting services, where growth is expected to be 5 6 percent over the next few years. The Nordic IT services market is expected to grow by 5 6 percent annually through to NORDIC IT SERVICES MARKET, GROWTH BY SERVICES AREA (percent) Hardware IT Services Software The chart shows expected annual percentage growth for Software and IT services in the Nordic market. Source: IDC 2005

10 8 EDB Business Partner Annual Report 2005 OPERATING REVENUE BEFORE AND AFTER ACQUISITIONS % 77% Excl. acquisitions 40% 60% Incl. acquisitions The figure shows the distribution of revenues in Solutions and IT Operations before and after the acquisitions of BanqIT Business Applications, TAG Systems, Datarutin, Avenir, Spring Consulting and STI during 2005 and the first quarter of Solutions IT Operations ACQUISITIONS STRENGTHEN EDB During the latter part of 2005 and the early part of 2006, seven new companies became part of EDB. The companies operate in different areas, but have one thing in common: they contribute strength and expertise to bring EDB even closer to the industries, businesses and customers we serve. The acquisitions of Avenir, Spring Consulting and STI give us a sound foothold in the Nordic market for IT consultancy and applications services. The companies Datarutin, Guide Konsult and BanqIT Business Applications strengthen our position in Sweden for both solutions and operating services. TAG Systems gives us a stronger presence in the card area for the bank and finance market. We can now with even greater conviction describe ourselves as a strong and attentive IT partner. EDB s regional presence gives it a closeness to its customers. SEVEN ACQUISITIONS FOR THE FUTURE EDB has traditionally focused its efforts on developing and operating IT solutions for large and medium-sized businesses. At the close of 2005, the company decided to also operate in the market for IT consulting services. This decision was based on increasing demand from our customers for an offer that covers all stages of the value chain. In addition, the market for consultant-based IT advice is growing, and EDB has high expectations for this market segment in future years. Through its acquisitions at the start of 2006 of Avenir, Spring Consulting, Software Technology Integration (STI) and Guide Konsult, EDB is well positioned for further growth in this area also saw EDB acquire three other businesses BanqIT Business Applications, TAG Systems and Datarutin that strengthen and complement its existing activities. These acquisitions have brought new employees with complementary expertise to EDB, and have also expanded the group s geographic presence. The acquisition of Datarutin creates a larger platform for our operations services, and strengthens our position in the document management market. Datarutin s product and customer base also provide a good foundation for marketing EDB s ebusiness solutions and services in the Swedish market. The acquisition of TAG Systems in December 2005 gives EDB an even stronger position in the card area. We can now offer Norwegian and international banks card solutions and services for their complete value chain in this area. EDB s Bank and Finance operation was also strengthened by the purchase of BanqIT Business Applications in May This acquisition reinforces EDB s position in the Swedish market, and complements the group s portfolio of solutions and components for the Nordic banking and finance market, particularly in solutions for bank branch office operations. In June 2005 EDB signed an agreement on Nordic collaboration with i-flex, a world-leading supplier of IT solutions for banks and other financial institutions. EDB and i-flex will jointly offer a UNIX-based solutions package for Nordic banks based on technology from both companies. As of 1 January 2006, EDB operates major centres of expertise in Bergen, Trondheim, Mo i Rana and Hamar in Norway, in addition to the head office in Oslo. In Sweden, the group has its head office in Stockholm and sizeable operations in Gothenburg, Örebro, Arjeplog and Herrljunga. EDB s Swedish activities are growing strongly, and all the group s core areas now have Swedish customers. EDB is also represented in a number of other locations in Norway and Sweden (see page 82 for details of all EDB s locations). Many of EDB s customers have based their operations outside the major cities, and EDB s local presence gives it a closeness to its customers that few of its international competitors can offer. From January 2006 EDB has changed its organisational structure to fine-tune its activities in line with the company s growth targets and the business objectives for the its core areas. The new structure reflects the division of the company s deliveries into four industry segments and two non industry-specific areas.

11 EDB Business Partner Annual Report INDUSTRY-SPECIFIC SOLUTIONS Bank and Finance Public Sector Trade and Industry Telecom IT CONSULTING AND APPLICATION SERVICES BUSINESS SUPPORT SERVICES, IT OPERATIONS AND NETWORK SERVICES SERVICES FOR ALL INDUSTRIES IN JANUARY 2006 EDB introduced changes to its organisational structure to fine-tune its activities in line with the company s growth targets and the business objectives for the its core areas. The new structure reflects the division of the company s deliveries into four industry segments and two non industry-specific areas. INDUSTRY-SPECIFIC SOLUTIONS (Solutions business area) Bank and Finance A complete portfolio of solutions for banks. The majority of Norwegian banks use applications and services supplied by EDB, as well as a large number of Swedish banks and financial institutions. The customer base also includes Nordic banks and international financial businesses. Trade and Industry Customised operations solutions for management, accounting and production-related IT systems for large and mediumsize European companies. At the core of EDB s offer to the Trade and Industry sectors is EDB SKALA, an efficient and reliable solution for distributed operations, mobility and collaborative working. Public Sector Operations services that ensure stable and secure operation of business-critical activities for the telecommunications sector. EDB s main involvement in this area is its contract to supply operating services for Telenor s IT systems. Telecom Services that ensure stable and secure operation of business critical activities for the telecommunications sector. EDB s main involvement in this area is its contract to supply operating services for Telenor s IT systems. SERVICES FOR ALL INDUSTRIES IT Consulting and Application Services (Application Services business area) IT Consulting and Application Services represents EDB s new area of focus in This unit establishes EDB as one of the leading Nordic centres of expertise for applications from SAP, Microsoft, IBM, Oracle and others. EDB already has a sizeable operation for applications development and applications operations. By bringing these activities together in a single business unit, EDB adds a new dimension to complement its current activities. Business Support Services, IT Operations Services and Network Services (IT Operations business area) The IT Operations business area will again be EDB s largest business area in IT Operations is responsible for operating business-critical IT systems together with related infrastructure and applications. The IT Operations business area delivers operating services for mainframes, networks, distributed operations, storage and applications to all sectors and industries. This business area is the leading Nordic supplier of distributed operations, and has operational responsibility for some workstations. IT Operations offers a complete end-to-end operations service, and is particularly skilled at handling high transaction volumes and large databases. The business area also offers a total concept for document production and electronic message management. IT Operations offers data centre methodology and security of the highest European standard.

12 10 EDB Business Partner Annual Report 2005 Strategic agenda Our strategic development is focused on four areas GROWTH Growth enables renewal and more efficient operations. >> GROWTH IN OPERATING REVENUE (NOK million) TARGETS Revenue of NOK 8 billion by the end of 2008 To be a leading Nordic player for IT services Growth ambitions to be achieved without an adverse effect on profitability Growth in operations and application services, payments transactions and processing volumes PROFITABILITY Profitability is essential to be able to invest in new expertise. >> RETURN ON INVESTED CAPITAL (ROIC) (NOK million) Cost savings of NOK 350 million over three years (period ) More efficient and better-standardised processes Make greater use of economies of scale for purchasing and new contracts Integrating operations and application services Develop additional value-added services for established solutions Maintain a good return on invested capital (ROIC) CLOSE CUSTOMER RELATIONSHIPS Close relationships with customers ensure rapid decision processes. >> MOST IMPORTANT FACTORS WHEN SELECTING AN OUTSOURCING PARTNER (percent) delivery High precision level of 01 Knowledgeable, competent employees 02 Flexibility, good service 03 Competitive prices 04 Greater profitability for my company Source: MMI on commission from EDB Understand the customer s industry and its specific problems Know the customer s customers Excellent availability expertise and service close at hand Always exceed the customer s expectations Live up to the values of resourceful, inspiring and attentive, and deliver our customer promise of a strong and attentive IT partner EMPLOYEE COMMITMENT Competence is the key to our future success. >> FROM EMPLOYEE COMMITMENT TO PROFITABILITY Quality in deliveries Profitability Committed employees VISIONS, VALUES, STRATEGIC GOALS Satisfied and loyal customers A strong and professional organisational culture and management ethos, with particular focus on delivery precision Train and develop employees so that the group always has the expertise it needs High quality human resource processes Ensure that staff joining EDB through corporate acquisitions are properly integrated Low level of absence due to illness, even during periods of rapid change Equal representation of female staff at the management level as in the group as a whole

13 EDB Business Partner Annual Report STATUS NEXT STEPS Over the past year, EDB has made a number of strategic acquisitions to strengthen its position in the Nordic market. The integration of BanqIT Business Applications creates a better foothold for Bank and Finance in Sweden, Tag Systems and Paynet give us strength in card services, and the acquisition of Datarutin opens the door to the Swedish market for e-invoicing and ebusiness. In addition, the acquisitions of Avenir, Spring Consulting and STI position us in the market for IT consulting and application services. Strong growth characterise the Nordic IT sector in most service areas and market segments. At the same time, the IT industry is undergoing major structural change and consolidation. EDB is well positioned for these changes. Successful integration of the companies acquired is essential to taking full advantage of the market potential they offer and the cross selling opportunities they create with existing customers. EDB is building the foundation for organic growth through its focus on sales and marketing and will also take opportunities to build suitable strong partnerships. We will continue to look for Nordic growth opportunities within the group s defined areas of focus. As part of EDB s three-year cost saving program, savings of NOK 130 million were targeted for This was achieved by a clear margin. All acquisitions made over the last two years are now fully integrated into our internal standardised processes, and we were again able to reduce software costs in We have signed strategically important contracts to develop new services, and the Telecom business area has been sold. In addition, we have made changes to make better use of our premises, and the saving in rental costs alone amounts to NOK 100 million since Over the next 12 months, we will focus on the four factors that dominate the group s cost structure: infrastructure and premises costs, personnel costs, hardware costs and software expenditure. This will involve further development of new value-adding services for established solutions and making even better use of economies of scale. Work on consolidating the group s data centres and technology platforms will also be a high priority. The focus on standardising and integrating the businesses acquired will continue throughout In the years up to 2003, EDB had some difficulty in maintaining its customers confidence in the services it offered, and we have worked hard since to rebuild this confidence. We now monitor customer satisfaction continuously. This information has taught us a great deal about how customers see EDB, and has provided an extremely important basis for the program of improvement we have rolled out over recent years. We now have a very high focus on delivery quality, a customer-oriented organisation, management training with a customer focus and effective implementation of EDB s overall strategies at all levels of the group. We are using the results of regular surveys of customer satisfaction to implement a systematic program of development and improvement for our customers. EDB s Board is very involved in this work, and closely follows both the current status overall and the development of the group s relationships with individual customers. In addition, staff appraisal and remuneration throughout the group is linked to customer satisfaction. Customers have a single contact point with EDB through a dedicated customer service team, and training is used at every stage of the value chain to ensure that each customer enjoys the highest possible quality of service in a unified and coordinated way. EDB is a knowledge-based company and is entirely dependent on how well the employees use their expertise. We therefore have a targeted focus on staff appraisal, staff development and encouraging employee involvement. This includes regular round table meetings where groups of employees are invited to join an open dialogue with the executive management team. In addition, EDB has signed an All-inclusive working life agreement to help maintain its low level of absence due to illness, and holds regular staff meetings to discuss work on diversity and equality. All EDB managers now use tools that include standardised parameters for monitoring corporate culture and employee commitment. We have also introduced a skills management system that provides an overview of each employee s education, experience and development goals in order to quality assure all the group s training activities. Over the next 12 months, we intend to strengthen our management performance by carrying out in-depth training in staff development for all EDB managers. The implementation of staff appraisal interviews to discuss targets and personal development will play a central role in this. We will also establish a sound foundation for recruitment through trainee and talent schemes, as well as working to strengthen all our employees awareness of values and appropriate attitudes. EDB pays particular attention to integrating new employees from the businesses we acquire.

14 12 EDB Business Partner Annual Report G MAIN MENU e 1 e-invoice Payment w/message Transfer Find PIN x Cancel card More services Currentaccount Disposable amount: 1, Select EDB Mobile Bank Exit Bank and Finance Increasing digitalisation and new public requirements EDB s OPERATING REVENUE BANK AND FINANCE (NOK million) EDB is a leading supplier of IT services for the bank and finance sector, and operates one of the largest Nordic product development operations for this industry. We strengthened our position over the course of 2005 both by increasing our market share and by taking important strategic steps. The bank and finance sector accounts for 20 percent of the total Nordic IT services market. IDC reports that the segment is expected to grow by 7 percent annually between 2005 and 2009, which is faster than the IT services market as a whole. EDB is principally active in Norway and Sweden, which account for 60 percent of the total Nordic bank and finance market. IT typically account for 20 percent of a bank s total operating costs. The chart shows EDB's operating revenue from the Bank and Finance sector for The Norwegian bank and finance sector is currently benefiting from a sound level of economic growth, which is reflected in a low level of insolvency and only moderate losses on corporate and retail lending. Banks and financial institutions throughout the Nordic region are enjoying strong revenue growth driven by high demand for credit, increasing customer focus on asset management and pension savings, as well as good growth in other areas of non-interest income. There is increasing demand for financial advice services in a number of areas. The banking industry has significant capacity, and there is intense competition for attractive customer segments. Combined with low interest rates, this puts net interest margins under increasing pressure. The banking market continues to consolidate. A new trend has emerged for Nordic banks to expand into the Baltics and further eastwards. The bank and finance industry has one of the highest rates of IT outsourcing. Storebrand signed a contract with EDB in 2005 to outsource its IT operations, and a number of major customers renewed their outsourcing contracts with EDB. EDB competes in this market with international players and, to some extent certain local suppliers. We differentiate EDB from its competition through our close personal relationships, well-proven systems and functionality that meets the particular needs of customers in the Nordic market.

15 EDB Business Partner Årsrapport BANK AND FINANCE PRODUCTS Self-service solutions EDB s solutions for self-service meet most of the needs in Internet banking, mobile banking and telephone banking. EDB will launch its mobile Internet banking solution in spring Card solutions EDB is the name behind Scandinavia s most widely used solution for card services, covering the entire value chain from issuing cards through to transactions management. EDB s offer also includes prepaid cards that can be credited through mini-banks or EDB Internet banking. The acquisition of TAG Systems completes EDB s offer for card solutions. Solutions for bank branch offices EDB develops branch office solutions to match the bank s strategy. Customers are using self-service channels for an increasing proportion of banking transactions, and the role of staff in branch offices is changing rapidly. This is reflected in EDB s branch office solutions, as well as in EDB s banking channel strategy. Component-based solutions EDB s suite of component-based solutions is known as Banking on Flexcube. This suite integrates with the most widely sold core banking solution in the market, which is supplied by EDB s collaboration partner i-flex. Solutions for money laundering prevention 126 banks now use EDB s solution for electronic monitoring to prevent money laundering. The solution is supported by services for improved detection of suspicious transactions, combined with user-friendly administration and reporting dialogue between the bank and the authorities.

16 14 EDB Business Partner Annual Report 2005 STOREBRAND BANK IS THE FIRST BANK in Norway to offer EDB Mobile bank. The services of EDB s new mobile banking solution help to give our customers greater flexibility and simplify their everyday needs. Our contract with EDB is an important milestone for Storebrand Bank s focus on forward-looking customer-initiated services. EDB Mobile bank makes our free banking service even easier to use and so more attractive to customers. Trygve Dahl Head of IT Development and Support Storebrand Bank EDB operates one of the largest Nordic product development operations for the bank and finance industry GROWTH IN NUMBER OF INTERNET BANKING USERS IN NORWAY The chart shows growth in the number of Internet banking users in Norway in millions of users for Source: Norges Bank GLOBALISATION, DIGITALISATION AND NEW REQUIREMENTS FROM THE AUTHORITIES As the banking market becomes more globalised, competition for customers intensifies. This partly reflects banking mergers, but also an increasing targeting of profitable customer niches from country to country. Social structures and customer behaviour are also changing rapidly, and this affects the banks in several ways: Customers are becoming more mobile, and the Internet is an ever more important channel. Young people change job and move house much more frequently than their parents generation. This creates opportunities to offer new banking products, while the banks still need solutions to meet the needs of their established customers. Society is becoming more multicultural, making it more important to differentiate banking products. Higher standards of living and longer life expectancy are encouraging greater focus on savings products. With a higher standard of living, more people are investing in a second home. Saving for a pension is attracting much greater interest, both because of uncertainty over what the state insurance scheme will provide and as a result of the introduction of mandatory employers pensions for Norwegian companies. Banks and financial institutions need to continuously develop their offer in order to cater for these trends. DIGITALISATION Changing social structures are encouraging greater consumer demand for digital solutions, particularly as new but proven technology becomes available. EDB launched its first services for Internet banking in years later, around 2.5 million Norwegians routinely use Internet banking, and banks recognise that simplifying and improving their Internet services is a key factor in ensuring customer satisfaction. EDB will launch a solution for mobile Internet banking this year, and there is already a great interest in this new development. We are also seeing the growth of Internet-based financial tools for the corporate market. International payment services are being standardised. In order to meet increasing competition, banks have to continually focus on automating and standardising their business processes. Examples of this are new self-service solutions for customers and tools for improving internal customer management. NEW REQUIREMENTS FROM THE AUTHORITIES Banks are now subject to very extensive reporting requirements, and this places particular demands on their internal systems. In addition, reporting requirements are changing, creating the need for changes to cope with developments such as Basel II, IFRS and new rules for preventing money laundering. Banks now need to have daily reporting and analysis of a range of key figures, and they also need the capacity to implement their responses more rapidly. EDB is subject to IT supervision by the Financial Services Authority of Norway, and adheres to the regulations in force at any time. MARKET POSITION EDB operates one of the largest Nordic product development operations for the bank and finance industry, with 750 employees. Total revenues in 2005 was NOK 2.75 billion. EDB won additional market share in Norway in 2005, particularly through stronger sales from our solutions portfolio. We also enjoyed strong growth in

17 EDB Business Partner Annual Report STOREBRAND BANK SECTOR: Bank and Finance CHALLENGE: Our customers demand flexible and user-friendly solutions, and over time these will take over many of the tasks the bank performs today. Storebrand Bank aspires to be one step ahead of customers requirements. When EDB presented its new mobile banking solution, we saw it as a natural part of the forward-looking customer platform we are now building. EDB Mobile bank also supports our strategy to be a modern bank that is simple to deal with and offers services that customers can access easily. WHY EDB: EDB is Norway s leading supplier of bank and finance solutions. We have enjoyed excellent collaboration with EDB for a number of years, and the company delivers market-leading products that strengthen our relationship with our customers. EDB also has a very well developed insight into our business, and delivers a very professional business relationship. SOLUTION: EDB Mobile bank is a simplified Internet banking solution accessed from a mobile telephone. It offers the same standard of service and functionality as EDB Internet bank, as well as functions that are very popular with customers such as card cancelling and pin code distribution. These functions are well suited to mobile phone use. MOST IMPORTANT BENEFIT: EDB Mobile bank gives customers better access to their accounts. The solution allows our customers to pay bills, make transfers between their accounts with us and carry out other account maintenance tasks whenever they want and from wherever they want. Sweden, albeit from a low starting point. We are the market leader in Norway, with a 47 percent market share. Over the last year, EDB signed long-term agreements with a number of banks for both operating services and solutions. We are enjoying good organic growth thanks to our broad product portfolio. The dynamics of the market ensure that there are always opportunities for new products and additional sales. The acquisition of TAG Systems will help us capture a larger share of the value chain in the card services area. EDB solutions have also been well received in Sweden. Over the last two years, EDB has moved from the sidelines to an established position as a supplier to all the major Swedish banks. We are now one of the 10 largest suppliers to the Swedish bank and finance market, and our sales are growing significantly more quickly than the overall market. The acquisition of BanqIT in 2005 strengthens our solutions portfolio and increases our capacity for the Swedish market. EDB s sales to the Swedish market focus on components related to core banking. Over the next few years, a number of banks will need to change their core banking systems. In order to position itself for this, EDB has entered a unique collaboration with i-flex for sales of core banking solutions in the Nordic region, and we see the Swedish market as offering the greatest potential over the next two years. Core banking decisions typically involve long processes and technologically demanding projects. Banks are driven by the need for standardisation and the pressure to reduce total IT costs. i-flex has been the global no. 1 in bank solutions over the last three years. i-flex and EDB have developed a detailed marketing plan with the main focus on Nordic countries other than Norway. A comprehensive benchmark study carried out by IDC Financial Insight has shown that EDB s core banking solution is fully competitive, and marketing is actively in progress. EDB also collaborates with i-flex in the area of offshoring (transferring services to specialist suppliers in other countries) saw our first internal offshoring project, and we are well pleased with the results. We intend to focus further on offshoring in The section on Services for all industries provides more details of EDB s services for offshoring. FLEXIBLE DELIVERY MODEL EDB offers total solutions for the complete scope of banking operations from core banking systems through to user applications and most Norwegian banks use EDB. We also supply solutions and services to other Nordic banks and a range of international financial institutions. Our core banking solutions now maintain 6.5 million banking customers, and 1.4 million customers use Internet banking solutions supplied by EDB. Payment service solutions from EDB process 5.1 billion transactions every year. Some customers entrust the operation of their entire banking systems to EDB, while other customers use EDB for niche products. We also work as consultants for many banking customers to help find the most efficient solutions for their needs. EDB s economies of scale ensure cost efficient operations for its banking customers. We also offer IT consulting and application services for the bank and finance industry. Further information can be found in the Services for all industries section of this report. FUTURE PROSPECTS Customers of banks, both at home and at work, show an ever-increasing interest in digital tools. Their preferences are driving the development of solutions in the banking sector. Moreover, digitalisation is also the driving force behind future globalisation. At the same time, customers clearly value a local presence. Banks can strengthen their competitive position by giving their customers the best of both worlds access to global best practice as well as a local presence. Changes in the reporting requirements imposed by the authorities also impact the bank and finance sector s demand for IT services. EDB believes it has very good opportunities to win market share in the bank and finance market through its broad portfolio of products and services and its many years experience as a specialist supplier to this industry ANNUAL GROWTH IN IT SERVICES BANK AND FINANCE (percent) The chart shows expected annual growth in the Nordic market for IT services for the Bank and Finance sector for Source: IDC

18 16 EDB Business Partner Annual Report 2005 BUILDING LICENCE From: Planning and Building Approval Department To: Ola Nordmann Your building application Ref has been approved.confirmation will be sent by post.we wish you success with the construction. Yours sincerely, Planning and Building Approval Department Public Sector The public sector becomes ever more digital EDB s OPERATING REVENUE PUBLIC SECTOR (NOK million) The chart shows EDB's operating revenue from the Public Sector for The public sector IT market is growing more rapidly than the IT services market in general, and is an increasingly important area of focus for EDB. Our strong position in IT operations and our expertise in solutions for user dialogue are among the features that make EDB a valuable partner for the public sector as it responds to new requirements and seeks to fulfil higher expectations from the public. The public sector accounts for 30 percent of the total Nordic IT services market. IDC forecasts annual growth of 6 percent from 2005 to This is slightly faster than average market growth, and this trend can be seen in all the Nordic countries. IT represents an increasing proportion of the public sector s total operating costs. EDB is presently represented in Norway and Sweden, which account for 62 percent of the total Nordic market. The public sector can be seen as three segments: local government, national public sector bodies and health authorities. The local and national elements each account for 40 percent of the public sector across the Nordic region, while health authorities represent 15 percent. However the health sector is the most rapidly growing segment. IT has been high on the agenda for the public sector for many years. New areas of application facilitate better dialogue with the public, simplify business reporting and improve dialogue between units in the public sector. Three target areas for the use of IT in the public sector apply across all the Nordic countries: Promote a knowledge-based society in which all citizens can participate and the public sector makes full use of the potential offered by IT technology. Make use of technology to simplify the everyday interaction with individuals and business and so help to promote value creation and thereby secure the welfare of future generations. Utilise information technology to ensure that the public sector delivers the best possible services in relation to the resources it has available.

19 EDB Business Partner Annual Report PRODUCTS FOR THE PUBLIC SECTOR EDB Case Administration and Archiving EDB s solution for case administration and archiving is the market leader in the municipality sector. The system provides a complete solution that meets the highest standards in this area. The solution includes functions for diarising and recording, document production, administering meetings and committees, case processing and follow-up. EDB Payroll and Human Resources EDB offers a fully integrated payroll and human resources system for centralised operation but with both centralised and local reporting functions. The solution is suitable for all types of user, but is most commonly used in local government (municipalities and county authorities) and also offers an Internet interface. EDB Management Reporting and Analysis Effective management needs simple and speedy access to the information necessary to support successful decision-making. EDB s solution for management reporting and analysis provides senior management with a better basis for managing their operations. Infobank EDB offers a system to access information from a range of official registers and private information databases. Through the Infobank portal, customers can access information from sources including the National Population Register, the Real Estate Register, the various public registers maintained by the Brønnøysund centre and credit reference information.

20 18 EDB Business Partner Annual Report 2005 EDB is one of the largest IT suppliers to the Nordic public sector. Digitalisation and increasing use of technological tools is not just a question of technology. It is important how we communicate, work and learn, how we organise and use the public sector and how we promote and develop value creation in Norwegian society. As users increasingly embrace digital technology, this puts greater demands on IT systems, and makes the need for 24/7 availability a reality in many more areas. At the same time, there are many demands on the public sector s resources, and standardised and rational operations are essential in order to make the best of the resources allocated to IT. This in turn creates the need to invest in new and better solutions. EDB has many years of relevant experience from operating business-critical banking applications, and this experience is very valuable for operating critical public sector systems. The public sector market for IT services remains largely a national market. Solutions developed in one country normally cannot simply be used as they stand in another country, although some components may be reusable. However the need for reliable and secure operating services is the same anywhere, and our Nordic IT operations organisation offers cost-efficient operations for all types of customer, including the public sector. SELF-SERVICE, DIGITALISATION AND THE DRIVE FOR GREATER EFFICIENCY Figures from April 2005 show that 83 percent of the Norwegian population have Internet access, equivalent to 3.2 million people. Internet access has multiplied many times over the last decade. People are also making much more use of SMS. 1.8 million Norwegians filed their tax returns electronically in 2005, while only used this service in Other public sector entities are also seeing rapid growth in Internet access. While many people have Internet access, there is significant variation in the frequency of use and their expertise. This makes the user-friendliness of systems important, and also points to the need for measures to improve the public s competence in this area. An increasing proportion of the population is using digital technology, and the users want more self-service functionality. This means more information, rapid processing times and the ability to follow the progress of orders, applications and the like electronically. In some areas, we are also seeing the need for harmonisation with EU rules. THE DIGITAL MUNICIPALITY ekommunen is a term we use to signify a municipality that makes active use of modern information education technology to deliver accessible and efficient public administration and quality services for its citizens and businesses. This implies that a modern municipality needs to: Give people the opportunity to choose their preferred form of communication, but with emphasis on the electronic channel. Meet the information needs of different user groups through the municipality s website/portal. Give people the opportunity to participate in democratic dialogue on important social issues over the Internet. Make as many services as possible available over the Internet. Use ICT and deliver high-quality services. Interact electronically with other public sector entities and bodies to create unified public services. Make proper provisions for personal privacy and ensure the security of information management. Free-up resources by improving administrative efficiency through the use of ICT. This in turn means that the modern municipality s IT partner must help it improve the quality of its services and the efficiency of its operations. MARKET POSITION EDB is one of the largest IT suppliers to the Nordic public sector with total sales of NOK 600 million, equivalent to 11 percent of the group s total turnover. Some public sector customers outsource the entire operation of their IT systems to EDB, while other customers use EDB forniche products. We also serve many public sector customers as concultants, helping them findthe most efficient solutions for their needs. We offer economies of scale that ensure cost efficient IT operations. EDB also offers applications services and IT consultancy for the public sector. Further information can be found in the section Services for all industries. The acquisitions EDB announced at the start of 2006 further strengthen its position in this market. EDB is winning market share in Norway through sales from its solutions portfolio and new contracts for IT operating ser- EASIER EVERYDAY SERVICES. EDB s IT Operations helps to create easier access to everyday services for the residents of Trondheim. EDB provides solutions that help the municipality interact digitally with its citizens, other entities in Trondheim and other parties that we need to communicate with. We set very high standards for our IT supplier, and EDB demonstrates every day that our confidence is well placed. Harald Moe Head of IT Municipality of Trondheim

21 EDB Business Partner Annual Report vices. EDB s business in Sweden is growing strongly, albeit from a low starting point. The purchase of Datarutin added solutions for public sector clients in Sweden to EDB s portfolio, and is a springboard for further focus on this market. EDB is one of the three leading IT suppliers to the public sector in Norway, with a market share of almost 10 percent. In Sweden, EDB is one of the 10 largest suppliers to this sector. Both markets are characterised by a fragmented supply side. EDB has signed long-term contracts with a number of public sector customers for IT operating services. We are now responsible for operating a number of critical public sector functions, including systems for the Norwegian police and justice administration, municipalities and the tax administration. Over the course of 2005, EDB started a major renewal of the product portfolio acquired from IBM. The major changes have been to the systems for human resources/payroll and case management/archiving, which now have more modern user interfaces and improved functionality. These are now cost-effective solutions that deliver complete functionality for these specialist areas. FUTURE PROSPECTS Digitalisation is an important driver for future developments in the public sector. We are moving towards a more open society, with easier access to information and more extensive self-service. Digitalisation also creates new challenges for personal privacy and the security aspects of IT systems. Users, both in the workplace and external customers, are increasingly familiar with digital tools and this is driving the development of new solutions. EDB offers a comprehensive solutions portfolio, extensive competence in IT consulting and application services as well as in-depth expertise in IT operations. We see clear similarities between the process of digitalisation that the banks have gone through in recent years and the challenges that now face the public sector. EDB is a long-established IT supplier to the Norwegian banking sector, and with its specialised solutions for defined users in the public sectorthe company is well-equipped to support both local and national public sector entities in meeting the challenges they will face in future years. EDB therefore sees good scope to win an increased share of the public sector market ANNUAL GROWTH IN IT SERVICES NORDIC PUBLIC SECTOR (percent) The chart shows expected growth in the Nordic market for IT services for the Public Sector for Source: IDC ANALYSIS OF THE PUBLIC SECTOR IT SERVICES MARKET IN THE NORDIC REGION IN 2005 (percent) National public bodies 47% Digitalisation is a major driver for the public sector s use of IT. Health 15% The chart shows an analysis of public sector spending on IT services in 2005 broken down by health authorities, municipalities and national public bodies. Source: IDC 2005 Municipalities 38% MUNICIPALITY OF TRONDHEIM SECTOR: Public sector CHALLENGE: Trondheim s objective is to be a vigorous and exciting city with the spirit of the future, and to offer its citizens quality services through dialogue, openness and trust. With solutions from EDB, Trondheim encourages digital interaction with its citizens. EDB is responsible for IT infrastructure, telephony solutions, applications and IT development, and helped make Trondheim a showcase for other Norwegian municipalities. WHY EDB: The municipality of Trondheim has used EDB as its IT operations supplier for a number of years, with a very results. EDB is Norway s largest technical specialist for IT operations and development, and the operations solutions it supplies for Trondheim work extremely well. Trondheim finds EDB to be a reliable and professional partner in its dealings with the municipality. SOLUTION: The package of products and services supplied by EDB includes operational services for servers, clients, applications, networks and telephony systems. In addition, EDB provides storage solutions, user support and customer centre solutions as well as working on development projects to support the municipalities service portfolio. Trondheim is in its fourth period of outsourcing, and has used external suppliers for IT operations since EDB s solutions help to simplify and improve the efficiency of communication both within the municipality and in its interaction with other public sector entities and the public at large. This allows the municipality administration to concentrate fully on its primary duties as an administrative body and service institution for the citizens of Trondheim.

22 20 EDB Business Partner Annual Report 2005 einvoice FOR APPROVAL From: Accounts department To: Head of Admin. The attached invoice is now ready for your approval. Please complete the information required and return the invoice to me electronically. With thanks. Trade and Industry Increasing demands for collaborative working and digitalisation EDB s OPERATING REVENUE TRADE AND INDUSTRY (NOK million) The chart shows EDB's operating revenue from the Trade and Industry sector for Companies in the trade and industry sector are showing greater interest in outsourcing their IT systems. At the same time, they are facing increasing demands for collaborative working both internally and externally. EDB has clearly defined ambitions to further strengthen its presence in this important sector. We intend to achieve this by being a close and attentive IT partner with solutions and services that support the customer s entire value chain. Trade and industry currently accounts for around 41.7 percent of the total Nordic IT services market. This sector covers a wide range from freight and shipping through traditional retailing to manufacturing production. IDC forecasts annual growth for IT services in this sector of between 4 percent and 5percent for the period , which is in line with the overall Nordic IT services market. EDB has a 4.1 percent share of the Nordic market for this sector per first half year Companies in the trade and industry sector are showing increasing interest in outsourcing their IT systems, especially in the medium-sized company segment. Many companies that have already outsourced either renegotiated or started renegotiating their existing contracts in In addition, a large number of medium-sized companies are looking into outsourcing for the first time. Larger companies that have not yet outsourced are taking a more cautious approach. Good earnings and general optimism over future prospects have reduced the focus on saving costs, which is often an important driver for considering outsourcing. This makes outsourcing a counter-cyclical business. Some large companies have spun-off their IT operations into separate companies that sell services to their owner and also actively compete for external customers. A number of these are seen as attractive candidates for future consolidation of the outsourcing industry.

23 EDB Business Partner Annual Report PRODUCTS FOR TRADE AND INDUSTRY EDB SKALA The scope for mobility and collaboration in daily work increases all the time. The challenges this presents for operating IT systems grow at the same pace. EDB SKALA gives businesses access to the freedom that new technology offers delivered in a solution that meets the highest standards of security and operational efficiency. EDI services EDB delivers EDI services to improve the dialogue between companies. EDI can be complemented by Internet banking services integrated with company accounting systems. Our Solutions for B2B e-invoicing reduce the cost of issuing, processing and paying invoices between companies, and so improve operational efficiency. Applications services EDB has developed a unique combination of experience, capacity and indepth specialist expertise for businesscritical systems. Many companies find it difficult to recruit and retain key technical personnel in areas such as the operation development of SAP. EDB has technical experts in all the SAP modules and can structure complete projects at very competitive prices.

24 22 EDB Business Partner Annual Report 2005 SUCCESS IN SERVICE MANAGEMENT demands high quality standards across all deliveries. In order to take on complete responsibility for our customers service functions, it is essential that we find the right partners. In IT, where strategic management, coordination and continuous development are crucial for our customers success, we have chosen to collaborate with EDB. Olov Schagerlund Business Area Manager Coor Service Management 2005 saw a number of steps to consolidate the supplier side of the outsourcing market. EDB increased its market share through both organic growth and acquisitions. Pricing for IT operations services fell in 2005, and many suppliers are seeking to offset this by offering standardised products in order to achieve sufficient critical mass for sizeable economies of scale. At the same time, many suppliers are focusing on increased sales of value-adding services MARKET FOR ERP SERVICES IN THE NORDIC REGION (percent) The chart shows the expected market growth for ERP services in the Nordic region for Source: IDC 2005 CUSTOMERS NEEDS AND DEMANDS FOR NEW TECHNOLOGY ARE IMPORTANT DRIVERS More and more businesses are recognising that IT is not only business-critical but is also key to maintaining competitiveness. Production activities and the value chain as a whole increasingly rely on automation, and are therefore dependent on IT. The increasing complexity of today s IT solutions is accompanied by higher demands for operational reliability and security. The development of new technology, combined with developing and improving existing IT solutions, will be key factors for this sector in the future: Developments in RFID technology (Radio Frequency Identification) will be a particularly important driver for transportation and logistics businesses. This technology can be used for pricing, identification and tracking products. An important advantage of RFID over bar codes is that it makes it much easier to read the prices of multiple products in one location. IT systems for Supply Chain Management, which aims to optimise the entire value chain from raw material supplier to end-customer, are becoming ever more important. Many companies have failed to keep their ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) systems fully up-to-date. Retail chains want more efficient deliveries and unified systems for their entire value chain. AMR (Automatic Meter Reading) is an important development, especially for power companies, but it is very likely that water companies and other companies that deliver metered supplies will need to use AMR. AMR makes it possible to collect meter readings automatically over fixed IP connections, GSM, GPRS or traditional modems. Internet shopping is growing very rapidly in Norway. Functional platforms for Internet shopping are becoming very important in retail as well as wholesale. In addition, companies can make considerable cost savings by implementing e-invoicing, not least for B2B invoice traffic. Requirements for greater reporting to the authorities on business activities and more demanding standards for the privacy of personal information held electronically are making new demands on IT systems. Looking ahead, companies in the trade and industry sector will be big users of technologically-demanding systems for collaboration both collaborative working within the company and collaborative dialogue with customers and other businesses. Their activities will be even more electronically oriented than is currently the case. Traditional shopping methods will increasingly migrate to the Internet. Internet shopping will become much more commonplace, and companies will need quality IT systems for shopping, payments and electronic catalogues as well as for their own purchasing and inventory control if they are to survive in this new market. Even businesses that still rely on other forms of customer contact will find that the Internet plays an ever-increasing role in their everyday business. Customer management will need to take place on a unified platform that allows the customer self-service solutions to interactively manage its dialogue with the supplier. The world that many people forecast for the IT industry at the end of the 1990s is now about to arrive, just a few years later than expected. Companies in the trade and industry sector will find that their businesses are much more reliant on IT, and in order to focus on their core activities they will

25 EDB Business Partner Annual Report COOR SERVICE MANAGEMENT SECTOR: Services management CHALLENGES AND CUSTOMER BENEFITS: Coor Service Management operates, develops and rationalises service functions, and takes on responsibility for all service aspects that fall outside a customer s core business activities. In doing this, Coor needs to develop and deliver services in many different areas. Efficient IT operations are important to stay competitive, and Coor has chosen to cooperate with an external partner in this area. EDB was selected for this role. Coor evaluates its IT supplier on the basis of its contribution to the management and development of Coor s customers, whether they are small companies or major groups. WHY EDB: EDB is one of the largest and most experienced groups in the Nordic region for operating business-critical IT systems. Coor was looking for an experienced and well-resourced partner able to take on complete responsibility for IT services from business processes through to IT operations. Both Coor and EDB have ambitious objectives in the Nordic market, providing for an even better match. SOLUTIONS: At the end of 2005, Coor started the transfer to a new IT platform EDB SKALA. All IT operations are coordinated with EDB SKALA, and this makes it possible to consolidate and improve operational efficiency for both Coor s own systems and those of its customers. MORE ABOUT COOR: Coor is a leader in service management. The company was established in 1998 as part of the Skanska contracting group, and was acquired by the investment company 3i in Coor has employees and turnover of some SEK 4 billion. need a strong and attentive IT partner that can offer a much greater degree of support for their entire value chain than is typically the case today. EDB S INVOLVEMENT WITH TRADE AND INDUSTRY EDB has a range of large and medium-sized customers in the trade and industry sector in both Norway and Sweden, and its customers represent most aspects of trade and industry. EDB currently delivers IT operations and other IT related services for 970 companies in trade and industry. This sector generates 22 percent of EDB s total revenue. EDB s offer for trade and industry customers draws on the full breadth of EDB s products and services, both for operations and solutions, and covers a range from customer-specific products through standard products to products delivered by EDB s partners. In addition, EDB offers a range of general services to support its customers business operations. At the core of EDB s offer for trade and industry is the EDB solution for distributed operations, mobility and collaborative working known as EDB SKALA. EDB has developed this concept to deliver significant benefits for businesses that have a wide geographic spread of IT workplaces and a growing proportion of users with mobile equipment. The concept is flexible, with modular services and pricing structure based on usage or agreed capacity. This makes it well suited for businesses undergoing rapid change. EDB offers product and services in the areas of: Operating services for applications and databases: Continuous operation and monitoring of the customer s own applications and/or standard software. Infrastructure operating services: Operational responsibility for the customer s equipment and related systems software. IT security: Services and tools to ensure that only authorised users can access the customer s IT systems and to provide the best possible protection for customer data. Continuity solutions: Backup copies and longterm storage of high-volume data as well as complete disaster recovery/continuity solutions to protect the customer against the risk of disruption to IT services. Customer centre: 24/7 response for the customer to report faults, place orders, register requests for changes etc. with appropriate coordination, follow up and escalation as required. Administration and management: Handling on behalf of the customer all IT-related agreements with suppliers, licence portfolios, purchasing and asset management. Consulting and project support: Solutions design, systems integration and server consolidation. FUTURE PROSPECTS EDB sees opportunities in operating services, value-added services and consulting for this sector. Retail distribution, industrial production and the energy sector will all be attractive areas and are expected to generate stronger growth in demand for IT services than the sector as a whole. Companies future IT needs will be driven by the pressures of competition and profitability as well as the introduction of new technology and greater IT intensity for their activities. EDB has the experience, expertise and partnership links to support customers in this sector through all stages of the value chain. Our new focus on IT consultancy and application services brings a new dimension to our portfolio of solutions and products, and we expect this to be a growth area. EDB has the experience, expertise and access to partners that make it possible to support every stage of the value chain. ANNUAL GROWTH IN IT SERVICES NORDIC TRADE AND INDUSTRY SECTOR (percent) The chart shows expected growth in the Nordic market for IT services for the Trade and Industry sector as represented by the segments retail, wholesale, industry, energy and transport for Source: IDC

26 24 EDB Business Partner Annual Report 2005 Hi I have updated the project plan and you can see it in our area of the eroom. Regards Petter Message From: Petter To: Everyone in the project group Answer More Telecom IP technology and multimedia content are changing the sector EDB s OPERATING REVENUE TELECOM (NOK million) The telecommunications sector accounts for 5.1 percent of the total Nordic IT services market. IDC forecasts that this sector will grow on average by 4.3 percent annually through to The outlook for the telecommunications market is broadly similar across the Nordic countries. EDB s telecom activities are principally centred on the Norwegian market, but the company aims to expand this business to other countries in the future. EDB has a 30 percent share of the Norwegian market. The chart shows EDB s turnover from the telecommunications sector for Telecommunications is a rapidly changing industry, characterised by consolidation towards larger, global players. Competition is intense, and pricing is continually under pressure. The industry is also in the process of migrating to the next generation of technology. Telecommunications companies have enjoyed growing revenue from mobile telephony and broadband services, but these areas are reaching saturation. Revenue from fixed line telephony is falling, and operators are looking in new directions to generate future revenue. IP technology and content services seem likely to play an important role in future years. Norway now has more registered mobile telephone subscribers than its total population. Around 100,000 households already use broadband telephony, equivalent to 6.4 percent of fixed line telephony customers and 14.3 percent of broadband customers. An increasing number of people are cancelling their fixed lines. The telecommunications sector in Norway is characterised by growth in new players and new features. In the first half of 2005, Norway had 158 active operators in fixed line telephony, mobile telephony, broadband and leased lines as compared to 144 operators in July saw the rollout of 3G telephony in Norway. Both Telenor and Netcom launched 3G networks in 2005, and the pace of customer migration to the new opportunities offered by 3G is accelerating.

27 EDB Business Partner Annual Report PRODUCTS FOR THE TELECOMMUNICATIONS INDUSTRY Mobility The scope for mobility and collaboration in daily work increases every day. The challenges presented for operating IT systems grow at the same pace. EDB SKALA gives businesses access to the freedom that new technology offers delivered in a solution that meets the highest standards of security and operational efficiency. EDB has developed EDB SKALA in close collaboration with Microsoft, and the solution combines Microsoft Office System with EDB s new operations platform. The concept allows EDB to take over operational responsibility for the customer s entire value chain. This frees up the customer s own resources for other more strategically important and long-term IT tasks rather than day-to-day operations. EDB SKALA offers significant benefits for businesses that have a wide geographic spread of IT workplaces and a growing proportion of users with mobile equipment. Collaborative working EDB SKALA is also very suitable for businesses that have a particular focus on internal collaboration, for example process or project management tasks. At the core of EDB SKALA is a package of services for cost-effective and reliable operation of distributed IT solutions for all types of equipment whether mobile or fixed, thick or thin, wireless or fixed line. EDB SKALA gives the customer cost-effective and reliable access to the best that the market can offer, delivered in conjunction with EDB s sound expertise in centralised operations solutions.

28 26 EDB Business Partner Annual Report 2005 TELENOR HAS ALMOST EMPLOYEES IN NORWAY who receive over 100 million s every year. The volume of information is enormous, and everyday working practices are becoming more digital all the time. A secure, reliable and user-friendly IT platform is essential for all this to work. With EDB as our IT operations supplier, we know that projects and tasks will be carried out as planned. EDB s services simplify our work at Telenor. Kjersti Wiklund Executive Vice President Telenor Nordic, IS EDB is the largest supplier of IT services for the telecommunications sector in Norway. The market for IT services used by the telecommunications industry is characterised by its small number of suppliers. The applications area is dominated by global suppliers, but IT operating services are offered to a greater degree by regional and local suppliers. EDB is the largest supplier of operating services for telecommunications operators in the Norwegian market, although its involvement in this market relates largely to its business with Telenor. IP TECHNOLOGY, DIGITALISATION AND MULTIMEDIA WILL DOMINATE FUTURE TRENDS IN TELECOMMUNICATIONS The telecommunications sector is facing new needs and demands from its customers in both the retail and corporate markets. Traditional products such as fixed line telephony are in retreat. Customers now want mobility, flexibility and greater freedom of choice, and are demanding services better suited to their individual requirements. IP technology and flexible IT solutions are important drivers in the task of winning and retaining market share in this industry. IT services and communications services are converging into single concept. In the new world of content services, telecommunications companies are becoming producers, suppliers and distributors. Wireless solutions are rapidly replacing fixed connections. As consumers embrace digital technology they also want flexible wireless solutions in their own homes. IP technology will be a driving force for services in the future. Integrated communications solutions based on IP telephony permit simplified delivery models. The same value chain applies regardless of whether access is by telephone, Internet or other channels. The future shape of the telecommunications industry will be dominated by high profile global providers offering services through a multitude of channels. New players from other sectors will join the market, while established telecommunications operators will expand their offer. Broadband will be used to deliver a range of new opportunities. The pace of technological development will accelerate, and many existing products will disappear. Telecommunications companies will increasingly focus on using a single service platform so that all their products can use a single value chain and delivery chain. The technological developments expected in this sector will offer many attractive opportunities for EDB. By way of example, EDB s experience and solutions for self-service banking and unified platforms for customer management will be very relevant as telecommunications operators move towards offering their customers self-service solutions and interfaces that cover all the products and services that they offer. EDB S ACTIVITIES FOR THE TELECOMMUNICATIONS SECTOR EDB Telecom is an industry unit of EDB, with Telenor as its major customer. This unit is responsible for the major part of Telenor s IT production, which extends to around 150 applications. The production infrastructure includes around 300 central servers with 75TB of data storage. EDB Telecom also takes on overall service responsibility for Telenor, including Help Desk user support

29 EDB Business Partner Annual Report TELENOR SECTOR: Telecom CHALLENGE: For Telenor to achieve its strategic objectives, it is crucial that it has a robust IT infrastructure with secure, reliable and efficient operations. EDB is responsible for the operation of Telenor's IT systems. This gives Telenor lower costs and simpler working environment for its employees so that they can focus 100 percent Telenor s core activities. WHY EDB: EDB has several decades of experience in operating IT systems for large and complex businesses. With its unique combination of IT experience and extensive industry-specific expertise, EDB can meet Telenor s IT needs, both operational and strategic. SOLUTION: EDB is responsible for Telenor s IT Operations, including servers and as many as 180 different business applications accessed from 127 locations around Norway. EDB s responsibilities include document storage, software distribution, desktop solutions, mail servers, eroom, help desk services in Norway and security solutions. MOST IMPORTANT BENEFITS: The services EDB delivers help to make Telenor more efficient and therefore generate significant cost savings. EDB s services simplify the working environment for Telenor s employees and so sharpen its organisational focus. for several thousand Telenor employees and some decentralised servers. Collaboration and mobility are important drivers for EDB s offer to the telecommunications sector. Many businesses are now moving to a new generation of office environment. The number of IT users is increasing all the time, many workplaces are located far from the head office and an ever-increasing proportion of these are mobile. However, the need to work together is just as great or perhaps even greater. Users expect flexible solutions and full access to the mobility and collaborative working that new technology can offer. EDB s new service concept EDB SKALA makes it possible for employees of telecommunications customers to work at their customer s location, at the airport, from home or anywhere else and have user-friendly, reliable and secure access to all the central applications that are adapted for mobility. This can include , address books and diary services, intranet, administrative tools and shared business-specific support systems. EDB SKALA is based on a new generation of network products that offer greater speed and flexibility. These products switch automatically between fixed and wireless connections at the office, and away from the office they automatically select the best mobile connection available (GSM, GPRS, EDGE or 3G). Mobile broadband access makes remote use of central applications much more user friendly and efficient. It also opens up the opportunity for IP based telephony and videoconferencing. FUTURE PROSPECTS Mobility and IP-based services will be central to the telecommunications industry in future years. Players in this market are looking to expand beyond their traditional specialities, and many are already expanding from simply delivering telecommunications services into multimedia production and content services. The model for service delivery to consumers is becoming more unified with increasing self-service functionality. With the use of IP technology, the industry is moving from parallel production to unified production for all channels. Services are delivered through a common IP services platform using a shared IP core and distribution network. Customers will be able to use the same interface for Internet and broadband, fixed and mobile telephony and digital television regardless of the signal transport network used. EDB s opportunities in this market lie in developing and delivering services that simplify production for telecommunications operators. In pace with the technology shift towards IP based deliveries and the new areas of focus for the industry, EDB will work closely with its customers to help them achieve their objectives in both traditional and new areas. In view of our delivery model for operating distributed IT solutions, our solutions for communications, mobility, collaboration and management, as well as the unique experience we have gained from our long relationship with Telenor, EDB is well equipped for further growth in the telecommunications market in future years ANNUAL GROWTH IN IT SERVICES TELECOM- MUNICATIONS IN THE NORDIC REGION (percent) The chart shows expected growth in the Nordic market for IT services for the telecommunications sector for Source: IDC

30 28 EDB Business Partner Annual Report 2005 From: Morten TEXTMESSAGE Hi, the latest version of the document is now on our shared domain. Please add your comments so that we can discuss this at our networked conference tomorrow. Regards Morten, Buskerud office Select Exit Services for all industries Digital collaboration for greater efficiency ANNUAL GROWTH IN IT OUTSOURCING IN THE NORDIC REGION (percent) The chart shows expected annual growth of the IT-outsourcing market in the Nordic Region for Source: IDC 2005 In addition to their industry-specific needs, EDB s customers use a range of general services. In addition, there is increasing demand for unified service delivery and experience across different industries. EDB meets this demand by delivering a well-proven platform of non-specific solutions for operations services, applications services, business support services and network services. EDB expects growth in this area of between 5 percent and 6 percent between 2005 and This is in line with the outlook for the IT services market as a whole. IT is playing an ever more important role for companies at every stage of the value chain. In addition, digital collaboration with customers is becoming ever more important, not only for retail sales but also for B2B interaction. Invoicing, deliveries, orders and other functions are moved onto digital platforms. Companies that use new technology and apply it right through to their interaction with customers are achieving important cost savings. Together with smarter and more efficient operational and accounting systems, this trend represents one of the most important drivers for the development of IT use in the corporate market. Companies internal focus is on improving the efficiency of their working processes, and both the private and public sector are setting new standards for productivity. This means that both employees and business units need greater flexibility and access to mobile IT tools. These trends are moving quickly, and introducing IT tools to allow collaboration right through the value chain represents a major increase in IT complexity. Companies that buy their IT services from external suppliers are increasingly looking for a total supplier who can help them manage this new level of complexity.

31 EDB Business Partner Annual Report SERVICES FOR ALL INDUSTRIES Outsourcing Successful outsourcing frees up resources so that a company can concentrate on strategic initiatives and its core activities both in the IT area and elsewhere. EDB has over four decades of experience in running businesscritical IT operations for major Nordic businesses. We help our customers to realise the potential benefits. ebusiness ebusiness covers a complete range of solutions to handle business critical processes such as purchasing and logistics, as well as invoicing between companies (B2B) and from company to consumer (B2C). We help our customers with efficient and professional processes, and make sure that information is available to everyone who needs it. Network services Today s services and value creation depend on efficient and reliable IT networks. EDB delivers services and network functionality that allow more flexible working processes both within a company s own organisation and in its interaction with customers and business partners. We offer solutions for both traditional data traffic and for the rapidly growing use of IP-based speech traffic. IT Security EDB delivers a complete range of IT security services for access control, network monitoring, security backup and disaster recovery. The services offered include security surveillance of network traffic and related products to limit the risk of unauthorised access.

32 30 EDB Business Partner Annual Report 2005 We will see a growing need for good IT consultancy in the future. MOBILITY, COLLABORATIVE WORKING, E-COMMERCE AND DIGITAL SOLUTIONS WILL DRIVE THE FUTURE DEVELOPMENT OF IT SERVICES The development of IT in the corporate market is driven by the interaction between new technology and users needs and expectations. Users expect to be productive the entire time, regardless of whether they are using a laptop PC, a pocket PC, a smart phone or just an ordinary mobile. They expect to be connected via LAN, WAN, GPRS, 3G or other types of network whenever and wherever they want, with reliable and secure access to colleagues, customers and the information they need through s, instant messages, networked meetings, portals and other information sources. Many companies are upgrading or replacing their customer relationship management and accounting systems. They are also implementing new IP solutions for telephony, networking, mobility and collaboration. New e-commerce platforms are emerging for interaction with customers, using e-invoicing, invoice hotels and media databases as part of the solution. An ever-increasing number of companies are recognising the opportunity to make considerable cost savings by moving to paper-free electronic invoicing. EDB s portfolio of products for general services meets the needs of companies in a large number of areas and at all stages of the value chain. There is a growing need for good IT consulting advice. EDB s focus on this area is based on its conviction that it is becoming essential to offer the customer everything from operating services and applications development through to consulting advice, project management, systems architecture, training and management. EDB structures its delivery of general services as part of its offer in the areas of business support services, operating services and infrastructure/network services. This means that EDB s offer covers all the three dimensions of applications development, applications operating services and applications consulting. EDB offers its customers access to uniquely standardised technology and methodology that delivers economies of scale across industry specialities. EDB s particular strength lies in the flexibility of the services it offers combined with high standards of accessibility, security, reliability and scalability. BUSINESS SUPPORT SERVICES EDB s business support services offer is structured to support our customers in their interaction with their customers, business partners, external authorities and others. By delivering functionality and services to simplify business processes and improve their efficiency, our solutions help to increase productivity and strengthen competitiveness. In our solutions for message management, EDB operates as an independent third party for exchanging business documents and messages between companies. We also offer other related services to integrate IT systems and message formats for users of the messaging system. EDB s e-invoicing solution allows customers to distribute invoices directly to their customers Internet banking connections. The e-invoicing solution also ensures that business critical information is brought together in a single database. B2B e-invoicing allows efficient and secure processing of corporate invoices at modest cost. The system operates as a meeting point for invoices sent and invoices received between companies. EDB IS GOOD AT LISTENING TO OUR NEEDS and has met all our expectations for the cost efficiency and quality of their services. This, together with the high level of expertise they offer and their reliable operations, was key to our decision to choose EDB as our IT partner. Rickard Norelid Head of IT, Business Services Posten AB

33 EDB Business Partner Annual Report EDB's range of business support services also include document hotels, printing and direct mail production, Web-based media databases and Web-to-Print. IT OPERATING SERVICES EDB offers a complete range of operating services for businesses in all industries. EDB s concept is to give customers cost-effective access to operations methodology and security with a level of quality equal to the best in Europe. Operating services are based on modules that make it simple to outsource a company s IT functions on a step-by-step basis. The solutions offered cover applications and database operations, infrastructure operations, IT security, customer centre operations and user support, as well as operations and management. INFRASTRUCTURE AND NETWORK SERVICES In today s world, almost all value creation and service delivery is based on access to efficient IT networks. EDB offers services and network functionality to support new and more flexible working processes for its customers, both internally and in their interaction with their customers and business partners. EDB s solutions include both traditional data traffic and IP-based voice traffic. Service provision is defined by business support contracts for service quality and end-to-end control. Aside from the telecommunications operators, EDB is one of the largest Nordic players for transmitting business-critical information over high-speed networks. EDB operates its own MPLS-based high-speed network, with connection nodes in all the major towns and cities in Norway and Sweden. We also operate a number of dedicated customer and industry networks. Our network services deliver efficient and quality guaranteed solutions for Internet, intranet, and extranet services. A PARTNER FOR THE FUTURE Mobility and collaboration are key words for the IT solutions of the future. Users need value-adding services, and they are in great demand. EDB s customers will find that IP technology, digital solutions and e-commerce will play an ever more important role in their business activities in future years. As IT becomes an ever more integral part of all business activities, the need for professional consulting advice in this area will also grow. Companies increasingly need an external IT partner that can support and direct their internal resources. EDB s platform of general services, coupled with our size, experience and expertise, makes us well suited to play this role GROWTH IN NUMBER OF einvoices HANDLED BY EDB (No. of einvoices) The chart shows growth in the number of einvoices handled by EDB for Mobility and collaboration are key words for the IT solutions of the future GROWTH IN THE NUMBER OF INFOBANK TRANSACTIONS (millions of transactions) The chart shows growth in the number of Infobank transactions made through EDB for POSTEN AB SECTOR: Logistics CHALLENGES AND CUSTOMER BENEFITS: Posten s IT systems comprise a cashier system, a management reporting system and a payroll system. EDB has operational responsibility for these extremely business-critical systems that serve Svensk Kassaservice with aproximately 500 branches and around banking terminals. These systems handle all commercial transactions between Posten and the group s business partners, and run the payroll for Posten s almost employees. WHY EDB: Posten s business demands excellent accessibility, and our customers set high standards for quality, costeffectiveness and expertise. It was also important to find a supplier capable of first-class quality assurance when responding to new and changing market requirements. MORE ABOUT POSTEN: Posten is one of the largest business operations in Sweden with an annual turnover of SEK 25 billion. Posten provides services every day for 4.5 million households and companies.

34 32 EDB Business Partner Annual Report 2005 EARNINGS PER SHARE (NOK) Earnings per share for the last three years. Report of the Board of Directors EDB Business Partner strengthened its profitability in 2005 by implementing cost saving measures, signing new contracts that have generated organic growth realising synergy gains through the integration of businesses acquired. Through the sale of all the assets in the Telecom business area, EDB has discontinued its activities in an area that was outside the group s core business. During the course of the year EDB implemented a strategic plan that is now firmly in place throughout the organisation. The Board considers it very important that EDB achieves profitable growth and broadens the range of solutions and services it offers. In addition, further growth in the Nordic countries is a priority. To further this strategy, EDB announced the purchase of TAG Systems in December This strengthens the group s Bank and Finance activities, giving EDB greater coverage of the value chain in the credit and debit card area. Earlier in 2005, EDB acquired BanqIT Business Applications AB. This was an important addition to the company's focus on the banking market in Sweden. Early in 2006, EDB purchased four companies in the area of IT consulting and applications services: Avenir, Spring Consulting, Software Technology Integration (STI) and Guide Konsult. The company has also purchased Datarutin. Datarutin is a market-leading player in Sweden, and supplies industry-specific solutions as well as IT operating services to trade union unemployment benefit offices, various organisations and property companies. The businesses acquired will help to ensure that EDB has a more complete range of products and services. In terms of operating revenue, solutions and services will account for almost 40 percent of the group s revenue while IT Operations accounts for just over 60 percent. In accordance with the approved strategy, EDB is increasing its presence in the Swedish market. In view of the improved profitability and good cash flow, the Board of EDB has proposed an increased dividend of NOK 1.00 per share. MAIN FEATURES The market for IT services in the Nordic region is worth NOK 110 billion annually, and represents around half of total spending on IT. Norway and Sweden, the countries of main focus for EDB, represent 63 percent of the Nordic IT services market. This market grew by 4 percent in Favourable economic conditions in the Nordic region have encouraged a greater willingness to invest in IT. EDB operates in two main segments of the IT services market, with outsourcing as the larger and more important segment. IT consulting, application services and industry-specific solutions also represent an important area for EDB.

35 EDB Business Partner Annual Report BJARNE AAMODT (60) Chairman STAFFAN BOHMAN (56) Deputy chairman Current employment: Senior Vice President, Telenor Previous employment: Group CEO Alcatel STK ASA, Deputy Managing Director of Det Norsk Veritas Education: Engineering degree from the Norwegian University of Science and Technology (1974). Other board appointments: Board member of a number of Telenor s venture-capital companies, board member of Inmarsat Group Holding Ltd and NordPool ASA. Deputy Chairman of the Supervisory Board of Nordea Bank Norge ASA Aamodt has been a member of EDB s Board since June 2002 Shares in EDB: Current employment: Independent entrepreneur Previous employment: Group CEO of DeLaval AB and Group CEO of Gränges AB and Sapa AB Education: MBA graduate of the Stockholm School of Economics, with further qualifications in management from Stanford Other board appointments: Member of the boards of Atlas Copco AB, Scania AB, Ratos AB, Trelleborg AB, Dynapac AB, InterIKEA Holding SA, Swedfund International AB and OSM AB. He is also the Deputy Chairman of the Board of the Institute of International Business at the Stockholm School of Economics. Bohman has been a member of EDB s Board since Shares in EDB: The IT industry continued to consolidate in This trend is expected to continue in The ability to realise economies of scale in order to meet customers demands for cost-efficient solutions and greater productivity will be the key to success in supplying this market. EDB strengthened its market position over the course of The company implemented measures in 2005 to improve the profitability of IT Operations in Sweden, and this area of activity reported a small but positive operating result for the year as a whole. The measures implemented will ensure that IT Operations Sweden produces an EBITA margin in line with the business area as a whole by the close of The Solutions Sweden area improved its profitability in 2005, and by the close of the year it reported EBITA in line with the Solutions business area as a whole. Over recent years, EDB has established and further developed a range of large platforms for major customers in addition to delivering operating services for solutions developed in-house. An extensive delivery quality project has been initiated to ensure optimal operations and greater professionalism in all the key work processes involved. The rollout of the Delivery Quality project will continue undiminished in This work is beginning to show results, and will improve EDB s ability to operate complex value chains in future years. The Board has systematically placed particular emphasis on improving the stability and reliability of service delivery, and thereby strengthening the group s reputation. Operational reliability is a very important factor in competitiveness, together with sound procedures for operational continuity and a proactive approach to continuous improvement. The Board is pleased to note that the efforts committed to operational reliability are also producing positive results. A number of major customers renewed and extended their contracts with EDB in 2005, thereby helping to secure the company s market position in future years. At the close of 2005, EDB had an order backlog of NOK 12.3 billion. FINANCIAL RESULTS EDB s consolidated operating revenue for 2005 was NOK 4.8 billion. This is 24 percent higher than After adjusting for acquisitions, organic growth was 4 percent, in line with the Nordic IT services market. The IT Operations business area accounted for 77 percent of operating revenue in 2005, with the balance of 23 percent from the Solutions business area. IT Operations achieved 18 percent revenue growth for 2005 as a whole, while Solutions reported an increase of 40 percent. Operating costs for 2005 totalled NOK 4.4 billion. A number of measures were implemented in 2005 to reduce costs and realise synergies across the group. These measures addressed hardware and software purchasing, utilisation of office space and premises administration, internal services and telephony. The group s objective is to reduce operating costs by NOK 350 million in total over the years 2004, 2005 and Together with measures to increase productivity in the business areas, this program made a major contribution to cost savings in The group starts 2006 on target to meet this objective. The group s operating profit before intangible asset amortisation (EBITA) increased from NOK 364 million in 2004 to NOK 486 million in EBITA margin showed a similar increase from 9.3 percent in 2004 to 10 percent in The IT Operations business area produced an increase in EBITA from NOK 302 million in 2004 to NOK 344 million in 2005 before a provision of NOK 28 million for restructuring costs in Sweden. After adjusting for this provision, IT Operations produced an EBITA margin of 9.1 percent in 2005, as compared to 9.4 percent in The Solutions business area reported EBITA of NOK 216 million as compared to NOK 118 million for EBITA margin improved from 14.5 percent in 2004 to 18.9 percent in Ordinary depreciation was NOK 307 million in 2005 as compared to NOK 235 million in Intangible asset amortisation totalled NOK 98 million in 2005 as compared to NOK 0 in 2004 when the company elected, in accordance with the IFRS transition rules, not to revalue goodwill prior to The book value of goodwill at 31 December 2005 was NOK million, down from NOK million one year earlier. The group has tested the value of its goodwill in accordance with IFRS, and has not identified any impairment. The sale of the remaining part of the Telecom business area created a pre-tax profit for the group of NOK 37 million. This business area is deconsolidated from the group s profit and loss account, and is shown separately after the profit for continuing operations. The sale of the company s building at Hamar created a gain of NOK 11 million, which is included in operating revenue. Consolidated operating profit (EBIT) was NOK 388 million in 2005 as compared to NOK 364 million in Net financial expense was NOK 32 million in 2005 as compared to NOK 42 million in The group reports a pre-tax profit (EBT) of NOK 356 million for 2005 as compared to NOK 322 million in 2004.

36 34 EDB Business Partner Annual Report 2005 GISELE MARCHAND (47) Board member HANS KRISTIAN RØD (53) Board member Current employment: Managing Director of the Norwegian Public Service Pension Fund Previous employment: Managing Director of Batesgruppen, Executive Vice President of DnB Education: Economics graduate of the Copenhagen Business School Other board appointments: Chair of the Norwegian Association of Pharmacists Pension Fund, Deputy Chair of the board of Innovasjon Norge and a board member of Norske Skog, GIEK and GK Kredittforsikring Marchand has been a member of EDB s Board since 2004 Shares in EDB: 0 Current employment: Managing Director for the Norwegian activities of the energy company Fortum. Previous employment: Managing Director of Neste Petroleum AS, Executive Vice President (E&P) at Fortum Oyj Education: MBA graduate of the University of Wisconsin, Madison and a graduate of the Norwegian School of Management. Other board appointments: Deputy Chairman of Fredrikstad Energi AS Rød has been a member of EDB s Board since Shares in EDB: 0 The group produced cash from operations of NOK 580 million in 2005 as compared to NOK 610 million in The group s liquidity reserves totalled NOK million at 31 December 2005, including un-drawn committed credit facilities of NOK 799 million. The group s net interest-bearing liabilities totalled NOK 454 million at 31 December 2005 as compared to NOK 628 million at 31 December Total equity at the close of 2005 was NOK million as compared to NOK million the previous year. Distributable reserves amounted to NOK 823 million at 31 December EDB is exposed to currency risk in connection with its international investments. The company seeks to reduce this exposure through matching foreign currency borrowings. Information on the group s procedures for handling other risks can be found in the separate section on Corporate Governance. As required by Section 3 3 of the Norwegian Accounting Act, the Board confirms that the annual accounts have been prepared on the going concern assumption. This assumption is based on the company s results for 2005, the group s business strategy and its current budgets. IT OPERATIONS BUSINESS AREA IT Operations comprises network services, operation of infrastructure and applications, security services and user support, as well as electronic business support services such as invoice management, payment services, messaging and printing. The activities of the IT Operations business area cover all industries and sectors, and it operates in Norway and Sweden. IT Operations reported operating revenue of NOK million in 2005, an increase of 18 percent from New customers and businesses acquired contributed to this business area s growth. IT Operations carried out an extensive program to integrate the businesses acquired in 2005, particularly the activities taken over from Telenor s Operating Services division, IBM and Capgemini. This led to a lower cost base. During the course of Autumn 2005, cost saving measures were implemented at IT Operations in Sweden. The results of this are now being seen, and IT Operations in Sweden is expected to report results in line with the rest of the business area by the close of This business area operates in a very competitive market, making it essential to continually take steps to maintain its competitiveness. Work on standardising products and services to create further economies of scale and additional revenue growth is therefore very important. IT Operations has also strengthened its offer of products and services for distributed operations as well as printing/dialogue and electronic services. The market for electronic services offers considerable potential for growth in future years. IT Operations produced firm evidence of its competitiveness in both the Norwegian and Swedish markets over the course of The new contracts signed by Storebrand, the Norwegian Tax Administration and the municipality of Trondheim in Norway, as well as Linkon, Coor Service Management and Samhall in Sweden, were among the most extensive outsourcing contracts seen in the Nordic market in The business area has strengthened its strategic position in markets such as the public sector, distribution and industry. In addition, the acquisition of Datarutin gives EDB new strength and depth for IT Operations in the Swedish market. IT Operations deliveries for DnB NOR s major conversion project to coordinate its IT resources proceeded on target throughout By the close of 2005, EDB was the third largest supplier of IT operations services to the Nordic countries, and the largest regional player in this market. The need to offer 24/7 operations is encouraging an increasing number of Nordic businesses to outsource their operations services to specialised suppliers. The benefits this offers include greater productivity, better operational reliability and reduced exposure to operational risk. The banking, finance and telecommunications sectors have been at the forefront of this trend, which is now spreading to other industries and companies and to the top end of the small and medium-sized business market. SOLUTIONS BUSINESS AREA The Solutions business area comprises the sale of software, systems and consultancy services to the bank and finance industry and the public sector. EDB offers an extensive range of products and services for Nordic banks, and this business operates principally in Norway and Sweden. EDB also supplies solutions to Norwegian municipalities, health authorities and a number of national public sector entities. Through the acquisition of Datarutin, EDB now also supplies solutions for the Swedish public sector. Solutions reported operating revenue of NOK million in 2005 as compared to NOK 817 million in Growth in revenue relates to the business activities acquired from IBM and the acquisition of BanqIT Business Applications, as well as organic growth of 8 percent. Bank and Finance remains the most important industry for EDB, but the group now also has a stronger foothold in the public sector. EDB is winning market share in both Norway and Sweden through higher sales of solutions to banks and financial institutions. The market s confidence in EDB was confirmed in 2005 by the number of new and extended contracts agreed with both

37 EDB Business Partner Annual Report MONICA CANEMAN (51) Board member ANNE-CECILIE FAGERLIE (47) Board member Current employment: Independent entrepreneur. Previous employment: Deputy CEO of Skandinaviska Enskilda Banken. Education: MBA graduate of the Stockholm School of Economics. Other board appointments: Chair of the boards of Interverbum AS, EDT AS and Point International, and a board member of Investment AS Öresund, Svenska Dagbladet AB, Citymail AB, Akademikliniken AB, SJ AB, Lindorff Holding AS, Poolia AB, Schibsted ASA, Orexo AB, SOS Barnebyer Sweden, Pon Card Group AB, Nya Livsforsäkrings AB and SEB Trygg Liv. Caneman has been a member of EDB s Board since April Shares in EDB: 0 Current employment: Senior Vice President Group IT at Aker Kværner. Previous employment: Partner a nd member of the Executive Group of Accenture. Education: Master of Science from the Norwegian Institute of Technology, Department of Computer Science (now the Norwegian University of Science and Technology), and a business graduate of the Norwegian School of Management. Other board appointments: Board member of Nordic Semiconductor ASA, Aker Kvaerner Business Partner Ltd, Sireko AS, the Research Council of Norway (large-scale programs) and the Advisory Council of the IME department of the Norwegian University of Science and Technology. Fagerlie has been a member of EDB s Board since April 2005 Shares in EDB: 0 current and new major customers. The acquisition of BanqIT Business Applications, together with organic growth, has strengthened the business area s position in the Swedish market. In Norway, EDB entered into an agreement in the fourth quarter to acquire the card systems company TAG Systems with effect from 1 January This will give EDB a stronger market position in card services and extend the range of its expertise in this area. In addition, the strategic collaboration agreed between EDB and i-flex Solutions in 2005 opens up entirely new and exciting opportunities for sales of complete systems solutions for retail banking in the Nordic market. TELECOM BUSINESS AREA As at 30 September 2005, all assets related to EDB Telecom s Network Inventory business and the European Mediation business were transferred to Comptel Corporation. At the same time EDB s shares in Telesciences Inc. in the USA were sold to a company owned by the management of Telesciences. Following these transactions, the group s Telecom business area ceased to operate. This business area is treated as a discontinued operation and was deconsolidated with effect from the third quarter interim report. ORGANISATION, WORKING CONDITIONS AND THE EXTERNAL ENVIRONMENT EDB has its headquarters in Oslo, but operates throughout much of Norway and Sweden. EDB was organised as three business areas in 2005 that represented the group s total activities, namely IT Operations, Solutions, and Sales and Business Development. All the group s sales and business development resources were brought together into a single unit in The IT Operations business area continued with largely the same area of focus as before. The solutions unit of Bank and Finance and the applications business acquired from IBM were brought together in a new business area known as Solutions. The group s activities in Sweden are responsible for sales and business development in Sweden and for co-ordinating EDB s activities in this market based on the group s strategies for IT Operations and Solutions. The EDB group had employees at the end of 2005, of which 417 were employed in Sweden. Since the start of 2006, EDB has gained a further employees through its acquisitions of Tag Systems, Datarutin, Avenir, Spring Consulting, Software Technology Integration and Guide Konsult. The group s employees are the key to its future success. Their unique expertise creates value for customers, the group and shareholders. EDB therefore pays continuing attention to developing skilled and committed employees who are proud to work for EDB. EDB has developed a group-wide Human Capital Index (HCI) which ensures a consistent approach to employee appraisals and objectives. The expertise of the group s employees is of critical importance for EDB, but their ability to create good relations and collaborate closely with colleagues and customers is as important as their technical skills. EDB devoted considerable resources to training and professional development in 2005, with particular emphasis on critically important areas of expertise. These programs will continue in 2006 and focus on management training, sales, and customer orientation. EDB aims to strengthen the company s diversity, and has therefore established a program for employment equality. Female staff accounted for 22 percent of total employees at the close of 2005, but women held only 16 percent of management jobs. This shows a slight fall from 2004, caused mainly by changes in staff composition resulting from businesses purchased and sold. EDB is committed to more equal gender representation for the company in general and an increase in the number of female managers in particular. The company's objective is for the proportion of female managers to be at least as high as the proportion of women in the company in general. The program for employment equality includes measures to achieve this target. The average salaries of male and female EDB employees are affected by differences in average age, length of service and the proportion of managers. All these factors tend to cause the average male salary to be higher than the average female salary. After adjusting for these factors, the salaries of male and female staff are equivalent. Absence due to sickness for the group in 2005 was 4.1 percent, as compared to 3.1 percent in No serious work accidents or injuries were reported during the course of the year. EDB operates a More inclusive working life agreement with the National Insurance Administration s Working Life Centre to strengthen its focus on this important area IT OPERATIONS EBITA margin Operating revenue (NOK million)

38 36 EDB Business Partner Annual Report 2005 INGRID LUND (47) Elected by the employees JOHN INGVAR BREKKE (47) Elected by the employees Current employment: Senior consultant, IT Operations Education: Legal studies at University of Bergen and in business economics at the Norwegian School of Economics and Business Administration Lund has been a member of EDB s Board since November 2005 Shares in EDB: 600 Current employment: Project Manager EDB Business Partner Norge AS Education: Qualified business economist Brekke has been a member of EDB s Board since November 2002 Shares in EDB: EDB does not carry out any activities that pollute the external environment. The group s impact on the external environment relates to energy consumption and the management of redundant electronic equipment. Both of these issues relate principally to the IT Operations business area, which is committed to a program of continuous improvement by making more efficient use of its premises and reducing the electric power used by computer and air conditioning equipment in its computer centres. The disposal of redundant electronic equipment is managed in collaboration with the equipment suppliers in accordance with national regulations and established arrangements for product return. The group also makes use of opportunities to sort waste for recycling by type in accordance with the opportunities available at each location. EDB introduced guidelines in 2003 on business ethics for all its employees and officers, including members of the Board, managers, employees and temporary staff. The guidelines on which EDB s corporate values are based are intended to help the group s employees make the right decisions on issues they may encounter in their work. EDB is committed to maintaining a high ethical standard in all aspects of the group's work and responsibility. CORPORATE GOVERNANCE The company is committed to ensuring that its corporate governance policies and practices follow the recommendations set out in the revised Norwegian Code of Practice for Corporate Governance issued on 8 December Work is underway to ensure that EDB satisfies the requirements of the revised Code in all relevant areas. The Board has a Compensation Committee and an Audit Committee to support its work and responsibility in these areas in a more detailed manner. EDB made arrangements with an independent law firm in 2005 to make it possible for employees of the group to report to the Board any potential concerns they might have about serious misbehaviour or illegal actions in a manner that ensures their anonymity in respect of the company s management ( whistle blowers ). Reference is also made to the separate section on Corporate Governance in the annual report. FUTURE PROSPECTS The Board expects continuing growth in the Nordic IT services market in Growth is expected in both Norway and Sweden, the markets in which the group carries out the bulk of its activities. Customers are looking for solutions that automate working processes and improve efficiency, solutions to meet new requirements from the authorities and changes to internal procedures, as well as projects that will ensure greater competitiveness. EDB offers a broad range of products and services for the bank and finance sector. This industry unit accounted for 54 percent of the group's revenue at the close of Following the acquisitions made in early 2006, this unit's share of revenue has reduced to 46 percent. The bank and finance sector will continue to be an important area for EDB in future, and the company sees good growth opportunities in this sector, especially for sales of solutions. EDB strengthened its position as a supplier to the public sector in The public sector will again be an important area of focus in Public sector clients accounted for 2 percent of group revenue in 2004, rising to 11 percent by the close of The recent acquisitions have further strengthened EDB's position with the public sector, and the group now offers a broader range of products and services for this sector. The public sector market accounts for 17 percent of the group s revenue following the acquisitions made in EDB sees opportunities for further growth in the public sector, in both Norway and Sweden. The third industry sector on which EDB focuses is trade and industry. This industry unit accounts for 24 percent of the group's revenue following the acquisitions mentioned as compared to 19 percent previously. EDB sees growth opportunities through new outsourcing contracts with large and medium-sized businesses as well as IT consultancy and sales of applications services. The telecommunications industry sector accounts for 13 percent of revenue as compared to 16 percent before the acquisitions. By concentrating on these sectors, EDB gains broader sales and marketing focus. The company sees continuing opportunities to standardise IT operating services across different industries in order to realise economies of scale. Medium-size companies are showing good demand for outsourcing. The outsourcing market is characterised by fewer major new contracts. There are still many businesses that have not exposed their IT service arrangements to competition, and the Board believes that this represents potential over time for further major contracts. Solutions, IT consultancy and application services represent a growing market. Customers continue to invest in IT solutions that improve their efficiency, while at the same time an increasing proportion of IT investment spending relates to renewal and upgrading. Consolidation among suppliers of IT services continues. The 10 largest players in the Nordic market share 53 percent of the total IT services market. Many players are suffering from weak profitability and are struggling to achieve critical

39 EDB Business Partner Annual Report EIRIK BORNØ (45) Elected by the employees SOLUTIONS Current employment: Systems Programmer DB2, IT Operations Education: Further education college Bornø has been a member of EDB s Board since November 2005 Shares in EDB: EBITA margin Operating revenue (NOK million) mass. At the start of 2006, EDB has strengthened its position in IT consulting and applications services. The company is well positioned to participate in the continuing process of consolidation and to achieve profitable growth in the Nordic market in line with the company s strategic objectives. SHAREHOLDER MATTERS The largest single shareholder in EDB Business Partner ASA is Telenor Business Partner Invest ASA, which owns 51.8 percent of the company s share capital. Foreign shareholders held 13 percent of the company at the close of Otherwise, Norwegian institutional investors dominate the balance of the ownership structure, and further details can be found in Note 18 to the consolidated accounts. The company had shareholders at 31 December As part of the group s share option program, the CEO, other members of executive management and approximately 50 key employees had been granted a total of share options out of a total limit of 1.9 million options as at 31 December Of the options granted, options had not been exercised at 31 December The final exercise period for the first half of the option program followed the publication of the company s results for the fourth quarter of This led to options being exercised, thereby increasing the company s share capital by NOK The accrued portion of the value of the options granted, including calculated employer s social security contributions on the benefit, represented a charge of NOK 7 million to profit and loss in This amount was allocated between the parent company and the business areas. EDB has adopted a dividend policy for the 2005 accounting year which aims to give shareholders an annual dividend equivalent to percent of normalised post-tax profit, subject to the Board being satisfied that the dividend will not have an adverse effect on the company s future growth ambitions and capital structure. The Board has decided to propose that the AGM should approve a dividend for the 2005 accounting year of NOK 1.00 per share, equivalent to NOK 90 million in total. This represents approximately 40 percent of normalised post-tax profit. EDB Business Partner has prepared its financial statements in accordance with IFRS from 1 January 2005, and all comparable figures have been restated in accordance with IFRS. Information on the changes to historic figures and the opening balance sheet can be found in Note 27 Group. ALLOCATION OF THE RESULT FOR THE YEAR The parent company recorded a profit of NOK 4 million for The Board proposes that this should be transferred to other equity. The dividend will be transferred from equity once it is approved by the Annual General Meeting. OSLO, 21 MARCH 2006 The board of Directors of EDB Business Partner ASA Bjarne Aamodt Chairman of the Board Staffan Bohman Deputy chairman of the Board Gisele Marchand Hans Kristian Rød Monica Caneman Anne-Cecilie Fagerlie Ingrid Lund Employee representative John Ingvar Brekke Employee representative Eirik Bornø Employee representative Endre Rangnes Chief Executive Officer

40 38 EDB Business Partner Annual Report 2005 Profit and Loss Account Group 1 January 31 December (NOK million) Note Sales revenue Other operating revenue Total operating revenue Cost of goods sold Wages and salaries 4,5, Depreciation of operating assets Other operating costs Total operating costs Operating profit before amortisation of intangible assets Amortisation of intangible assets Operating profit Financial income Financial expense Net financial items Ordinary profit before tax Tax on ordinary profit Profit for the year for continuing operations Profit for the year for discontinuing operations Profit for the year Whereof majority interests Whereof minority interests 0.2 Earnings per share (NOK) Earnings per share continuing operations (NOK) Diluted earnings per share (NOK) Diluted earnings per share continuing operations (NOK)

41 EDB Business Partner Annual Report Balance Sheet Group (NOK million) Note Fixed assets Deferred tax assets Goodwill and other intangible assets Total intangible assets Land, buildings and other real estate Machinery, equipment and fixtures Total tangible assets Other shareholdings Other long-term receivables Total financial fixed assets Total fixed assets Current assets Inventories Accounts receivable Other current deposits Total receivables Cash and bank deposits Total current assets Total assets Equity Issued Share capital Own shares Share premium Other equity Total equity exclusive of minority interests Minority interests Total equity and minority interests Liabilities Deferred tax Pension liabilities Total provision for liabilities Loan on special terms Other long-term interest bearing liabilities Other long-term non-interest bearing liabilities Total other long-term liabilities Accounts payable Tax payable Deductions and duties payable Loan on special terms Other current liabilities 21, Total current liabilities Total liabilities Total equity and liabilities Oslo, 21 March 2006 The Board of Directors of EDB Business Partner ASA Bjarne Aamodt Chairman of the Board Staffan Bohman Deputy chairman of the Board Gisele Marchand Hans Kristian Rød Monica Caneman Anne-Cecilie Fagerlie Ingrid Lund Employee representative John Ingvar Brekke Employee representative Eirik Bornø Employee representative Endre Rangnes Chief Executive Officer

42 40 EDB Business Partner Annual Report 2005 Cash Flow Statement Group 1 January 31 December (NOK million) Cash from/to operations: Ordinary profit before tax* Gain/loss on sale of fixed assets Tax paid in the period Depreciation/write-downs Difference between pension cost and payments Change in inventories, accounts receivable and accounts payable Change in other accruals Net cash flow from operations Cash from/to investments: Investment in fixed operating assets Sale of fixed operating assets (sales proceeds) Investment in other companies Sale of companies Purchase/sale of other shares and equity investments 10.2 Net cash flow from investments Cash from/to financing: New borrowing (short and long-term) Borrowings repaid Dividends paid Share issues 1.5 Net cash flow from financing Net change in liquid assets over the year Currency movement in liquid assets Cash and bank deposits at Cash and bank deposits at * The cash flow statement is not restated after the sale of Telecom. See note 1 for information about the cash flow for Telecom. Statement of changes in equity OTHER TRANS- TOTAL SHARE OWN SHARE PAID-IN FAIR VALUE RETAINED LATION MAJORITY MINORITY TOTAL (NOK million) CAPITAL SHARES PREMIUM EQUITY RESERVES EARNINGS DIFFERENCES INTEREST INTEREST EQUITY Equity at 1 January Share option scheme employee Currency translation differencees Profit for the year Equity at 31 December Adopting IAS Equity at 1 January Share option scheme employee Cash flow hedges Available for sale investments Currency translation differencees Aqusition of shares from minority Own shares used in connection with exercised options Dividend Profit for the year Equity at 31 December

43 EDB Business Partner Annual Report Accounting principles for the EDB Group 1. BUSINESS ACTIVITIES EDB Business Partner ASA (the company ) is registered in Norway as a public limited liability company. The company's main activities are the sale of software and IT solutions, centralised and decentralised operation of computer systems, outsourcing services and services related to data communication, data security and electronic publishing, The Annual Accounts were approved by the Board of Directors at a meeting held in Oslo on 21 March BASIS OF PRESENTATION Accounting principles In accordance with the Norwegian Accounting Act, the Annual Accounts (consolidated accounts of the group and unconsolidated accounts of the parent company) of EDB Business Partner ASA have been prepared in accordance with the International Financial Reporting Standards (IFRS) as approved by the EU. The figures presented in the annual accounts are in millions of Norwegian kroner unless otherwise stated. The accounts have been prepared on a historical cost basis with the exception of pensions and financial instruments, which are measured at fair value. 3. SUMMARY OF MATERIAL ACCOUNTING PRINCIPLES The material accounting principles used to prepare the annual accounts of EDB Business Partner ASA are as follows: a) Presentation currency The group presents its accounts in Norwegian kroner (NOK). This is also the group s functional currency. b) Consolidation principles The consolidated accounts include the parent company EDB Business Partner ASA and the companies over which EDB Business Partner has a controlling influence. A controlling influence is assumed to exist when the group, directly or indirectly, owns 50 percent or more of the voting shares in a company and is able to exercise control over financial and operational decisions. Subsidiaries are consolidated using the purchase method of accounting, whereby the acquisition cost of the shares is offset against the subsidiaries equity at the time of purchase. Any excess value resulting from this treatment at the time of purchase is allocated to identifiable assets and is depreciated over their expected life. Excess value that cannot be allocated to identifiable assets is recorded in the balance sheet as goodwill. Excess value, including goodwill and deferred tax assets, related to the purchase of independent foreign entities, is translated using the same principles as for other assets and liabilities of foreign subsidiaries. Subsidiaries acquired during the period are consolidated from the date on which the group obtains financial and operational control. Similarly, businesses sold are included in the consolidated accounts until the purchaser takes over financial and operational control. All intra-group transactions and balances as well as internal gains are netted off in the accounts. Minority interests' share of post-tax profit or loss is treated as a deduction and shown as a separate line in the profit and loss account. Negative minority interests are not carried in the balance sheet unless there is a guarantee of the shortfall. At the time of acquisition, minority interests are calculated as a portion of the equity of the subsidiary plus excess/under value arising from the acquisition. Minority interests' share is calculated on the basis of the subsidiary's post tax-profit, after internal netting, as included in the consolidated accounts. Where the group s ownership interest in a company is between 20 percent and 50 percent and the group has significant influence in financial and operational matters, the equity method of accounting is applied to the investment. The group s share of the company s profit/loss after tax, net of any write-down of excess value, is shown in the profit and loss account as Share of profit/loss in associated companies. c) Classification of assets and liabilities in the balance sheet Assets related to the normal turnover of the business are classified as current assets. The same criterion is applied to current liabilities. Receivables or liabilities not related to the normal turnover of the business are classified as current assets or current liabilities if they fall due for payment within 12 months. Other assets are classified as fixed assets and other liabilities are classified as long-term liabilities. d) Recognition of revenue and costs Where operating services are provided through volume-based contracts, revenue is recognised on the basis of the actual use of services by the customer, or on a linear basis over the period of the contract for term-based contracts. Sales of dialogue services are recognised as revenue on the basis of actual customer usage. Revenue from a transition project that is an integral part of subsequent operating services contract is recognised on a linear basis over the period of the operating services contract. Revenue from transition projects that are not related to an operating services contract is recognised over the transition period. Service and maintenance agreements are recognised to income on a linear basis over the period of the contract. Sales of goods are recognised as revenue at the time of delivery. Sales of licences and rights to use software are recognised at the date the contract is signed since this corresponds to the time at which the software is made available to and can be used by the customer. Revenue from software developed specifically for customers is recognised over the development period in line with the degree of completion. Revenue from consulting services is recognised as the services are provided. Sales of services on a fixed fee basis are recognised to income in line with the number of hours supplied relative to the total number of hours anticipated for the assignment, taking into account any expected additional work and any other expected additional costs. Cost of goods sold comprises directly allocated costs related to the delivery of goods, including maintenance and operational leasing of hardware and software, as well as the cost of consulting services that are directly related to the turnover of the goods. The costs of employing external consultants that are used for the group's normal operations and that are re-charged to customers are classified as cost of goods sold. Costs incurred in performing service and maintenance contracts are recognised to profit and loss when the cost is incurred. e) Inventories Inventories are valued at the lower of purchase price and net realisable value, less a provision for obsolescence. Net realisable value is defined as the expected sale price under normal commercial conditions with a deduction for sales costs. Purchase price is determined on the basis of average cost price. f) Accounts receivable Accounts receivable are recognised in the accounts at nominal value after a deduction for possible losses. g) Transactions in foreign currency Transactions in foreign currencies are translated at the exchange rate at the date of the transaction. Currency gains/losses that arise as a result of changes in the exchange rate between the date of the transaction and the payment date are recognised to profit and loss with the exception of translation differences that arise in respect of the group s net investment in overseas units. Currency gains/losses that relate to receivables/liabilities that form part of net investment in overseas units are included in translation differences in equity. The foreign subsidiaries included in the consolidated accounts are deemed to be independent units since they are independent in respect of financial, commercial and organisational decisions. The local currency of a foreign unit is deemed to be its functional currency. Balance sheet items are translated at the exchange rate on the balance sheet date, while profit and loss items are translated at the average exchange rate for the accounting period. Translation differences that arise as a result are included in translation differences in equity. Upon disposal of a foreign subsidiary, the cumulative translation difference in respect of the subsidiary is recognised to profit and loss. If part of a receivable/liability that is treated as part of net investment in a foreign unit is realised, a proportionate share of the cumulative translation difference is recognised to profit and loss. h) Shares in subsidiaries and associated companies Shares in subsidiaries and associated companies are recognised in the company s unconsolidated accounts in accordance with the cost method. Dividends and other profit distributions received from these companies are recognised as financial income in the period in which the payment is approved by the subsidiary or associated company to the extent that they result from profits earned during the period of ownership. i) Tangible assets Tangible operating assets are carried in the balance sheet at historic purchase price less accumulated ordinary depreciation and write-down. When tangible operational assets cease to be used, the historic purchase price and accumulated depreciation

44 42 EDB Business Partner Annual Report 2005 Accounting principles cont. are reversed from the accounts, and any gain or loss this causes is recognised to profit and loss. Ordinary depreciation is applied on a straight-line basis over the following time periods: - Leasehold improvements 5-10 years - Machinery/equipment/fixtures 3-7 years - Vehicles 5 years - IT equipment 3-5 years The economic life and depreciation method used are reviewed regularly to ensure that the method and depreciation period reflect the expected useful commercial life of the assets in question. This also applies to disposal value. j) Impairment of assets Tangible operating assets and intangible assets with a limited commercial life are tested for impairment if specific events or changes in circumstances indicate that the carrying amount of an asset may have suffered a fall in value that is not temporary in nature. The fall in value is calculated by comparing the carrying amount of the asset (at the level of a valuation unit) against the recoverable amount. The recoverable amount is defined as the higher of value in use and net sales value. Value in use is calculated as net present value of future cash flow from continuing use, including cash flow arising from eventual disposal. The discount rate used to calculate the present value is the risk-free interest rate plus a risk premium appropriate to the asset being valued. The smallest unit of a particular asset which can be separately assessed as a valuation unit for the purpose of determining whether there has been a fall in value is determined by the lowest level at which it is possible to identify cash flow independent of cash flow from other groupings of the same class of asset. In most cases, the group s business areas represent the smallest valuation unit for this purpose. An asset is written down to the recoverable amount if the recoverable amount is less than the Carrying amount before write-downs. Impairment losses are charged to profit and loss in the period the impairment loss is identified, and reduce the carrying amount of the asset by an equivalent amount. Impairment losses may subsequently be reversed to the extent that the reason for the impairment loss no longer applies. However, impairment losses are not reversed if the reversal would cause the carrying amount to exceed the amount that would have applied after applying normal depreciation for the period. k) Leasing Financial leasing Financial leasing contracts are recognised as assets and liabilities in the balance sheet in an amount equivalent to the operating asset s actual value at the time the leasing contract was entered into or, if lower, the net discounted value of the future minimum payments under the terms of the lease contract. A financial leasing contract results in the recognition of both depreciation on the asset financed and financing costs. The depreciation plan for leased assets is equivalent to the depreciation plan for owned assets. If it is not certain that the group will take over the asset upon the expiry of the leasing contract, the asset is depreciated over the shorter of the life of the leasing contract and the depreciation period applied for equivalent assets owned by the group. Operational leasing Leasing of assets where the lessor retains the major part of risk and control are classified as operational leases. The leasing costs of operational leases are allocated on a linear basis over the period of the lease, and are classified as cost of goods sold or other operating costs. l) Goodwill Excess value that cannot be attributed to identifiable assets and liabilities in subsidiaries at the time of purchase, is recognised as goodwill in the balance sheet. In the case of investment in associated companies, goodwill is included in the cost price of the investment. If, subsequent to the acquisition, further information comes to light on assets and liabilities at the date of the transaction, adjustments may be made to the fair value of the assets and liabilities at any time up until the first accounts for a complete accounting period are produced. Goodwill is not depreciated, but an assessment is made each year as to whether the carrying amount can be justified by future earnings. In addition, goodwill is tested for impairment at any time regardless of the annual test if there are indications that impairment may be needed. If the discounted cash flow is lower than the carrying amount, goodwill is written down to fair value. m) Other intangible assets Other intangible assets are recognised in the balance sheet if it can be proven that there are probable future economic benefits that can be attributed to the asset which is owned by the company, and the asset's cost price can be reliably estimated. Intangible assets are recognised at cost price. Intangible assets with limited commercial life are amortised and any need of impairment losses to be recognised is considered Depreciation is carried out using the weighted cash flow method over the following periods: Customer contracts 2-5 years Software, licences etc years Estimated depreciation and the method of depreciation are subject to annual review that takes into account the commercial reality of the intangible asset in question. The group does not have any intangible assets with unlimited commercial life. n) Research and development Expenses relating to research are recognised in the income statement when they are accrued. Expenses relating to development are capitalised if the following criteria are met in full: the product or process is clearly defined and its cost elements can be identified and measured reliably the technical solution for the product has been demonstrated the product or process will be sold or used in the company s operations the asset will generate future economic benefit; and sufficient technical, financial and other resources for completing the project are present. When all the above criteria are met, the costs relating to development are capitalised. Costs that have been charged as expenses in previous accounting periods are not recognised in the balance sheet. Capitalised development costs are depreciated on a straight-line basis over the estimated useful life of the asset. The depreciation period will not normally exceed 5 years. o) Pension liabilities The group's Norwegian subsidiaries operate collective pension schemes for all employees. The costs associated with the contractual pension arrangements for employees are classed as benefits plans, and are included with salary costs in the accounts. The starting point for calculating pension costs is linear application of pension entitlement earned against the likely accumulated pension liability at the time the pension is first drawn. Liability in respect of pension commitments is valued as the present value of the future pension benefits for which entitlement has been earned at the date of the balance sheet, and is calculated on the basis of assumptions about discount rates, the investment return on pension assets and expected growth in earnings and pensions. Pension investments are valued at fair value at the date of the balance sheet. The cost of pensions is calculated on the basis of the discounted pension entitlement earned at the beginning and end of the year and the pension rights accrued during the year, less the return on the assets provided to fund pensions. The effect of any changes in the pension scheme that leads to the issue of fully paid-up policies is recognised in the period the change is made. The effect of other changes in the pension scheme is amortised over the expected average remaining service period. The effect of any changes in estimates, changes in assumptions and calculation differences that exceeds 15 percent of the higher of pension liabilities or pension assets is amortised over 5 years. Where the effect of such changes exceeds 10 percent of the higher of pension liabilities and pension assets, this is amortised over the average remaining service period. In addition to the defined benefit pension scheme described above for Norwegian employees, all employees in the group s Swedish companies are members of the ITP occupational pension scheme. This is an occupational pension insurance based on a collective agreement between Svenskt Näringsliv (the Confederation of Swedish Enterprise) and PTK (the Federation of Salaried Employees in Industry and Services). The company also operates a pension scheme through operations for the group s executive management to which it makes annual contributions in proportion to the salaries of the individuals in question. Both these schemes are treated in the consolidated accounts as defined contribution schemes, and pension premiums paid are recognised to profit and loss as they are incurred.

45 EDB Business Partner Annual Report p) Taxation The tax charge is made up of tax payable and changes in deferred tax/tax assets. The value of deferred tax/tax assets in the balance sheet is calculated on the basis of differences between accounting and taxation values of assets and liabilities (liability method). The amount provided includes all types of difference, and is calculated without being discounted to present value. Deferred tax and deferred tax assets are netted to the extent that temporary timing differences are reversed in the same period and are subject to the same tax system. Deferred tax assets are capitalised to the balance sheet to the extent that it is considered likely that the company in question will have sufficient taxable profit in subsequent periods to make use of the tax asset. At each balance sheet date, the group carries out a review of deferred tax assets not capitalised to the balance sheet and their accounting value. Deferred tax assets not previously capitalised to the balance sheet are capitalised to the extent that it appears likely from the review that the company in question will be able to make use of the tax asset. Similarly, companies will reduce the capitalised value of tax assets to the extent that they are no longer able to use the tax assets in question. If a company has reported a loss for the last three years, it will normally be assumed that the uncertainty over future profits is such that deferred tax assets should not be capitalised. Deferred tax assets that will be realised through the sale or liquidation of companies are not recognised in the accounts until such time as a decision on sale or liquidation has been made. Tax payable and deferred tax/tax assets are applied directly to equity to the extent that they relate to items that are themselves applied directly to equity. q) Cash and cash flow statement Cash includes cash held and bank deposits. The cash flow statement is presented using the indirect method. r) Use of estimated figures The company has to make estimates and apply assumptions that have an effect on the value of assets and liabilities in the balance sheet and on reported revenues and costs for the accounting year. This is particularly case for measuring the value of goodwill and pension liabilities. Future events may cause changes to these estimates. The effect of changes will be recognised to the accounts when new estimates can be made with a suitable degree of certainty. s) Earnings per share Earnings per share is calculated by dividing the majority shareholders share of the profit/loss for the period by the weighted average number of ordinary shares outstanding over the course of the period. When calculating diluted earnings per share, the average number of shares outstanding is adjusted for all share options that have a potential dilutive effect. Options that have a dilutive effect are treated as shares from the date they are issued. t) Provisions A provision is recognised in the accounts only when the company is subject to a liability that is a consequence of an event that has already happened and where it is likely (i.e. more likely than not) that in order to reduce or discharge the liability the company will have to apply financially measurable resources, and the liability can be reasonably estimated. Provisions are evaluated at the end of each accounting period and adjusted to reflect the best estimate of the liability at the time. If the time period to the date at which the liability may lead to payment has a material effect on the calculation, the provision will represent the discounted present value of the future liability. Increases in liability caused solely by the lapse of time are reported as an interest expense. Provisions for restructuring costs only include direct expenses linked to the restructuring which are both necessary for the implementation of the restructuring and which do not relate to the continuing ordinary activities of the company. Such provisions are recognised in the accounts when the company has a detailed plan for the restructuring in question that identifies which business areas will be affected, the locations affected, the functions and estimated number of employees due to receive termination payments, the costs that will be incurred and a time plan for implementation. There must be a real expectation by the parties affected that the company will implement the restructuring. This means either that implementation of the restructuring programme has commenced or that the main elements have been disclosed to the affected parties. u) Equity The nominal value of holdings of own shares is reported in the balance sheet as a deduction to share capital. The purchase price in excess of nominal value is charged to other equity. Gains or losses on transactions in own shares are applied directly to equity. If own shares are sold at a price in excess of cost price, the surplus is recognised as other paid-in equity. Transaction costs in relation to equity transactions are charged to equity after deducting tax. The fair value reserve includes cumulative net changes in fair value of financial instruments until the investment is disposed of or is judged to be of no value. v) Share options Certain key employees and the group's executive management have been granted options to purchase shares in the parent company. The fair value of these options is calculated at the date they are granted and is charged to profit and loss on a linear basis over the vesting period. w) Hedging The group has established a strategy to hedge its net overseas investments. Derivative contracts are recognised as hedging instruments if they satisfy the following criteria: a) hedging is expected to be highly effective in achieving offsetting changes in fair value or cash flows attributable to the hedged risk, with hedge effectiveness in the range percent b) the effectiveness of the hedging can be reliably measured c) there is adequate documentation on entry into the hedging to show that the hedging is highly effective d) hedging is reviewed regularly and has proved effective throughout the reporting periods for which it was intended The group takes active positions in various currencies to hedge its net investment in overseas units. Changes in the value of currency derivatives classified as hedging instruments are recognised as translation differences in the group's equity until the investment is disposed of, at which time the cumulative translation differences linked to the investment are recognised to profit and loss. x) Derivatives that are not hedging instruments Derivatives that are not classified as hedging instruments are classified as available for sale and valued at fair value. Changes in the fair value of such derivatives are recognised to profit and loss. y) Financial instruments The group implemented IAS 39 Financial Instruments Recognition and Measurement with effect from 1 January The group only holds financial instruments classified as available for sale. All purchases and sales of financial instruments are recognised on the transaction date. Transaction costs are included in the cost price. Changes in fair value are recognised directly to equity until the investment is disposed of. Upon disposal, the cumulative gain or loss on the financial instrument in question that has been applied directly to equity is reversed and recognised to profit and loss. z) Contingent assets and liabilities Contingent assets are not included in the annual accounts, but information is provided if there is a reasonable certainty that the benefit in question will accrue to the group. Contingent liabilities comprise: a) a possible obligation arising as a result of past events where the obligation depends on some uncertain future event b) a present obligation that is not recognised in the accounts since it is not probable that the obligation will result in a payment being made c) liabilities that cannot be measured reliably Contingent liabilities are not recognised in the accounts with the exception of contingent liabilities acquired as part of the purchase of a business. Continent liabilities acquired as part of the purchase of a business are recognised in the accounts at fair value even if the liability is not likely to crystallise. Information is provided in the accounts on material contingent liabilities except for contingent liabilities where the likelihood of a payment being made is low. æ) Discontinued businesses The profit from operations until the date of sale and profit/loss of the sale is s hown separately from continuing operations in the profit and loss account. Comparable figures for 2004 have been restated accordingly. The balance sheet and cash flow statement include businesses sold until the date of sale.

46 44 EDB Business Partner Annual Report 2005 Notes Group NOTE 1 Changes in group structure BUSINESSES ACQUIRED IN 2005 On 1 May 2005 the subsidiary EDB Business Partner Sverige AB purchased 100 percent of the share capital of BanqIT Business Applications AB (BanqIT) for cash consideration of SEK 57.3 million equivalent to NOK 50.8 million. Transaction costs totalled NOK 0.4 million, and relate to legal and financial due diligence of the company acquired. BanqIT offers software and components for the Nordic bank and finance market, with particular emphasis on solutions for bank branch offices. The acquisition created goodwill of SEK 14.5 million equivalent to NOK 12.9 million, which will be tested for impairment each year. Management is of the view that the acquisition will strengthen EDB's development capacity in Sweden for the bank and finance sector, and this will in turn strengthen EDB's market position and customer relationships in Sweden. Assets and liabilities acquired in the transaction are mesured at fair value. Par value is used as the best estimat for fair value for receivables and liabilities, while it for customer contracts and software are used net present value of future cashflow from the assets. The business acquired, with the exception of in-house developed software, was transferred from BanqIT to EDB Business Partner Sverige AB on 1 July 2005 and is not reported as a separate unit after that date. BUSINESSES ACQUIRED IN 2004 In November 2004, EDB entered into an agreement to acquire Capgemini s Infrastructure Management operations in Sweden and Norway for NOK 191 million. The costs of legal and financial due diligence reviews of the business acquired totalled NOK 1.5 million. The transfer of these activities from Capgemini to EDB took place on 31 December 2004, and gave rise to goodwill of NOK million. On 20 October 2004, the group entered into an agreement with IBM to take over IBM s outsourcing business with municipalities and medium-sized corporate customers in Norway, IBM s Infobank, EDI services, IBM s operating centre at Hamar and IBM s ownership interest in Kommunedata AL for a total payment of NOK 473 million. The costs of the transaction totalled NOK 7.4 million, and related to legal and financial due diligence of the business acquired. The transfer of these activities from IBM to EDB took place on 31 December 2004, and gave rise to goodwill of NOK million. On 25 March 2004, Telenor sold the major part of its Operating Services division to EDB for NOK 132 million net after restructuring costs. The sale involved the transfer of contracts to supply IT operating services to 26 Telenor customers in the distribution, industry and public sectors. The acquisition was financed by EDB issuing a convertible loan of NOK 132 million to the seller (see Note 19). The costs of legal and financial due diligence reviews of the business acquired totalled NOK 3 million. The transfer of these activities from Telenor to EDB took place on 1 May 2004, and gave rise to goodwill of NOK 170 million. The businesses acquired in 2004 were fully incorporated into EDB s normal business activities and are not reported as separate units of the group following this BALANCE SHEET (NOK million) BANQIT IBM CAPGEMINI TELENOR Goodwill 3.0 Customer contracts Software Tangible fixed assets Receivables Deferred tax/tax assets Liabilities Net identifiable assets/liabilities Goodwill arising from the acquisition Net cash outflow BUSINESSES SOLD The Telecom business area was sold on 30 September The disposal included the business of the subsidiary EDB Telecom AS and the business carried out in the USA through the subsidiary Telesciences Inc. In the profit and loss account, earnings from the business sold through to the date of sale and the profit from the disposal of the business activities are shown on a separate line as profit from discontinued operations. In the balance sheet and cash flow statement, the Telecom business area is removed with effect from the date of sale, i.e. 30 September PROFIT AND LOSS (NOK million) Sales revenue Profit from divestments Operating costs Operating profit Net financial items Profit before tax Tax on profit from divestments Tax on operations Profit from discontinued operations NOTE 1 cont. next page

47 EDB Business Partner Annual Report Notes Group cont. NOTE 1 cont. CASH FLOW (NOK million) Cash flow from operations Cash flow from investments Cash flow from financing Currency movement in liquid assets Net cash flow NOTE 2 Segment information Segment information is presented for business areas, which is the group s primary segment reporting format and geographic segments, which is the secondary segment reporting format. BUSINESS AREAS The group's business is divided into strategic business areas, each of which is organised and managed separately. The business areas sell different services and software targeted for different customer groups, and they have different risk and reward profiles. The EDB Business Partner group is divided into the following business areas: a) IT Operations b) Solutions The IT Operations segment offers services related to outsourcing of operations in the public and private sectors. Solutions offers applications and services for the bank and finance industry and the public sector. The group sold its Telecom segment on 30 September See note 1. Transactions within the segments are based on market conditions. All transactions between the segments are eliminated. OPERATING OF WHICH OPERATING 2005 (NOK million) REVENUE EXTERNAL EBITDA EBITA PROFIT ASSETS LIABILITIES CAPEX IT Operations Solutions Parent company/not allocated Netting Total (NOK million) IT Operations Solutions Parent company/not allocated Netting Total NOTE 3 Geographic segments The group's activities are divided between Norway, Sweden and other countries. GEOGRAPHIC BREAKDOWN (NOK million) NORWAY SWEDEN OTHER TOTAL Sales revenue Segment assets Investment NOTE 4 Personnel costs etc. PERSONNEL COSTS (NOK million) Wages and salaries Share-based remuneration Employer's social security contributions Pension costs Other benefits Total The average number of employees in the group was in 2005 and in LOANS TO EMPLOYEES No loans have been made to employees. NOTE 4 cont. next page

48 46 EDB Business Partner Annual Report 2005 Notes Group cont. NOTE 4 cont. EXECUTIVE MANAGEMENT REMUNERATION (NOK million) 2005 Chief Executive Officer Salary Pension premium Bonus and other remuneration Salary, bonus, pension premium and other remuneration to other members of executive management Ole Urdahl John-Arne Haugerud Oddgeir Hansen Tore Valderhaug Vibeke Nyvold Urban Doverholt Jan Erik Larsen Petter Idar Jenssen Geir Remman Sum The CEO was at appointment allocated options as part of a 7-year option agreement. The options were compensation for non transferable, built up rights from his former employer. The other members of executive management were in 2004 granted options as part of a 2-year option agreement. Further details can be found at note 6 Group. A bonus scheme has been established for the members of executive management, whereby each individual can achieve a bonus of between 50 percent and 100 percent of annual salary. Bonus payments are subject to satisfying a range of financial and non-financial criteria, and 50 percent of bonus payments are made in the form of shares. The members of executive management are included in the group's defined benefit group pension scheme in addition to an operations-based pension plan for the portion of salary that exceeds 12G. The CEO has an agreement valid to 31 December 2005 in respect of compensation for any difference between the contributions and return to which he is entitled under the group's pension schemes and the pension arrangements to which he was entitled in his previous employment. Further details can be found in note 5 Group. The CEO has waived the redundancy rights provided by chapter XII of the Working Environment Act, but has an individual agreement to receive salary for 12 months following the normal notice period of 6 months. Salary payable for the 12-month period would be reduced by up to 75 percent in respect of other income. However if the CEO's employment is terminated as a result of a change in the ownership structure of the company, he is entitled to receive salary for 18 months following the normal notice period of 6 months with no reduction in respect of other income. The group's Executive Vice Presidents are variously entitled to receive salary for periods of up to 6 months following the normal notice period of 6 months. Remuneration paid to present and past members of the Board of Directors in 2005 for work in 2004, were as follows: (NOK million) 2005 Telenor ASA (for Bjarne Aamodts partisipation) Hans Kristian Rød Birgitta Monica Caneman Ole Jørgen Fredriksen Espen Ulvin Terje Nordskaug Erling Hjertnes Gisele Marchand Håkon Follestad (4 meetings as deputy board member) Einar Eggen John Ingvar Brekke Total AUDITOR S REMUNERATION The following table shows the proposed remuneration to be paid to the group's auditor, Ernst & Young AS, in respect of the audit for 2005, including the amounts invoiced in respect of other audit-related and tax-related services. The amounts shown include both Norwegian and foreign subsidiaries, and are exclusive of value added tax. (NOK million) 2005 Audit fee Other audit-related services Tax-related services Other services Total NOTE 4 cont. next page

49 EDB Business Partner Annual Report Notes Group cont. NOTE 5 Pensions The company provides pensions principally through an insured group scheme with a life insurance company. Pension arrangements relate to working members and 211 pensioners. The company has an AFP arrangement for its employees. PENSION COSTS (NOK million) Current service cost Interest on pension liabilities Gross pension expense Return on pension assets Recognised actuarial gains and losses and the effect of changes in the pension plan Employer's social security contributions Net pension expense Additional schemes and early retirement Pension costs charged to profit and loss PENSION LIABILITIES (NOK million) Gross liability to provide pensions Pension assets at fair value Unrecognised actuarial gains and losses Employers social security contributions Net pension liability Pension assets in the balance sheet Pension liabilities in the balance sheet CHANGE IN PENSION LIABILITY (NOK million) Book value of pension liability at Pension cost of the year Insurance premium paid Acquisitions/sales of businesses Book value of pension liability at THE FOLLOWING ASSUMPTIONS ARE USED IN THE ACTUARIAL CALCULATIONS: Expected return on pension assets 4.7% 5.4% Discount rate 3.9% 4.5% Annual earnings growth 3.0% 3.0% Growth in the basic state pension (G) 3.0% 3.0% Annual increase in pensions 2.5% 3.0% Staff turnover 10.0% 6.0% The account of pension arrangements given above is based on calculations carried out by an independent actuary which are reviewed annually. The pension assets are invested in accordance with the life insurance company's guidelines. With effect from 1 January 2004, the company operates a pension scheme through operations for the members of executive management. The pension scheme through operations is not subject to Norwegian legislation on defined pensions or occupational pensions, and is not funded. Annual pension entitlement accrues at the rate of 30 percent of the individual's salary in excess of 12G, and the annual return is to be at a minimum equivalent to 12 months NIBOR on 31 December of the preceding year. The pension entitlement accrued for 2005 amounts to NOK 1.56 million and the return for the year on entitlement accrued in earlier years amounts to NOK 0.1 million. The accumulated accrued entitlement including investment return and employer's social security contributions totalled NOK 6.3 million at 31 December ESTIMATION UNCERTAINTY Calculations of pension cost for the year and the book value of pension liability are based on the assumptions detailed above. Considerable uncertainty attaches to the amounts calculated, which will principally vary in pace with the level of interest rates in Norway. The most important assumption for the calculation of the book value of pension liability is the choice of discount rate. The accounting standard for pensions requires the discount rate to be determined as the yield on high-quality bonds with maturity equivalent to the remaining average period for accrual of pension entitlements. For the group, this period is close to 20 years. Since the Norwegian government does not issue 20-year bonds, the appropriate discount rate has been estimated. This is done by taking the yield on 10-year Norwegian government bonds and adjusting by the difference between the yields on 10 and 20-year European government bonds in order to estimate what the yield would be on Norwegian government bonds with 20 maturity.

50 48 EDB Business Partner Annual Report 2005 Notes Group cont. NOTE 6 Employee share option SHARE OPTION SCHEME The company operates a share option scheme for members of executive management and key employees in specific senior positions. 57 employees were members of the share option scheme at 31 December One-third of options granted to the CEO can be exercised over each of the three years after they are granted, while for other members one-half of the options granted may be exercised over each of the two years after they are granted. Options can be exercised quarterly in a period 3 to 10 days following the publication of the company's quarterly report. The fair value of options is calculated when they are granted, and charged to profit and loss over the vesting period of three years for the CEO and two years for other employees. The cost recognised for the option program was NOK 6.8 million in 2005 and NOK 6.0 million in Average fair value of the options granted in 2005 was NOK Provision is made for employer's social security contributions on the difference between the exercise price of options fully vested and the market value at Provision for employer's social security contributions in the balance sheet was NOK 3.2 million in 2005 and NOK 3.4 million in OPTIONS OUTSTANDING: Options outstanding at Options granted Options exercised Options terminated Options outstanding at Of which fully vested The average option price for options exercised was NOK 45.55, while the average share price was NOK THE TERMS AND CONDITIONS OF OPTIONS OUTSTANDING ARE AS FOLLOWS: AVERAGE NO. OF YEAR OF EXPIRY EXERCISE PRICE SHARES Total Fair value of options is estimated using the Black and Scholes option pricing model. The average fair value of options granted in 2005 was NOK 8.42 (2004: NOK 9.43). THE FOLLOWING ASSUMPTIONS ARE USED FOR THE CALCULATION: Share price when options are granted: The share price for options granted is the market share price on the day they are granted. Option exercise price: The exercise price is the share price at the date the options are granted. Options can only be exercised if the share price at the date of exercise exceeds the exercise price plus annual interest of 5.38 percent since the date the options were granted. Volatility: Historic volatility is assumed to be a reasonable indicator of future volatility. Future volatility is therefore defined as historic volatility for the same period as the vesting period. This represents volatility between 30 percent and 84 percent for the individual elements of the option program. Life of the options: Staff turnover for key personnel is assumed to be 10 percent. The expected life of options granted is defined as the vesting period for the individual elements of the option program. Dividend: No assumption is made on future dividends. Risk-free interest rate: The risk-free interest rate used for option calculations is equivalent to the yield on government bonds over the same period as the life of the options, i.e. 2.2 percent to 6.0 percent.

51 EDB Business Partner Annual Report Notes Group cont. NOTE 7 Cost of goods sold and other operating costs COST OF GOODS SOLD COMPRISE (NOK million) Purchase and lease of software Purchase and lease of hardware Consulting staff Other material costs Total cost of goods sold OTHER OPERATING COSTS COMPRISE: (NOK million) Premises rental and other premises costs Temporary consulting staff Other operating costs Total other operating costs The increase in temporary consulting staff from 2004 to 2005 were mainly related to activities acquired from IBM which were using more subcontractors. The total effect was NOK 45.0 million. NOTE 8 Financial items (NOK million) Interest income Currency gains Total financial income Interest expense Currency losses Other Total financial expense NOTE 9 Tax Deferred tax is calculated on the basis of the differences which exist at year-end between accounting and taxation values. DEFERRED TAX ARISES IN RESPECT OF THE FOLLOWING TIMING DIFFERENCES: TIMING DIFFERENCES (NOK million) Short-term timing differences Long-term timing differences Profit and loss account Gross timing differences Losses carried forward Other timing differences Write-down of timing differences Basis for deferred tax (deferred tax asset) Deferred tax asset Deferred tax 8.5 The group has a total of NOK millions in tax loss carried forward at the end of Deferred tax asset related to NOK millions in tax loss carried forward in Sweden is not recognised in the balance sheet since the taxable income the latest three years have been negative. Recognised deferred tax asset relates to tax deductible temporary differences in Norwegian companies. Estimated taxable profit for 2006 exceeds the temporary differences and the tax asset is therefor recognised in the balance sheet. MOVEMENT IN DEFERRED TAX (NOK million) Change in deferred tax to P&L Deferred tax in activities sold/purchased Other changes in deferred tax not taken to P&L Change in deferred tax in the balance sheet TAX COST FOR THE YEAR COMPRISES Tax payable Change in deferred tax Under/over accrual of tax prior year Total NOTE 9 cont. next page

52 50 EDB Business Partner Annual Report 2005 Notes Group cont. NOTE 9 cont. EFFECT OF PERMANENT DIFFERENCES % of pre-tax profit Expenses not deductible Non-taxable income -7.3 Losses/tax rate differences abroad Under/over accrual of tax prior year Other permanent differences Tax of the year NOTE 10 Earnings per share and proposed dividend Ordinary earnings per share is calculated as profit for the year attributable to shareholders divided by the average weighted number of shares outstanding over the year. Diluted earnings per share is calculated as profit for the year attributable to shareholders adjusted for interest on convertible loan. The average weighted number of shares outstanding over the year are adjusted for all dilutive effects in respect of options and convertible loans. The denominator for the calculation of diluted earnings per share includes all shares that may be received by holders of convertible loans and all share options that are in the money and can be exercised. For the purposes of the calculation, it is assumed that such share options were exercised at the date the option was granted Profit for the year attributable to shareholders (majority) Profit for the year from discontinued operations Profit for the year from continuing operations Interest convertible loan Average number of shares in the period Effect of employee options Effect of convertible loan Diluted average number of shares Earnings per share (NOK) Earnings per share continuing operations (NOK) Diluted earnings per share (NOK) Diluted earnings per share continuing operations (NOK) DIVIDEND PROPOSED FOR APPROVAL BY THE ANNUAL GENERAL MEETING (NOT RECOGNISED AS A LIABILITY AT 31.12) * Proposed total dividend payment (NOK thousand) Proposed dividend per share (NOK) * Dividend for 2004 were paid in May 2005.

53 EDB Business Partner Annual Report Notes Group cont. NOTE 11 Intangible assets SOFTWARE OTHER DEVELOPED INTANGIBLE (NOK million) GOODWILL IN-HOUSE ASSETS TOTAL Acquisition cost at Additions in the year Disposal/reclassification in the year Translation differences Acquisition cost at Accumulated depreciation/write-down at Ordinary depreciation in the year Disposals in the year-ordinary depreciation Translation differences Accumulated depreciation/write-down at Book value at Economic life Perpetual 3 years 2 10 years Method of depreciation None Linear Weighted cash flow In 2005 in-house developed software was capitalised with NOK 9.3 million. This relates to upgrading software acquired with the activities purchased from IBM and the development of a software solution for defined contribution pensions. No material research and development costs were recognised to profit and loss in RECOGNISED GOODWILL AND OTHER INTANGIBLE ASSETS ARISE FROM THE FOLLOWING ACQUISITIONS: OTHER INTANG- YEAR OF (NOK million) GOODWILL IBLE ASSETS PURCHASE Fellesdata IBM Local Government Outsourcing assignment Telenor operating services division Capgemini IT operations, Norway and Sweden Unigrid Telenor Programvare AS BanqIT PDS Other smaller acquisitions 24.6 Total ALLOCATION OF GOODWILL TO CASH-GENERATING UNITS (NOK million) IT OPERATIONS SOLUTIONS TOTAL Norway Sweden Total In accordance with IFRS, goodwill is tested for impairment annually by measuring the recoverable amount against book value. The test is made at the lowest level of cash generating unit in the group. The group's segment reporting forms the basis for determining the lowest level of cash generating unit. This is the level at which management reporting is carried out. The calculation of recoverable amount is based on future value in use, which is net present value of future cash flows from the cash generating unit. When calculating future value in use there has been used estimates when assessing future cash flows and discount rate. There are uncertainty connected to those estimates. The calculation of value in use discounts future cash flows over a five-year period. In addition, a terminal value is calculated for the end of the five-year period using a fixed growth rate. The cash flows used are based on the budget for 2006 and the group's strategic plans, both as approved by management. When the future cash flows and terminal value are calculated an average fixed growth rate of 5 percent is used. This is the same as expected average market growth for the industry. A reduction of the growth with 50 percent will not result in an impairment loss. Revenue and EBITA margin are important assumptions when calculating future cash flows. These assumptions are based on historic revenue/margin adjusted for future developments in the market. A reduction of average EBITA margin with 2 percentage points, will not result in an impairment loss. Future cash flows are discounted using a discount rate of 10 percent. This is approximately 1 percentage point higher than the average of five analysts' estimate of the rate of return the stock market expects from EDB. An increase of the discount rate of 2 percentage points will not result in an impairment loss.

54 52 EDB Business Partner Annual Report 2005 Notes Group cont. NOTE 12 Tangible Fixed assets IMPROVEMENTS TO MACHINERY/ IT (NOK million) LEASED PREMISES 1) FIXTURES 1) VEHICLES EQUIPMENT TOTAL Acquisition cost at Additions in the year Disposals in the year Translation differences Acquisition cost at Accumulated depreciation/write-downs at Ordinary depreciation for the year Accumulated depreciation/write-down on sale Translation differences Accumulated depreciation/write-down at Book value at Depreciation rates 10-20% 15-30% 20% 20-33% Depreciation method Linear Linear Linear Linear 1) Fixtures and fittings in leased premises are depreciated over the residual period of the lease if this is shorter than the normal depreciation period. An amount of NOK 5.4 million of the book value of IT equipment is financed through financial leasing as at 31 December NOTE 13 Interests in subsidiaries and associated companies REGISTERED BOOK SHARES IN SUBSIDIARIES OWNED BY PARENT COMPANY (NOK million) OFFICE SHARE % VOTING % VALUE EDB Business Partner Norge AS Oslo * 28% 100% Fellesdata AS Oslo 100% 100% EDB Telekom AS Oslo 100% 100% 43.8 EDB Business Partner AB Stockholm 100% 100% Total *The parent company also controls 72 percent through the wholly-owned subsidiary Fellesdata AS. The subsidiary Telesciences Inc was sold in The subsidiary EDB Business Consulting AS was merged with EDB Business Partner Norge AS in EDB 4Tel AS was dissolved in IN ADDITION TO SUBSIDIARIES OWNED BY THE PARENT COMPANY, THE FOLLOWING COMPANIES ARE CONSOLIDATED IN THE GROUP ACCOUNTS IN ACCORDANCE WITH THE PURCHASE METHOD: REGISTERED SELSKAP OFFICE SHARE % VOTING % Fellesdata Eiendom AS Oslo 100% 100% EDB Business Partner Sverige AB Stockholm 100% 100% EDB Infovention AB Stockholm 100% 100% EDB Telesciences S.A Madrid 100% 100% EDB Telesciences AG Zürich 100% 100% Paynet AS Oslo 100% 100% Kjonerud Eiendom AS Stange 100% 100% Kjonerud Teknologisenter ANS Stange 100% 100% Kommunedata AL Oslo 71% 71% The remaining shares in Paynet AS were acquired by EDB Business Partner Norge AS in November PDS AS merged with EDB Business Partner Norge AS in Incatel AS merged with EDB Telekom AS, EDB Telesciences Ltd was sold and Incatel Ltd was dissolved in 2005.

55 EDB Business Partner Annual Report Notes Group cont. NOTE 14 Interest in other companies (NOK million) OWNERSHIP INTEREST BOOK VALUE Clear2Pay BV 1.4% 3.8 Other shareholdings 1.3 Total parent company 5.1 Energiverkenes avregningssentral AS, ownership interest 29 percent, was sold in NOTE 15 Accounts receivable Accounts receivable are recognised at their nominal value less a provision for losses. (NOK million) Gross outstanding Provision for losses on receivables Net accounts receivable Loss on receivables to P&L NOTE 16 Other current receivables (NOK million) Current receivables employees Deferred income Pre-paid costs Other current receivables Total NOTE 17 Liquid assets EDB has established a cash pool system whereby EDB Business Partner ASA operates the main account, while other group companies are sub-account holders. The bank nets all balances and withdrawals to create a net position that represents the credit or debit balance between DnB NOR and EDB Business Partner ASA. The group does not hold any restricted bank accounts. The group has issued a guarantee in respect of tax deductions from salaries due to the tax authorities. The guarantee amount was NOK 83.7 million at 31 December NOTE 18 Share capital, shareholders etc. THE SHARE CAPITAL OF EDB BUSINESS PARTNER ASA AT 31 DECEMBER 2005 CONSISTED OF: PAR VALUE BOOK VALUE NUMBER (NOK) (NOK) Ordinary shares (fully paid) Of which own shares Total shares outstanding The company sold 34,117 own shares in 2005 (see note 6). Other than this, there were no changes in the number of shares outstanding in The company had 2,260 shareholders at year-end, and Norwegian shareholders held 86.9 percent of the total share capital. THE LARGEST SHAREHOLDERS AT 31 DECEMBER 2005 WERE: SHAREHOLDER INTEREST Telenor Business Partner Invest AS 51.8% Folketrygdfondet 11.8% Oslo Pensjonsforsikring 3.3% Bank of New York,. Client Account 1.4% Orkla ASA 1.3% Dexia Banque International 1.2% JPMorgan Chase Bank, Client Account 1.1% Storebrand livsforsikring p980, aksjefondet 1.1% Verdipapirfondet Avanse Norge (II) 1.0% KLP Forsikring Aksje 1.0% Other 25.0% Total 100.0% NOTE 18 cont. next page

56 54 EDB Business Partner Annual Report 2005 Notes Group cont. NOTE 18 cont. THE FOLLOWING MEMBERS OF THE BOARD OF DIRECTORS HOLD SHARES/OPTIONS (PER 31 DECEMBER 2005): NAME NUMBER OF SHARES NUMBER OF OPTIONS Bjarne Aamodt Staffan Bohman John Ingvar Brekke Ingrid Lund 600 THE FOLLOWING MEMBERS OF EXECUTIVE MANAGEMENT HOLD SHARES/OPTIONS: NO. OF SHARES NO. OF OPTIONS NAME PER PER PER PER Endre Rangnes John-Arne Haugerud Oddgeir Hansen Ole Urdahl Tore Valderhaug Vibeke Nyvold Jan Erik Larsen Urban Doverholt Geir Remman Petter Idar Jenssen MANDATES FOR THE ISSUE OF SHARES General mandate The Board is authorised to increase the company s share capital by up to NOK by issuing up to 9 million shares each of nominal value NOK 1.75 pursuant to the terms of Section of the Public Limited Liability Companies Act. The Board is authorised to waive the right of existing shareholders to subscribe for such shares pursuant to Section 10 4 of the Public Limited Liability Companies Act. This mandate is valid until 1 June Mandate in respect of share options for key personnel The Board is authorised to increase the company s share capital by up to NOK by issuing up to shares each of nominal value NOK 1.75 pursuant to the terms of Section of the Public Limited Liability Companies Act. The Board is authorised to waive the right of existing shareholders to subscribe for such shares pursuant to Section 10 4 of the Public Limited Liability Companies Act. This mandate is valid until 29 April NOTE 19 Loan on special terms As part of the acquisition of Telenor Operating Services division in May 2004, a convertible loan was granted by Telenor to EDB Business Partner of NOK 132 million. The loan is subordinated to the financial creditors of the company and it is exempt from instalments until repayment in full in May The interest rate is NIBOR + 1 percentage point. The loan may at any time during its life be converted to shares at a share price of NOK plus accrued interest. As of 31 December 2005, the total amount due was NOK million, of which capitalized interest amounted to NOK 7.0 million. NOTE 20 Other long-term interest bearing liabilities (NOK million) Liabilities for financial leases Due to other credit institutions Total The group refinanced its borrowing portfolio in December 2004 and has entered into a syndicated loan facility of NOK 1,150 million. The facility has a maturity of 3 years for NOK 400 million and 5 years for the remaining NOK 750 million. At 31 December 2005 there were drawings on the facility of NOK 250 million and SEK 295 million at an interest rate of 3 month NIBOR/STIBOR percent respectively. Concurrently with the refinancing of the borrowing portfolio, the group entered into a bilateral loan facility with DnB NOR amounting to NOK 75 million. NOK 67 million was drawn on this facility at 31 December Under the terms of the facility agreements, the company is required to maintain the following ratio: NIBD/EBITDA (cumulative over the last four quarters) less than 3.25.

57 EDB Business Partner Annual Report Notes Group cont. NOTE 21 Other curent liabilities (NOK million) Expenses incurred Deferred income Provisions Interest bearing current liabilities Other current liabilities Total NOTE 22 Provisions (NOK million) RESTRUCTURING PREMISES OTHER TOTAL Opening balance at Provisions made in Provisions reversed in Provisions applied in Closing balance at Short-term Long-term Restructuring: Represents restructuring taken over in connection with the purchase of Telenor's operating services division, customer contracts acquired through purchase of business activities and restructuring undertaken by the group to adjust the cost base of its activities. Two restructuring programs were implemented in 2005 for IT Operations in Sweden. In connection with the purchase of Capgemini, headcount was reduced by 25 employees. The restructuring provision for this reduction was NOK 12.5 million. In addition, cost savings were implemented in the fourth quarter at IT Operations in Sweden to improve profitability. The cost savings will be achieved by a reduction in headcount that will affect in the order of 30 employees. A provision of NOK 16.3 million was made in connection with this restructuring. In accordance with the restructuring plan, these cost will be incurred in 2005 and Premises: Provision is made for premises leases where the premises are not used or are sub-let on less favourable terms. NOTE 23 Leasing contracts GROUP AS LESSEE FINANCIAL LEASING Assets leased by the group under financial leasing contracts include IT equipment. ASSETS LEASED UNDER FINANCIAL LEASING CONTRACTS ARE AS FOLLOWS: (NOK million) IT equipment Accumulated depreciation Prepaid expenses Net book value FUTURE MINIMUM LEASE PAYMENTS Up to 1 year to 5 years 45.6 After 5 years Total future minimum lease payments 62.7 Interest -5.9 Present value of future minimum lease payments 56.8 OF WHICH: - current liabilities long-term liabilities 40.4 These agreements do not impose any restrictions on the company's dividend policy or financing arrangements. GROUP AS LESSEE OPERATIONAL LEASING contracts for IT equipment, office premises and other facilities. The majority of these leasing contracts include options to extend. NOTE 23 cont. next page

58 56 EDB Business Partner Annual Report 2005 Notes Group cont. NOTE 23 cont. LEASING COSTS ARE MADE UP AS FOLLOWS: (NOK million) Office premises IT equipment, vehicles and other Total leasing cost THE MINIMUM FUTURE LEASE PAYMENTS IN RESPECT OF CONTRACTS WITH NO CANCELLATION OPTION FALL DUE AS FOLLOWS: Up to 1 year to 5 years After 5 years Total future minimum lease payments NOTE 24 Financial instruments FINANCIAL RISK The group has established a strategy to manage the interest risk and currency risk associated with international investments. Interest risk and currency risk are managed to ensure a high degree of predictability and lower fluctuations in interest and currency costs from year to year. The group does not intend to trade actively in the market, but evaluates the risks and enters into appropriate hedging transactions for major projects and investments. CURRENCY RISK EDB's activities in the Nordic countries involve investments denominated in foreign currencies that represent financial risk in the form of currency exposure. The group is principally exposed to two types of currency risk: foreign investments leading to future loan repayments and/or dividend payments contractual purchases or sales denominated in foreign currency Foreign investments are in principle financed in the same currency as the investment, and the maturity profile of borrowings is arranged so that repayment coincides with dividend receipts/loan repayments from the foreign unit. For each individual exposure in excess of the equivalent of NOK 50 million, at least 80 percent of expected cash flow is hedged in this way. At the close of 2005 the group had taken up a loan of SEK 295 million to hedge its investments in Sweden. Translation differences in respect of this loan and receivables due from the Swedish activities are applied directly to equity and will be recognised to profit and loss when the investment is realised or the receivable due is repaid. All sales and purchasing contracts with annual net currency exposure in excess of NOK 25 million are hedged to the extent of percent with maturities that match expected cash flow from the contract. Contracts with annual net currency exposure of between NOK million are hedged to the extent of at least 50 percent. Hedging takes the form of forward foreign exchange contracts or put options. The group did not carry out any such hedging during INTEREST RATE RISK The group's policy is to maintain a base of long-term bank borrowing and to draw on long-term banking facilities to finance long-term investments. Short-term interest-bearing financing is principally used as a temporary measure in anticipation of arranging long-term financing. The group's current short-term borrowing should not normally exceed more than percent of total borrowing in order to limit refinancing risk. The interest rate risk target for the company's borrowing portfolio is for the average interest rate fixing period to be between 0.5 and 2.5 years. Floating rate borrowing (interest rate fixing periods less than one year) shall not exceed 75 percent of borrowing. Similarly, fixed rate borrowing shall not exceed 75 percent of long-term borrowing. NOTE 25 Related parties Telenor Business Partner Invest AS owns 51.8 percent of the share capital and voting share capital of EDB Business Partner ASA. The consolidated accounts of EDB Business Partner ASA are included in the consolidated accounts of Telenor ASA. The EDB group is party to agreements for the sale of services to a number of companies in the Telenor group. Total revenue from sales to companies in the Telenor group in 2005 amounted to NOK 896 million. The EDB group purchased goods and services from the Telenor group in 2005 totalling NOK 290 million. All transactions with the Telenor group are carried out on normal arm s length commercial terms. At the close of 2005 the group had receivables due from Telenor companies totalling NOK 92 million, and had liabilities to Telenor companies totalling NOK 206 million. For information on remuneration of the executive management, the Board of Directors and the auditor, see note 4 Group.

59 EDB Business Partner Annual Report Notes Group cont. NOTE 26 Events after the balance sheet date ACQUISITIONS The group acquired a number of businesses in January and February. The group acquired the entire share capital of TAG Systems AS 15 January 2006 for cash consideration of NOK million. A provisional evaluation indicates additional value related to customer contracts, software and fixed assets in addition to goodwill. The group acquired the entire share capital of Spring Consulting AS 1 January 2006 for cash consideration of NOK 175 million. In addition, the purchase included an earn-out agreement for up to NOK 28 million. The consideration consists mainly of goodwill. In addition, the consulting businesses of Ementor, Avenir, was acquired 1 January 2006 for cash consideration of NOK million, which mainly consists of goodwill. The operations of Datarutin AB and its subsidiary Datarutin Dokumentor AB were acquired 15 February 2006 for cash consideration of SEK 124 million equivalent to NOK 105 million. In addition, the purchase included an earn-out agreement for up to SEK 57 million, equivalent to NOK 48 million. In addition to goodwill we acquired customer contracts, fixed assets and liabilities to employees. In mid-february, the group acquired the entire share capital of Software Technology Integration AS for cash consideration of NOK 8 million. In addition, the purchase included an earn-out agreement for up to NOK 4 million. 13 March 2006 the group acquired the entire share capital of the swedish company Guide Konsult AB and its subsidiaries, for cash consideration of SEK million equivalent to NOK million. NOTE 27 Commentary on the transition to IFRS These accounts are the first consolidated accounts the company has published in accordance with IFRS. The accounting principles described above have been used to prepare the company's consolidated accounts for 2005, the comparable figures for 2004 and for preparing the IFRS opening balance sheet at 1 January 2004 which is the transition date for the group's conversion from Norwegian generally accepted accounting principles (NGAAP) to IFRS. IAS 39 Financial instruments has been applied with first effect from 1 January However the effects of adopting IAS 39 are included in the presentation below, but are included in the balance sheet and statement of changes in equity with effect from 1 January In connection with the implementation of IFRS as the group's new accounting standard, the group has previously applied a USGAAP approach to the recognition of revenue from software licenses. (See note 26 to the 2004 annual accounts, the IFRS transition document dated 25 April 2005 and the provisional annual accounts for 2005). After several assessments, the group has concluded that the principle formerly applied according to NGAAP is acceptable within IFRS and that this approach is in accordance with market practice for comparable businesses. The effect of IFRS in respect of such revenue previously reported is therefore not included in the presentation below. The following paragraphs provide commentary on the effect of the transition from NGAAP to IFRS of the group's financial condition, profit and cash flow. RECONCILIATION OF TRANSITION EFFECTS EFFECT OF EFFECT OF TRANSITION TRANSITION (NOK million) Note NGAAP TO IFRS IFRS NGAAP TO IFRS IFRS Assets Deferred tax assets ) Intangible assets A,B Tangible assets B Financial fixed assets Total fixed assets Inventories Current receivables Cash Total current assets Total assets Equity and liabilities Equity Total equity Pension liabilities C Interest-bearing long-term liabilities Other long-term liabilities Dividend D Other current liabilities Total liabilities Total equity and liabilities NOTE 27 cont. next page

60 58 EDB Business Partner Annual Report 2005 Notes Group cont. NOTE 27 cont. RECONCILIATION OF PROFIT AND LOSS FOR 2004 EFFECT OF TRANSITION (NOK million) Note 2003 NGAAP 2004 NGAAP TO IFRS 2004 IFRS Operating revenue Cost of goods sold Personnel costs B,C Depreciation of fixed assets Write-down of fixed assets 11.7 Other operating costs Operating costs EBITA Depreciation of intangible assets A Write-down of goodwill Operating profit Financial income Financial expense Profit before tax Taxes ) Ordinary profit after tax Profit from discontinued operations Profit for the year ) An error was discovered in 2005 in the tax computation for EDB Business Partner ASA for 2004 that caused the tax losses carried forward at 31 December 2004 to be overstated by NOK 70.1 million. This result in revised NGAAP-accounts for The tax charge in the profit and loss account for 2004 is NOK 19.6 million higher and both deferred tax assets and equity in 2004 are reduced by the same amount. (NOK million) 2003 NGAAP 2004 NGAAP 2004 IFRS Of which: Majority interests Minority interests -3.8 Profit for the year The transition from NGAAP to IFRS has not caused any material changes to the cash flow statement. Earnings per share Ordinary Diluted EXPLANATION OF CHANGES IN EQUITY A) Goodwill (IFRS 3) IFRS 3 on business combinations states that goodwill in the balance sheet should not be depreciated but should be tested for impairment at least once a year. Goodwill amortisation in 2004 represents NOK million before tax, of which NOK 9.0 million relates to discontinued operations. The write-back after tax is NOK million, of which NOK 9.0 million relates to discontinued operations. Impairment testing has not identified any need to write-down the value of goodwill in the balance sheet. B) Financial instruments (IAS 39) EDB has applied the principles in IAS 39 from 1 January This standard includes investments held for sale, convertible loans and bonds. In connection with the acquisition of the Operating Services division from Telenor, EDB was granted a two-year subordinated convertible loan by Telenor Business Solutions AS. The seller required EDB to take up this loan as part of the conditions for the transaction, and it was therefore taken into account in EDB's evaluation of the cost of the acquisition. Fair value of the right to convert to shares in accordance with IAS 39 was calculated at the date of acquisition to be NOK 20 million, and this amount is included in equity and goodwill from 1 January The investment in Clear2pay BV is classified in accordance with IAS 39 as an investment held for sale and is valued at fair value. This caused a write-down in the book value of this investment of NOK 0.2 million which was applied directly to equity.in accordance with IFRS 2, the share options granted to the CEO, executive management and key employees have been valued at fair value using the Black and Scholes options pricing model. The cost has been allocated linearly over the period of vesting for the options. The application of these new principles causes an additional charge in the profit and loss account of NOK 6 million, but has no effect on equity. NOTE 27 cont. next page

61 EDB Business Partner Annual Report Notes Group cont. NOTE 27 cont. C) Pension liabilities (IAS 19) The pension liability recognised in the balance sheet was lower than the actual pension liability. This is because of the effects of changes in the rules of the pension scheme in previous periods and changes in the assumptions used to calculate pension liability have not been charged to profit and loss (un-amortised deviation). In addition, there is a deviation between pension l iability calculated in accordance with IFRS and pension liability calculated in accordance with NGAAP. Both of these deviations were applied directly to equity at the time of transition to IFRS. The resulting increase in pension liability at 31 December 2004 was NOK million. After deducting the tax effect, this caused a reduction in equity of NOK million. In relation to the published profit and loss account, the implementation of this change causes an increase in pension cost for 2004 of NOK 3.1 million before tax (NOK 2.1 million after-tax) for continuing operations but reduces pension cost for discontinued operations by NOK 12.1 million before tax (NOK 8.6 million after-tax). D) Dividend IFRS requires that the provision for dividend should continue to be shown as part of equity until the Annual General Meeting has formally approved the dividend. The provision for dividend for 2004 under NGAAP was credited back to equity in connection with the implementation of IFRS. NOTE 28 Approved changes to IFRS This note provides information on approved changes to IFRS/IAS that came into force after the end of the company's financial year that are of relevance to the group's activities. IFRS 7 Financial instruments: Disclosures IFRS 7 includes new requirements for the information to be disclosed in the notes to the accounts to improve the information provided about financial instruments. The standard comes into force on 1 January 2007, and EDB will apply IFRS 7 and the supplementary change to IAS 1 from this date. IAS 19 (Amendment), Employee Benefits The amendment to this standard provides an alternative method to account for actuarial gains and losses. It also extends the information required to be shown in the notes to the accounts. The group does not intend to use the alternative method of accounting for actuarial gains and losses, but will implement the requirement for additional information with effect from 1 January IAS 39 (Amendment), Fair value option The amendment to the standard changes the definition of financial instruments that can be held at fair value through profit and loss. The amendment limits the scope to reclassify financial instruments to this category. EDB will apply the amendment from 1 January 2006, but it is not expected to have any material effect on the group's classification of financial instruments. IFRIC 4, Determining whether an Arrangement contains a Lease This interpretation clarifies that when determining whether an arrangement is a lease or contains a lease, the evaluation should be based on the commercial reality of the arrangement. The group will apply IFRIC 4 from 1 January 2006, but this change is not expected to have any material effect on the group's annual accounts.

62 60 EDB Business Partner Annual Report 2005 Profit and Loss account EDB Business Partner ASA 1 January 31 December (NOK million) Note Other operating revenue Total operating revenue Wages and salaries 1, Depreciation of operating assets Other operating costs Total operating costs Operating profit Income from investment in subsidiaries Other financial income Other financial expense Net financial items Ordinary profit before tax Tax on ordinary profit Profit for the year

63 EDB Business Partner Annual Report Balance Sheet EDB Business Partner ASA at 31 December (NOK million) Note Fixed assets Deferred tax assets Total intangible assets Machinery, equipment and fixtures Total tangible assets 6.6 Investments in subsidiaries Other long-term shareholdings Other long-term receivables Total financial fixed assets Total fixed assets Current assets Other current deposits 9, Cash and bank deposits Total current assets Total assets Equity Share capital Own shares Share premium reserve Other paid-in equity Total paid-in equity Retained earnings 4.1 Total equity Liabilities Pension liabilities Total provision for liabilities Loan on special terms Other long-term interest bearing liabilities Other long-term non-interest bearing liabilities Total other long-term liabilities Current interest bearing liabilities Accounts payable 7.3 Tax payable Deductions and duties payable Other current liabilities Total current liabilities Total liabilities Total liabilities and equity Oslo, 21 March 2006 The Board of Directors of EDB Business Partner ASA Bjarne Aamodt Chairman of the Board Staffan Bohman Deputy chairman of the Board Gisele Marchand Hans Kristian Rød Monica Caneman Anne-Cecilie Fagerlie Ingrid Lund Employee representative John Ingvar Brekke Employee representative Eirik Bornø Employee representative Endre Rangnes Chief Executive Officer

64 62 EDB Business Partner Annual Report 2005 Cash Flow Statement EDB Business Partner ASA 1 January 31 December (NOK million) Cash from/to operations: Ordinary profit before tax Gain/loss on sale of fixed assets Share of profit/loss in subsidiaries/associated companies Tax paid in the period Depreciation/write-downs 1.9 Difference between pension cost and payments Change in inventories, accounts receivable and accounts payable Change in other accruals Net cash flow from operations Cash from/to investments: Investment in fixed operating assets -4.1 Sale of fixed operating assets (sales proceeds) 1.1 Investment in other companies Sale of companies Purchase/sale of other shares and equity investments -0.1 Net cash flow from investments Cash from/to financing: New borrowing (short and long-term) Borrowings repaid Dividends paid Sale of own shares 1.5 Group contribution received/paid Net cash flow from financing Net change in liquid assets over the year Cash and bank deposits at Cash and bank deposits at Statement of changes in equity OTHER SHARE OWN SHARE PAID-IN RETAINED TOTAL (NOK million) CAPITAL SHARES PREMIUM EQUITY EARNINGS EQUITY Equity at 31 December Effect of transition to IFRS Equity at 1 January Share option scheme employee Profit for the year Equity at 31 December Share option scheme employee Own shares used in connection with exercised options Dividend Profit for the year Equity at 31 December

65 EDB Business Partner Annual Report Notes ASA NOTE 0 Accounting principles The accounts of EDB Business Partner ASA are prepared in accordance with the regulation in the Norwegian Accounting Act that allow simplified application of International Financial Reporting Standards. This means that the accounting principles are the same as in the group accounts, while the disclosures are in accordance with the Norwegian Accounting Act. NOTE 1 Personnel costs etc. PERSONELL COSTS (NOK million) Wages and salaries Employer's social security contributions Pension costs Other benefits Charged other units -9.6 Total The average number of employees was 8 in 2005 and 33 in AUDITOR'S REMUNERATION The following table shows the proposed remuneration to be paid to the group's auditor, Ernst & Young AS, in respect of the audit for 2005, including the amounts invoiced in respect of audit-related and taxrelated services. The amounts shown are exclusive of value added tax. (NOK million) 2005 Audit fee Tax-related and other services Total NOTE 2 Pensions The company provides pensions principally through an insured collective scheme with a life insurance company. In accordance with IAS 19 this arrangement is deemed to be a defined benefit plan. Pension arrangements relate to 7 active members. PENSION COSTS (NOK million) Current value of pension entitlement accrued over the year Interest on pension liabilities Gross pension expense Return on pension assets Booked difference due to changes in estimates and in the pension plan 0.8 Employers' social security contributions Net pension expense Additional schemes and early retirement Pension costs charged to profit and loss PENSION LIABILITIES (NOK million) Gross liability to provide pensions Pension assets Changes not amortised Employers' social security contributions Net pension liability Pension assets in the balance sheet Pension liabilities in the balance sheet For assumptions used in the actuarial calculations, see note 5 - Group. NOTE 3 Income from investment in subsidiaries Income from investment in subsidiaries relates to dividends received and/or group contribution from equity accumulated during the period of ownership by the parent company.

66 64 EDB Business Partner Annual Report 2005 Notes ASA cont. NOTE 4 Financial items (NOK million) Intra-group interest income External interest income Currency gains 10.6 Total other financial income Intra-group interest expense External interest expense Currency losses Other Total financial expense NOTE 5 Tax Deferred tax is calculated on the basis of the differences which exists at year-end between accounting and taxation values. DEFERRED TAX ARISES IN RESPECT OF THE FOLLOWING TIMING DIFFERENCES: TIMING DIFFERENCES (NOK million) Short-term timing differences Long-term timing differences Profit and loss account Gross timing differences Basis for deferred tax (deferred tax asset) Deferred tax (deferred tax asset) CALCULATION OF TAX BASE FOR THE YEAR Profit before tax Permanent differences Change in timing differences to P&L Basis for tax payable TAX COST FOR THE YEAR COMPRISES Tax payable 32.1 Change in deferred tax Total MOVEMENT IN DEFERRED TAX Change in deferred tax to P&L Tax on equity transactions Change in deferred tax in the balance sheet EFFECT OF PERMANENT DIFFERENCES 28% of profit before tax Dividend from group companies Expenses not deductible Non-taxable income -3.2 Other permanent differences Tax for the year The substantial changes in timing differences in 2004 is due to the approval of changes in tax legislation, White paper (No. 29) Tax reform, relating to the tax treatment of gains and losses arising from disposal of shares (the tax exemption model ).

67 EDB Business Partner Annual Report Notes ASA cont. NOTE 6 Tangible fixed assets MACHINERY/ TRANSPORT- IT (NOK million) FIXTURES 1) VEHICLES EQUIPMENT TOTAL Acquisition cost at Additions in the year Disposals in the year sales/scrapping Acquisition cost at Accumulated depreciation at Ordinary depreciation for the year Write-downs for the year Accumulated depreciation on sale/scrapping Accumulated depreciation at Book value at Depreciation rates 20% 20% 33% 1) Fixtures and fittings in leased premises are depreciated over the residual period of the lease if this i shorter than the normal depreciation period. NOTE 7 Guarantees issued and contractual commitments NOTE 8 Interests in subsidiaries The parent company has guaranteed NOK 150 million for borrowings by subsidiaries as part of the cash pool arrangement and has issued a tax deduction guarantee of NOK 1.5 million. Shares in subsidiaries are recognised in accordance with the cost method. See also note 13 Group. NOTE 9 Intra-group accounts receivable and payable (NOK million) Receivables Long-term interest-bearing receivables Current interest-bearing receivables 42.8 Current interest-free receivables Total Liabilities Long-term interest-free liabilities Current interest-free liabilities 17.6 Current interest-bearing liabilities 89.0 Total NOTE 10 Other current receivables (NOK million) Pre-paid costs 0.5 Other current receivables Total

68 66 EDB Business Partner Annual Report 2005 Notes ASA cont. NOTE 11 Share capital, shareholders etc. See note 20 Group for number of shares and shareholders etc. NOTE 12 Other long-term interest-bearing liabilities (NOK million) Liabilities to credit institutions See also notes 19 Group and 20 Group for further details.

69 EDB Business Partner Annual Report Auditor s Report

70 68 EDB Business Partner Annual Report 2005 Corporate governance at EDB EDB is committed to good corporate governance practices that will strengthen confidence in the company and contribute to optimal value creation over time. The objective of corporate governance is to regulate the division of roles between shareholders, the board of directors and executive management more comprehensively than is required by legislation. The Norwegian Corporate Governance Board (NCGB) has issued the Norwegian Code of Practice for Corporate Governance. The NCGB has members from a range of organisations representing shareholders, the auditing profession, finance and the stock exchange. Adherence to the Code of Practice is based on the comply or explain principle, which means that a company must comply with all the recommendations of the Code of Practice or explain why it has chosen an alternative approach to specific recommendations. The Oslo stock exchange (Oslo Børs) requires listed companies to publish an annual statement of their policy on corporate governance in accordance with the Code of Practice in force at the time. EDB s commitment to corporate governance is based on the following elements: EDB will provide open, reliable and relevant communication to the outside world about the company s activities and its corporate governance. EDB s board of directors will be autonomous, and independent of the company s executive management. EDB will pay particular attention to ensuring that there are no conflicts of interest between the interests of its shareholders, the members of its board of directors and its executive management. Where conflicts of interest do arise, the company will ensure that it has rules and procedures to deal with the situation in a professional manner. EDB will ensure a clear division of responsibility between the Board and the executive management. EDB will treat all shareholders equally. 1. IMPLEMENTATION AND REPORTING ON CORPORATE GOVERNANCE Implementation EDB s corporate governance policy is the result of detailed consideration by the executive management and the Board of Directors (the Board ). EDB follows the Norwegian Code of Practice for Corporate Governance of 8 December 2005 (the Code ), which is set out in detail at

71 EDB Business Partner Annual Report ELECTION COMMITTEE GENERAL MEETING AUDIT COMMITTEE COMPENSATION COMMITTEE BOARD OF DIRECTORS CHIEF EXECUTIVE OFFICER Relations and division of responsibility among the governing bodies form the frame work of corporate governance in EDB. EXECUTIVE MANGEMENT The company has updated its internal policies and guidelines with effect from 2006 in accordance with the Code. EDB provides information on corporate governance in its annual report and on its web site at The group follows all the recommendations of the Code, and there are accordingly no deviations from the recommendations that require further comment. Corporate values and ethical guidelines Confidence in EDB as a company and in its business activities as a whole is essential for the group s continuing competitiveness. EDB sees good corporate governance as more than following the relevant laws and regulations. Openness about the systems and procedures for the management of the group strengthens value creation, builds internal and external confidence and promotes an ethical and sustainable approach to business. To support this work, we have established shared corporate values and ethical guidelines for all EDB s employees. 2. BUSINESS The business objective of EDB Business Partner ASA is defined in the company s Articles of Association, which state that EDB is to develop, manage and operate its own and other parties IT solutions, to sell services and consultancy and any activities related to the foregoing. The company s Articles of Association can be found on page 71, and are published on the EDB web site at 3. EQUITY AND DIVIDENDS Equity The group s equity at 31 December 2005 was NOK million, representing an equity ratio of 43.9 percent. The Board considers this to be satisfactory. The group s capital adequacy is kept under constant review in relation to its objectives, strategy and risk profile. Dividend policy The company s objective is to generate a return for its shareholders through dividends and increases in the share price that is at least in line with the return available on similar investment opportunities of comparable risk. EDB aims to pay an annual dividend to shareholders equivalent to percent of normalised post-tax profit. The Board proposes a dividend if it is satisfied that this will not have an adverse effect on the company s future growth ambitions and capital structure. The Board has decided to propose that the Annual General Meeting should approve a dividend for the 2005 accounting year of NOK 1.00 per share, equivalent to approximately NOK 90 million in total. The EDB share will be listed ex-dividend from 11 May The approved dividend will be paid on 31 May 2006 to shareholders registered in the company s share register on 10 May Increases in share capital The Board held two mandates in respect of share capital at 31 December Both mandates expire in Any new mandates will be valid for only one year to the date of the next AGM. Any new mandates will be issued for specifically stated purposes. The Board will only propose increases in share capital when this is in the long-term interest of shareholders. It will normally be the case that existing shareholders will be given priority subscription and allotment rights in any major new issue of shares. Purchases of the company s own shares The Board did not hold any mandate for share buy-backs at 31 December EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH CLOSE ASSOCIATES Equal treatment The Articles of Association do not impose any restrictions on voting rights. All shares have equal rights. Transactions with close associates EDB s Board and executive management are committed to treating all the company s shareholders equally. Telenor owns 51.8 percent of EDB s shares. EDB provides services to Telenor in accordance with an extensive operating services agreement. EDB s Board and management are satisfied that these and other business transactions and contracts between EDB and Telenor are on an arm s length basis. The Board will pay particular attention to obtaining independent valuations for any material transactions between the company and its close associates. 5. FREELY NEGOTIABLE SHARES Shares in EDB are freely negotiable. The Articles of Association do not impose any restrictions on transfers of shares. EDB Business Partner ASA is listed on the Oslo stock exchange (Oslo Børs). EDB works actively to attract the interest of potential new shareholders. Good liquidity in the company s shares is essential if the company is to be seen as an attractive investment and thereby achieve a low cost of capital. Members of the executive management team meet regularly with current and potential shareholders in Norway, Europe and the USA. The company strives to ensure

72 70 EDB Business Partner Annual Report 2005 that the information provided in stock exchange announcements, meetings, reports and presentations gives a complete picture of the company s strategy, business areas, operations and financial results. 6. GENERAL MEETINGS The Annual General Meeting of EDB The Annual General Meeting ( AGM ) is the company s ultimate corporate body. The Board strives to ensure that AGMs are an effective forum for communication between shareholders and the Board. Preparation for the AGM The AGM is normally held before 1 June each year, and in any case not later than 30 June, which is the latest date permitted by company law. The 2006 AGM will be held on 10 May. The notice calling the AGM is distributed no later than two weeks in advance. The notice includes all the necessary information for shareholders to form a view on the matters to be considered. In accordance with the company s established practice, the deadline for shareholders to notify their intention to attend the AGM is not earlier than two days before the date of the meeting. The company s financial calendar is published on its web site and in the annual report. Participation in the AGM Shareholders must give written notice of their intention to attend the AGM, either by post, telefax or . Shareholders who are unable to attend the meeting are encouraged to appoint a proxy. The arrangements for appointing a proxy allow shareholders to specify how their proxy should vote on each matter to be considered. The Board attends the AGM, together with at least one representative from the Election Committee and the auditor. The executive management is represented at the AGM with, at a minimum, the CEO and the CFO attending. Agenda and conduct of the AGM The Board decides the agenda for the AGM. The main agenda items are determined by the requirements of the Public Limited Liability Companies Act and Article 7 of the Articles of Association. The AGM to be held on 10 May 2006 will consider a proposal to change the Articles of Association to require that an independent chairman is appointed for each AGM. This proposal reflects the recommendations of the revised Code. The CEO gives a presentation of the group at each AGM. The AGM minutes are published on the EDB web site at 7. ELECTION COMMITTEE EDB has an Election Committee comprising three members. The members of the Election Committee are elected by the AGM, and serve for a 2-year term of office. The AGM also issues the Mandate for the work of the Election Committee. The AGM to be held on 10 May 2006 will be asked to amend the Articles of Association to formalise these arrangements for the Election Committee. The Election Committee s duties are to nominate candidates for consideration by the AGM for the Chairman of the Board, the other members of the Board and the deputy members of the Board. The Mandate for the Election Committee includes guidance on selecting suitable candidates to ensure an appropriate composition of expertise on the Board. The Election Committee is also responsible for carrying out an annual review of the remuneration paid to the members of the Board and submitting specific proposals in this respect to the AGM. The members of the Election Committee in 2005 were as follows: Erik Amlie, Hjemmet-Mortensen, Chairman Nils Bastiansen, National Insurance Fund Bjørn Magnus Kopperud, Telenor ASA Erik Amlie and Bjørn Magnus Kopperud come to the end of their term of office at the 2006 AGM. Information on the membership of the Election Committee and the timetable for submitting proposals for new members can be found on the EDB web site at 8. BOARD OF DIRECTORS: COMPOSITION AND INDEPENDENCE The Board of EDB Business Partner has nine members, of which six are elected by shareholders and three are elected by and from among the employees. Of the six shareholderelected members, three are female, and one of the three employee representatives is female. Two shareholder-elected members of the Board come to the end of their term of office at the 2006 AGM. Elections to the Board Pursuant to a ruling by the Industrial Democracy Commission on 23 August 2005, EDB does not have a corporate assembly. The Board is therefore elected by the AGM. The Chairman of the board is elected by the AGM.

73 EDB Business Partner Annual Report ARTICLES OF ASSOCIATION FOR EDB BUSINESS PARTNER ASA Updated 16 February Name of the company The name of the company is EDB Business Partner ASA. The company is a public limited liability company. 2 Registered office The company s registered office is in Oslo. 3 Business objective The company s business is to develop, manage and operate its own and other parties IT solutions, to sell services and consultancy and any activities related to the foregoing. These activities may be carried out by the company itself, by its subsidiaries or through collaboration with other parties. 4 Share capital T he share capital is NOK consisting of shares each of nominal value NOK Board of Directors The company s Board of Directors shall have a minimum of five and a maximum of eleven members in accordance with the decision of the General Meeting. 6 Power of signing The Board of Directors represents the company and has the power to commit the company. Power of signing for the company is vested in the Chairman and one member of the Board of Directors signing jointly. 7 General Meeting The business of the Annual General Meeting shall be to consider and vote upon the following matters: To adopt the Profit and Loss Account and Balance Sheet, including the application of the profit for the year or the covering of the loss. Such other matters as by the law or by operation of the Articles of Association are to be dealt with at a General Meeting. The General Meeting is led by the Chairman of the Board of Directors. Shareholders who intend to attend the General Meeting shall give the company written notice of their intention within a time limit given in the Notice of the General Meeting, which cannot expire earlier than five days before the General Meeting. Shareholders who have failed to give such notice within the time limit, can be denied admission. The composition of the Board The shareholder-elected members represent wide-ranging experience, with industry specific expertise from banking and finance, telecommunications, industry and ICT, as well as professional expertise in management, finance, accounting, technology and marketing. The members bring experience from Norwegian, Swedish and other European companies. EDB believes that the Board as a whole represents the best interests of all the company s shareholders. This is achieved in part by ensuring that the Board s expertise, capacity and diversity are well suited to the activities in which EDB is involved. The Report of the Board of Directors includes CVs for its members and information on their shareholdings in EDB. This information is also available and updated on Independence of the Board The Chairman of the Board, Bjarne Aamodt, is an employee of Telenor. Aamodt is not responsible for purchasing services or negotiating contracts in respect of products and services purchased and sold between EDB and Telenor, nor does he have any operational responsibility in this area. None of the other shareholder-elected members has employment or business links to Telenor or EDB. The Board has rules on conflicts of interest to ensure that any potential conflicts are identified and handled in a professional manner. The Deputy Chairman leads the Board s consideration of any matter where the Chairman has a conflict of interest. The Board s guidelines require that members must notify the Chairman in advance if the Board is to consider any matter in which they may have a financial interest or are otherwise involved. Holdings of shares in EDB by members of the Board Information on shares in EDB held by members of the Board can be found in Note 18 Group on page 53 of the annual report. 9. THE WORK OF THE BOARD The duties and responsibilities of the Board The Board has the ultimate responsibility for the management at the group and for supervising its day-to-day management and activities in general. The main duties of the Board are to develop the company s strategy and monitor its implementation. In addition, the Board exercises supervision responsibilities to ensure that the company manages its business and assets in a prudent and satisfactory manner. The Board is responsible for the appointment of the CEO. Mandate for the Board In accordance with the provisions of Norwegian company law, the terms of reference for the Board are set out in a formal mandate that includes specific rules on the work of the board and decision-making. The Chairman of the Board is responsible for ensuring that the work of the Board is carried out in an effective and proper manner in accordance with legislation. Mandate for the CEO The Board issues a mandate for the work of the CEO. There is a clear division of responsibilities between the Board and executive management. The CEO is responsible for the operational management of the group. Group internal audit The Board decided in 2005 to establish a separate internal audit department for the EDB group, and appointed a Head of Internal Audit to manage this function and report directly to the Board. Internal control, quality assurance and risk management EDB has implemented an Approval Authority Matrix, which specifies the authority required for decisions. The Matrix is approved by the Board, and the CEO has operational responsibility for ensuring that it is enforced. All employees have clear guidelines on the limit of their personal authority and on the approval needed for decisions beyond their authority. In addition to the organisational hierarchy, the group operates three levels of decision-making committees, which have clearly defined authority limits. The Matrix applies to all types of business decision including investments, funding, sales and purchasing, and regulates the level of authority for each type of decision in relation to the amounts involved. As part of its contractual relationship with its banking and finance customers and Norwegian municipalities, EDB has established audit committees elected by representatives of these customers internal and external auditors. These committees carry out audit work to meet the requirements of these customers for monitoring EDB s internal control function. During the course of 2006, these audit committees will be replaced by an arrangement whereby EDB s group internal audit function will carry out the audit work required by various customer groups. The audit reports produced will be certified by an independent third party. Kredittilsynet (the Financial Supervisory Authority of Norway) is not directly responsible for

74 72 EDB Business Partner Annual Report 2005 High-quality information to analysts and investors is a Group priority. supervising EDB, but can exercise control over the group through the banks in accordance with the ICT Regulations. EDB has chosen to follow an open approach in its relationship with Kredittilsynet. EDB has comprehensive internal procedures that stipulate how the company identifies and reduces risk factors. The company continually monitors threats to operational quality, delivery standards, changes in market conditions and in its financial condition. As a subsidiary of Telenor, EDB is subject to the Sarbanes-Oxley Act (SOA) since Telenor is listed on NASDAQ. SOA compliance requires extensive documentation on risk factors and the company s cash flows. This reporting represents significant additional work for EDB, but also serves to improve the quality of the company s reporting and control systems for financial reporting. Financial reporting The Board receives monthly reports on the company s commercial and financial status. The company follows the timetable laid down by Oslo Børs for the publication of interim and annual reports. Board meetings The Board holds at least 10 regular meetings each year, including a strategy meeting. Extraordinary Board meetings are held as and when required to consider matters that cannot wait until the next regular meeting. In addition, the Board has appointed an Audit Committee and a Compensation Committee to work on matters in these areas. Audit Committee The Audit Committee is appointed by the Board, and its main responsibilities are to supervise the group s internal control systems and to ensure that the auditor is independent and that the annual accounts give a fair picture of the group s financial results and financial condition in accordance with generally accepted accounting practice. The Audit Committee has reviewed the procedures for risk management and financial controls in the major areas of the group s business activities. The Audit Committee receives reports on the work of the external auditor and the results of the audit. In addition, the Committee has reviewed the group s work on corporate governance in EDB. The Committee has also investigated the need to establish an Internal Audit Department, and was involved in appointing the person to manage this function. The members of the Audit Committee with effect from the 2005 AGM are: Hans Kristian Rød, Chairman Anne-Cecilie Fagerlie from 7 June 2005 Tormod A. Nordlie from 17 March 2005 to 23 November 2005 Eirik Bornø from 31 January 2006 Compensation Committee The Compensation Committee makes proposals to the Board on the employment terms and conditions and total remuneration of the CEO and other senior employees. These proposals are also relevant for other employees entitled to variable salary payments. The Board takes into account comparisons with other companies when deciding the terms and conditions and remuneration of the CEO. The Board also sets the overall scope for the remuneration of the executive management team. The CEO determines the remuneration of individual members of the executive management team in collaboration with the Chairman of the Board. The members of the Audit Committee with effect from the 2005 AGM are: Monica Caneman, Chair Gisele Marchand John Ingvar Brekke Arrangements for anonymous employee contact with the Board EDB places great importance on ensuring that employees should be able to freely express their views and provide feedback to the Board. In order to ensure anonymity, the Board has set up a contact point for whistle blowers through the law firm Hestenes & Dramer in Oslo to ensure that information can be submitted directly to the Chairman of the Board without the company knowing the identity of the sender. The Board s evaluation of its own work The Board carries out an annual evaluation of its own performance, working arrangements and competence. A report of this evaluation is made available to the Election

75 EDB Business Partner Annual Report CONTACT INFORMATION FOR WHISTLE BLOWERS Law firm Hestenes & Dramer & Co attn: Frode Sulland, attorney Tel: Fax: The system secures anonymity for everyone reporting seriously harmful or criminal conduct. Committee. The Board also carries out a similar evaluation of the CEO. 10. REMUNERATION OF THE BOARD OF DIRECTORS The remuneration paid to the members of the Board is decided by the AGM having considered proposals by the Election Committee. 11. REMUNERATION OF SENIOR EMPLOYEES Performance-based remuneration EDB s arrangements for performance-based remuneration of its senior employees are based on the creation of shareholder value and long-term earnings performance. The group s system for management by objectives provides the main basis for determining the remuneration of managers and employees. The group s financial objectives represent the main parameter for evaluating executive management performance, and also determine whether bonuses are paid. The financial objectives that provide the basis for executive management bonuses are budgeted EBITA, budgeted revenue targets and targets for EPS. The performance of other employees is appraised relative to parameters set by the management by objectives system, with objectives that are largely within the individual s control. In addition to financial targets, performance appraisal includes customer satisfaction and employee satisfaction. Information on payments of performancebased remuneration to senior employees can be found in Note 4 Group on page INFORMATION AND COMMUNICATIONS Financial reports and announcements EDB normally publishes its provisional annual accounts early in February. The complete annual report and accounts are distributed to shareholders no later than two weeks prior to the AGM. Quarterly interim reports are normally published in the third week following the end of the quarter. EDB publishes an annual financial calendar which can be consulted on the Oslo Børs website, through news agencies and on the EDB website. All stock exchange announcements are also distributed through Hugin. Other market information EDB holds public presentations for investors in connection with the publication of its interim reports. These presentations review the published results, market conditions and the company s future prospects. The presentations are given by the CEO and the CFO at a minimum, and are distributed by webcast so that anyone unable to attend can follow the presentation in real-time or view it at a later time. Following each quarterly presentation the CEO and the CFO hold further presentations for investors at various locations in Europe and the USA. Quarterly interim reports, presentation material and webcasts are all available on the EDB web site at In addition to these arrangements, EDB maintains regular dialogue with investment analysts and investors. The group considers it very important to inform shareholders and investors about the company s commercial and financial performance. EDB is committed to ensuring that the participants in the stock market receive the same information at the same time. The group therefore takes a cautious approach in its contacts with individual shareholders and investment analysts. The company does not participate in any meetings with investors or analysts for the four weeks prior to each quarter-end. Oslo Børs approved the use by EDB of its Information Symbol and English Symbol in October TAKE-OVERS EDB s Articles of Association do not contain any restrictions or limitations on acquiring the company s shares. Telenor owns 51.8 percent of the company s share capital, but has no special rights as a shareholder. 14. AUDITOR Election of the auditor EDB and Telenor are both audited by Ernst & Young, but different audit teams are responsible for each company. The Audit Committee recommended this course of action because it was very satisfied with the current auditor and believed that continuity would be very valuable given the major changes taking place in EDB s senior management. In view of this, the Board did not make any specific recommendation for the election of the auditor by the 2005 AGM, which meant that Ernst & Young AS continued as the company s auditor for the 2005 accounting year. Auditor s relationship with the Board and the Audit Committee The Auditor attends at least one meeting each year with the Board at which the company s management is not represented. The Auditor participates at meetings of the Board that consider the annual accounts and maintains regular contact with the Audit Committee. Auditor s relationship with executive management The Board has issued guidelines for the conduct of the relationship between the Auditor and the group. The Board regularly reviews this relationship to ensure that the auditor is

76 74 EDB Business Partner Annual Report 2005 Article = included in the Corporate Governance section of the Annual Report Report = included elsewhere in the Annual Report Web = information available on the EDB web site at Business objectives Art Rep Web Articles of Association Presentation of the company s business EDB s corporate vision, values and strategy Targets and objectives Internal control and risk management Equity and dividend Capital structure and dividend policy Increases in capital for specific purposes Mandate to the Board of Directors for share buy-backs Equal treatment Single class of shares Priority rights of shareholders to new issues Stock exchange transactions Independent valuations Guidelines for conflict of interest (Board and Management) No restrictions on share negotiability Corporate bodies Art Rep Web General Meetings Corporate Assembly Election Committee Board of Directors Audit Committee Compensation Committee Executive Management Duties, composition and independence of the Board Planning the work of the Board Guidelines for the Board and Management Self-evaluation by the Board Disaster recovery Collaboration with the auditor Remuneration of the Board Remuneration of the Executive Management Information and Corporate Communications Information policy Financial calendar Take-over No obstacles to take-over or acquisition of the company Business disposal to be approved by the General Meeting Auditor Art Rep Web fulfilling a sufficiently independent and satisfactory control function. The Board has ruled that EDB can only use the auditor for consultancy work where this is specifically approved by the Board. 15. OTHER MATTERS Corporate structure and management The most important corporate bodies in EDB s management structure are the General Meeting, the Board, the CEO and the executive management. EDB attaches great importance to defining the division of responsibility between these bodies and allocating clearly defined responsibility for the group s commercial and financial performance. The Board has overall responsibility for the group s strategy. Executive management is responsible for producing proposals on strategy and long-term objectives. The final decision on strategy and objectives is taken by the Board. The strategic plan covers a three-year period, and is reviewed and approved annually. This process starts in January and is completed in June. The approved strategic plan forms the basis for operational objectives and plans for all areas of the EDB organisation. Budgeting The budget process starts in August, and involves all profit centres in the group. The overall budget guidelines are set at group level, and are based on the strategic plan and external operating conditions. Budget submissions are considered in considerable detail by the executive management and the Board. The final budget is approved by the Board in December, and forms the central tool for financial management over the course of the calendar year. Performance monitoring The CEO holds monthly meetings with each business area to monitor performance. The CFO also participates in these meetings, together with other members of executive management as required. Corrective measures are applied as and when required. Risk management EDB operates a risk matrix system that monitors the performance of the group s deliveries. Regular reports are generated to show the status of delivery quality, and these provide the basis for proactive risk management. In addition, EDB monitors external market parameters and internal financial ratios to provide the basis to assess and manage exposure to financial risk. EDB also has a separate legal department, managed by an in-house attorney who reports directly to the CEO. The attorney is also secretary to the Board and therefore has direct access to members of the Board. Procedures and guidelines are in place to ensure that the legal department is involved in all activity over a certain size that might represent legal risks for the group, including bidding for contracts and entering into agreements. The group has standard policies for contract terms and conditions. Risk exposure is reported to the Board on a regular basis both at its meetings and through financial reporting. Employees EDB s employees are the group s most important resource and are crucial to the company s success in achieving its targets for long-term value creation. EDB commits sizeable resources to staff training and development. The EDB guidelines for business ethics are communicated and monitored at all locations where the group operates. Openess builds trust and promotes sustainable business conduct.

77 EDB Business Partner Annual Report FINANCIAL CALENDER DEVELOPMENT EDB SHARE PRICE (NOK) 25 April 2006 Q interim report 10 May 2006 Annual General Meeting 18 July 2006 Q interim report 18 October 2006 Q interim report Q-03 2Q-03 3Q-03 4Q-03 1Q-04 2Q-04 3Q-04 4Q-04 1Q-05 2Q-05 3Q-05 4Q-05 1Q-06 The EDB share Investor information SHARE TRADING EDB Business Partner ASA is listed on the Main List of the Oslo Stock Exchange (Oslo Børs) in the OB Match liquidity category. A total of EDB shares changed hands in stock exchange trading in 2005, equivalent to 48 percent of the total number of shares and 99 percent of shares in free float. Average daily turnover was shares per day. (NOK) Highest price Lowest price Closing price RETURN ON INVESTMENT AND DIVIDEND The company s objective is to generate the best possible long-term return for its shareholders, both through dividends and increases in its share price, so that this is at least in line with the return available on similar investment opportunities of comparable risk. EDB aims to pay an annual dividend equivalent to percent of normalised post-tax profit, defined as post-tax profit adjusted for non-recurring items such as gains on disposals, provisions for restructuring and nonrecurring tax charges, subject to the Board being of the view that this will not have an adverse effect on the company s future growth ambitions and capital structure. The Board has decided to propose that the AGM should approve a dividend for the 2005 accounting year of NOK 1.00 per share, equivalent to NOK 91 million in total. If this dividend is approved, the EDB share will be listed ex-dividend from 11 May 2006 and the dividend will be paid on 31 May 2006 to shareholders registered in the company s share register on 10 May INCREASES IN SHARE CAPITAL The Board will only propose increases in share capital when this is in the long-term interest of shareholders. It will normally be the case that existing shareholders will be given priority subscription and allotment rights in any major new issue of shares, although the AGM has authorised the Board to waive these rights in certain circumstances. The Board holds a general mandate to increase the company s share capital by up to 9 million shares, and is also authorised to issue up to 1.9 million shares in connection with the share options scheme for key employees. The Board is authorised to waive the priority rights of existing shareholders in respect of any shares issued under these mandates. NORWEGIAN SHAREHOLDERS: RISK ADJUSTMENT RISK refers to the annual adjustment for change in retained capital applied by the Norwegian tax authorities to the value of shares for tax purposes, and is only relevant to Norwegian shareholders. The adjustment is made on 1 January each year, and applies to shares held at that date. The RISK system is replaced in 2006 with a rate of return allowance that is offset against dividend income. RISK amount per share for : (NOK) INVESTOR RELATIONS EDB Business Partner ASA provides regular information to shareholders, investment analysts and other interested parties on the company s performance, activities and specific developments. The company strives to ensure that the information it provides represents the most complete and correct picture possible of its activities and current business status. This helps to ensure that the pricing of the company s shares reflects its underlying value and expectations of its future performance. EDB is required to issue announcements through Oslo Børs, as promptly as possible, of any events that might have an effect on the company s share price and that are of significance for the market. These announcements are subject to relevant rules and guidelines. In response to changes in the rules for a listed company's duty of disclosure, a new IR policy has been established to clearly define what information must be treated as inside information and when this information must be notified to Oslo Børs. EDB maintains open and structured lines of communication with the investor market and other players. The objective is to ensure that all shareholder groups have access to the same information at the same time. This is achieved through annual reports, quarterly interim reports, presentations,

78 76 EDB Business Partner Annual Report 2005 EDB SHARE PRICE (INDEX) EDB Oslo Stock Exchange IT Index Oslo Stock Exchange Benchmark Index 1Q-03 2Q-03 3Q-03 4Q-03 1Q-04 2Q-04 3Q-04 4Q-04 1Q-05 2Q-05 3Q-05 4Q-05 1Q-06 webcasts of all open presentations, a capital markets day, meetings with investors and press releases. The financial calendar for EDB for the coming year is published on the company s web site. This provides the dates for events including the publication of quarterly interim reports and the Annual General Meeting. Investor road shows are an important part of our commitment to information and corporate communications. Members of the Executive Management team hold regular presentations in Europe and in the USA to give both current and potential investors information on EDB s business, strategy, financial results etc. Contact names for investor relations can be found on our web site. As at the end of February 2006, the following analysts followed the EDB share: Firm ABG Sundal Collier Alfred Berg ABN Amro Carnegie Cheuvreux Danske Bank, Danske Equities DnB Markets First Securities Fondsfinans Handelsbanken Kaupthing Orkla Enskilda Pareto Standard & Poor's Equity Research Name Ole Andre Hagen Karl Berglund Eirik Hernes Larsen Johan Eliason Peter Trigarszky Trygve Lauvdal Torgeir Svae Arild Nysæther Ole A.Gulsvik Didrik Kjeldahl Erich Solberg Petter Sagfossen Mattias Eriksson Shareholder structure Number of shareholders at Proportion held by Norwegian shareholders 86.9% 96.0% -of which Telenor Business Partner ASA 51.8% 51.8% Proportion held by foreign shareholders 13.1% 4.0% Total number of shares at of which holdings of own shares SHARE OPTIONS AND CONVERTIBLE LOAN The Group CEO was allocated 0.6 million options when he was appointed in April These options are released over a 3-year period. In 2004 and 2005, the Board of EDB Business Partner granted options to the other members of the group s Executive Management team and approximately 50 key employees in respect of shares. The options accrue over a 2-year vesting period. Following the vesting period, options can be exercised quarterly between 3 and 10 days after the publication of each interim report. The exercise price for these shares is based on the average market price at the time they are granted, and options can only be exercised if the current share price is equivalent to at least the price at the time of allocation plus annual interest of 5.38 percent. The options outstanding are as follows: options granted in April 2003 at a market price of NOK options granted in May 2004 at a market price of NOK options granted in January 2005 at a market price of NOK options granted in October 2005 at a market price of NOK options were exercised in Subsequent to the publication of the provisional annual accounts for 2005, the first half of the employee share options granted by the 2004 AGM became eligible for exercise. As a result of this, options were exercised, of which were held by members of the executive management. Of the shares acquired by primary insiders in the company, shares have since been sold. Telenor Business Solutions AS made a subordinated convertible loan of NOK 132 million to EDB on 1 May 2004 in connection with EDB s acquisition of Telenor s Operating Services division. The amount outstanding plus accrued interest can be converted into EDB shares at any time during its 2-year term. ANALYSIS OF SHARES BY SHAREHOLDER GROUP AT No. of shares No. of % of total % of total per shareholder shareholders shareholders share capital : % 1% : % 2% : 143 6% 5% : 57 3% 21% : 4 0% 7% Over : 2 0% 64% Total: % 100% Information on the company's largest shareholders and the shares/options held by members of the board and executive management can be found in Note 18 to the consolidated accounts.

79 EDB Business Partner Annual Report EDBASA EDB is authorised by Oslo Børs to use both the Information symbol and the English symbol. IR Policy Guidelines for Investor Relations EDB Business Partner is committed to providing the financial markets with precise, relevant, timely and consistent information on matters that are of material significance for the valuation of securities issued by the company whenever EDB is the appropriate source for such information. EDB strives to ensure that the information it provides to the financial markets gives market players the best possible basis to establish a precise picture of the company's financial condition and factors that may affect its future value creation. EQUAL TREATMENT EDB uses the Oslo Børs company message system to ensure the simultaneous release of price sensitive information to the financial markets. The company's web site is the principal source of other information on EDB for the financial markets. EDB applies a consistent policy to the release of information regardless of whether the contents are of a positive or negative character. SPOKESPEOPLE FOR THE COMPANY The Group Chief Executive Officer and the Chief Financial Officer are the company's spokesmen for contact with the financial markets. The company may nominate one of its other executive vice presidents as its spokesperson on a specific matter or issue where this is necessary to ensure that the market is given access to the best information possible. PUBLICATION OF PRICE SENSITIVE INFORMATION EDB routinely and promptly publishes information in respect of material contracts and investment spending and any other material changes or events that might have an effect on the company s share price once the decision in question has been taken at the appropriate level in the group and, where relevant, agreement has been reached with the appropriate third party. It is the company's policy not to comment on rumours or speculation about such matters. GUIDANCE EDB does not provide guidance on quantitative targets for the company's future turnover, earnings, return on equity or cash flow. Following the close of each quarter, the company publishes summarised information on orders in hand that will produce turnover in future periods ("order backlog"), together with the company's view on general market conditions in the markets in which it operates. RELATIONSHIP WITH INVESTMENT ANALYSTS, EARNINGS FORE- CASTS AND MARKET EXPECTATIONS EDB routinely monitors the research reports and forecasts published about the company. If EDB becomes aware of a significant positive or negative discrepancy between the development of the company's turnover or earnings and the level of expectations in the financial markets for the current financial year, as expressed by earnings forecasts, it will advise the market of the discrepancy by issuing a stock exchange announcement. The company may agree to review research reports prior to their publication, but its comments will be limited to correcting errors of fact and any errors in the presentation of information that the company has itself released to the market through stock exchange announcements or by publication on its web site. EDB will not make any comment on earnings forecasts or any other form of evaluation produced by investment analysts or investors. EDB does not distribute research or reports on the company produced by third parties, and will only refer potential investors to the summary published on the company web site of the investment banks that routinely follow the company. SILENT PERIOD For a period of four weeks prior to the publication of each interim quarterly report, EDB will minimise its contact with investment analysts, investors and journalists. During this period, the company will not hold any meetings with investors or analysts, and will not provide any comments on market conditions or developments in the company. This policy has been adopted to minimise the risk of any unequal treatment of different players in the market.

80 78 EDB Business Partner Annual Report 2005 KEY FIGURES: DEFINITIONS Cash flow per share: Net cash flow from operations divided by average number of shares outstanding. Average number of shares after dilution: Average number of shares outstanding less the company s holding of its own shares plus the average number of new shares equivalent to the dilution effect of employee share options and convertible loans. Equity ratio: Total equity capital as a percentage of total assets. Gearing: Net interest-bearing liabilities divided by total equity. Liquid assets: Cash and bank deposits. Liquidity reserves: Cash and bank deposits plus un-drawn committed credit facilities. Net interest-bearing liabilities: Total of current and long-term interest-bearing liabilities less cash and bank deposits. Return on invested capital (ROIC): EBITA adjusted for non-recurring items divided by invested capital. Invested capital: Goodwill before amortisation but after any impairments, plus net working capital plus net long-term operational assets and commitments (deferred tax and provisions for restructuring are not included as operational items). Free cash flow: Cash from operations less operational investment spending. Free cash flow return: Free cash flow divided by market capitalisation. IFRS NGAAP KEY FIGURES FOR THE GROUP Key figures (NOK million) Operating revenue Operating profit before depreciation (EBITDA) Operating profit before goodwill depreciation (EBITA) EBITA margin 10.0% 9.3% 2.8% 2.4% 5.0% EBITA margin before non-recurring items 10.3% 9.3% 7.3% 5.3% 7.8% Return on invested capital (ROIC) 19.6% 19.1% 14.6% 9.1% 10.9% Number of employees Market capitalization Geographical analysis of operating revenue (NOK mill) Norway Sweden Other Total Share of revenue outside Norway 14% 9% 7% 7% 3% Key figures per share (NOK) Earnings per share Earnings per share after tax, before amortization EBITDA per share Cash flow per share Book equity per share Average numbers of shares Solidity Equity ratio 44% 38% 48% 42% 46% Gearing Net interest-bearing liabilities Net interest-bearing liabilities/ebitda 0,6 1,0 1,0 1,0 0,7 Liquidity (NOK million) Cash and bank deposits Liquidity reserves Cash from operations Operational investment Free cash flow Free cash flow return 4.3% 8.5% 2.5% 1.8% 8.2%

81 EDB Business Partner Annual Report IFRS NGAAP KEY FIGURES BY BUSINESS AREAS (NOK million) IT Operations Operating revenue EBITA EBITA margin 8.3% 9.4% 8.7% 6.6% -1.2% EBITA margin before non-recurring items 9.1% 9.4% 8.7% 6.6% 4.8% Operational investments Number of employees Solutions Operating revenue EBITA EBITA margin 18.9% 14.5% -5.1% -2.8% 9.3% EBITA margin before non-recurring items 18.9% 14.5% 6.1% 4.2% 9.3% Operational investments Number of employees Total order backlog Order backlog distributed ORDER BACKLOG (NOK million) Later IT Operations Solutions Total order backlog % of total 29% 24% 21% 14% 12% The order backlog includes signed fixed-price contracts and forecast revenues related to signed contracts charged on an hourly basis.

82 80 EDB Business Partner Annual Report 2005 EXECUTIVE MANAGEMENT GEIR REMMAN (43) Executive Vice President, Corporate Communications and Marketing Joined EDB in 2005 after 10 years with Finansavisen, the last five years as editor. An economics graduate of the BI Norwegian School of Management. He holds shares and options in EDB. VIBEKE NYVOLD (47) Executive Vice President, Human Resources Joined EDB in 2003 having been Executive Vice President for Human Resources and Organisational Development at Tandberg Television. Previous positions include Vice President, Strategy and Business Development in Hafslund Nycomed and Executive Vice President for Human Resources and Organisational Development in Løvenskiold Vaekerø. She holds shares and options in EDB. PETTER IDAR JENSSEN (41) Executive Vice President, Solutions Formerly a divisional director of TietoEnator responsible for global sales and delivery in the core banking area and the ebanking portfolio. 12 years experience with Accenture prior to this, most recently as a partner responsible for Financial Services in Norway. He holds shares and options in EDB. JOHN-ARNE HAUGERUD (50) Executive Vice President, Business Development Responsible for business development and the planning and implementation of major outsourcing assignments. Formerly head of EDB IT Operations. Various senior management positions at EDB Teamco, Novit and Fellesdata since Broad experience from the bank and finance sector. He holds shares and options in EDB. ENDRE RANGNES (46) President and Chief Executive Officer Joined EDB in 2003 from his previous position as Managing Director of IBM Norway. Has previously held a number of leading positions at IBM internationally and in Norway. Member of the Board of Relacom. He holds shares and options in EDB.

83 EDB Business Partner Annual Report TORE VALDERHAUG (45) Executive Vice President, Chief Financial Officer Background as CFO in the Norwegian publicly listed companies ASK Proxima, Ocean Rig and Unitor. Has ten years experience as an external auditor, mainly in Arthur Andersen & Co. Joined EDB from the financial consulting company ProCorp ASA where he was a partner. He holds shares and options in EDB. OLE URDAHL (46) Executive Vice President, IT Operations Responsible for the IT Operations business area. Previously head of the Solutions business area. Formerly Deputy Managing Director of EDB Teamco and Fellesdata, where he was Director of Operations and prior to this held senior positions in marketing and development. He holds shares and options in EDB. URBAN DOVERHOLT (44) Executive Vice President, EDB Sweden Managing director of EDB Sverige AB. He has extensive experience of the IT sector in Sweden, most recently as Managing Director of the Stockholm-based listed e-learning company Enlight. Prior to this he worked for a number of other companies including IBM. He holds shares and options in EDB. Urban Doverholt left the company 27 March JAN ERIK LARSEN (50) Executive Vice President, Sales and Business Development Joined EDB in January 2005 from Software Innovation, where he was head of the consultancy and solutions division. Prior to this he was CEO of the listed company TeleComputing, and has held a number of senior positions and board appointments with Nordic companies in the technology sector. He holds shares and options in EDB. ODDGEIR HANSEN (52) Executive Vice President, Chief Operating Officer Member of EDB s executive management since 2003 after joining from IBM Norway, where he was a Department Director. Previous experience includes a number of administrative positions in IBM both in Norway and in the Nordic region. He holds shares and options in EDB.