communication systems FOR satellite broadband for Railway Supervision

Transcription

1 annual report 2011

2 communication systems FOR satellite broadband CONTROL SYSTEMS for Railway Supervision 2 DATA RESPONS ASA ANNUAL REPORT 2011 MEASURING SYSTEMS for oil and gas

3 Data Respons is a full-service, independent technology company and a leading player in the embedded solutions market. THIS IS DATA RESPONS DATA RESPONS is a full-service, independent technology company and a leading player in the embedded solutions market. We provide products, services and embedded solutions at all levels of complexity to OEM companies, system integrators and vertical product suppliers in a range of market segments such as defence, medical equipment, industrial automation, offshore, transportation, energy and telecommunications. embedded solutions can be described as the computer brain of a machine, system or industrial end product, and can be used in a broad range of industrial applications, such as rugged control units for military vehicles, graphic monitoring systems for greener train operations, laser solutions for calculating medical data or fiscal measuring systems for oil and gas. Our presence in Asia provides quality both in the industrialisation process and the delivery phase, while at the same time innovation and development of technological solutions takes place locally with the customers in cooperation with our highly-skilled experts from our offices located in important industrial regions in Scandinavia and Germany. contents 04 Board of Directors report 10 The Board of Directors 11 Investor information 12 Growth drivers 13 Key figures 15 Financial statements and notes 16 Statement of comprehensive income 17 Statement of financial position 19 Equity statement 20 Cash flow statement 21 Notes 43 Auditor s report Our customers include global companies such as ABB, Volvo, Kongsberg Group, Ericsson, Raytheon Anschütz, Saab, Rolls-Royce and Tomra. KEY FACTS established: VISION: A smarter solution starts from inside. offfices: Denmark (2), Germany (2), Norway (7), Sweden (6) & Taiwan (1). BUSINESS FORM: Public limited company, listed on the Oslo Stock Exchange (ticker: DAT). CERTIFICATIONS: ISO 9001:2008, ISO 14001:2004 AND OHSAS 18001:2007 number of employees: 446 Financial calendar Presentation of Q Annual General Meeting Presentation of Q Presentation of Q Presentation of Q DATA RESPONS ASA ANNUAL REPORT 2011

4 CHAPTER 1: Board of Directors report Board of Directors report ORDER INTAKE (NOK million) REVENUE (NOK million) EBITA (NOK million) During 2011, market conditions in most of the countries the company operates in gradually improved, resulting in a strong order intake of NOK 883 million and a record order backlog of NOK 639 million. statement on the annual financial statements In accordance with the Norwegian Accounting Act 3.3a the Board confirms that the company fulfils the requirements necessary to operate as a going concern, and the 2011 financial statements have been prepared on the basis of this assumption. As a listed company Data Respons ASA prepared the consolidated financial statements for the Data Respons group for the financial year 2011 in accordance with IFRS (International Financial Reporting Standards) As adopted by the European Union. income statement The report includes comparisons with figures for the same period in 2010 (in parenthesis). Operating revenue was NOK million (706.8), an increase of 20 %. EBITDA was NOK 13.4 million (3.3). EBIT was NOK million (-3.6) after impairment of goodwill 87.3 million. Profit before tax was NOK million (-7.7). Cash flow from operations in 2011 was NOK 1.8 million (-22.6). The order intake during 2011 totalled NOK 883 million (913), and the order backlog was NOK 639 million (604). The company s high revenue growth, order intake and order backlog in 2011 is mainly due to the positive development in Sweden and Norway. The Norwegian operations continued the positive development with high growth and strong profitability. Sweden showed strong growth, while investments in solutions projects and non-recurring costs impacted profitability. In Denmark, the cost base has been further reduced to adapt to the difficult market conditions. In order to improve profitability, the company has, during the year, undertaken several initiatives to make the organisation more efficient and cost effective. The initiatives have included a reduction in group administration 4 DATA RESPONS ASA ANNUAL REPORT 2011

5 CHAPTER 1: Board of Directors report The positive development for order intake contributed to growth in operating revenues for our business areas towards year end, and indicates better market conditions and revenue growth for costs, stronger coordination of the Nordic operations, transferring tasks to our Asian organisation and downsizing loss-making business units. Data Respons is well positioned as a leading full-service technology company (complete solution provider) in the market. The company had a strong order intake of NOK 883 million in 2011 and a record order backlog of NOK 639 million at the end of the year. The positive development for order intake contributed to growth in operating revenues for our business areas and indicates revenue growth for balance sheet, liquidity & cash flow The group s total assets at the end of 2011 were NOK million. The group s equity was NOK million which gives an equity ratio of 55 %. Current assets amounted to NOK million and current liabilities were NOK million. Earn-out obligations from acquisitions were settled during the 2nd quarter and there are no remaining obligations as of December 31, Of the non-current assets of NOK million, deferred tax assets were NOK 20.1 million, while intangible assets (goodwill) amounted to NOK million. Goodwill was impaired with NOK 87 million in The goodwill impairment was related to Denmark (NOK 53 million), Sweden (NOK 24 million) and Germany (NOK 10 million). After impairment the remaining goodwill per segment is NOK 71 million in Norway, NOK 67 million in Sweden, NOK 17 million in Germany and zero in Denmark. The company had an operational cash flow of NOK 1.8 million in The difference between operating result and operating cash flow was due to an impairment of goodwill amounting to NOK 87.3 million, increased accounts receivables from the revenue growth at the end of the year, as well as increases in inventory for deliveries in The cash balance as of December 31, 2011 amounted to NOK 4.9 million, all of which is restricted. The group had interest-bearing debt of NOK 24.1 million and consider the debt ratio as appropriate for the group s development. Data Respons has unused credit facilities of NOK 51 million, and further information connected to these are specified in note 17. financial risk The group s activities expose it to a variety of financial risks, such as price, interest rates, currency, credit and liquidity. Overall these risks are regarded as low. Management of financial risk is performed by the group s central Finance Department under the guidelines set out by the Board of Directors. The main principle is to minimise exposure to financial risk, and the group holds no financial assets or liabilities for speculative purposes. For further details on financial risk management, see Note 19. operations Data Respons is a leading embedded solutions provider for the industrial market in Europe. Embedded solutions can be described as the brains of a machine, system or industrial end product. Data Respons supplies embedded solutions to leading OEM companies, system integrators and vertical product suppliers in a range of market segments such as defence, offshore, automation, medical equipment, surveillance, transport, telecommunications and other industries. Data Respons ASA is listed on the Oslo Stock Exchange (Ticker: DAT), and is part of the information technology index. The company has offices in Denmark, Germany, Norway, Sweden and Taiwan. markets norway Operating revenue for 2011 was NOK million (271.1), a growth of 35 %. EBITA was NOK 35.9 million (20.9). The order backlog ended at NOK 421 million (382). Norway showed healthy operations and profitability in 2011 and had the best performance in the Norwegian company s history. Increasing levels of solutions deliveries, an improving services market and general high activity in the organisation, have all contributed to the positive development. The company experienced an increase in demand from both existing and new customers, resulting in a strong order intake during Data Respons has a leading market position in Norway with a well-balanced business mix (solutions, services and products), many recurring large-cap solution customers and a record strong order backlog. KEY FIGURES NOK million Operating revenue EBITA Order backlog Order intake Employees ORDER BACKLOG (NOK million) REVENUE BY BUSINESS AREA 44% 49% 7% REVENUE BY INDUSTRY 16% 4% 13% 2011 Solutions Products Services NUMBER OF EMPLOYEES % 7% 5% 10% % 24% Defence Energy Medical Other industries Telecom Transportation Offshore Maritime Automation DATA RESPONS ASA ANNUAL REPORT 2011

6 CHAPTER 1: Board of Directors report Solution deliveries secure long-term and strategically-important customer relationships, and provide significant potential for future growth. REVENUE PER COUNTRY (NOK million) Country Change Norway % Sweden % Denmark % Germany % REVENUE PER COUNTRY 42% backlog PER COUNTRY (NOK million) EMPLOYEES PER COUNTRY 37% 45% EMPLOYEES PER DIVISION 13% 421 6% 21 8% 13% 13% 10% % 9% 65% 24 Norway Germany Sweden Denmark Norway Germany Sweden Denmark Norway Germany Sweden Denmark Operations Sales Development Administration sweden Operating revenue for 2011 was NOK million (267.0), an increase of 23 %. EBITA was NOK -4.3 million (-0.4). The order backlog ended at NOK 173 million (144). The revenue growth is mainly due to the positive development in the services segment. The margins have been impacted by investments and costs related to the completion and introduction of several new solutions contracts. Additionally, profitability in 2011 was negatively affected by restructuring costs related to several efficiency initiatives. The initiatives will give a more efficient and cost effective organisation going into During the year, the company has increased its geographical deployment in important regions and strengthened the total competency platform, both of which will increase the ability to win new embedded solution contracts. The company expects gradual profitability improvements going forward. The strong revenue growth and order backlog confirms the company s market potential in Sweden. denmark Operating revenue for 2011 was NOK million (119.9), a reduction of 9 %. EBITA was NOK -9.8 million (-14.4). The order backlog ended at NOK 24 million (64). Operating revenue and order intake were impacted by effects of the planned downsizing of the Danish operations. While the market conditions have been satisfactory in other regions, the Danish market has continued to be challenging. The company implemented several efficiency initiatives in the 1st half year of 2011 to reduce the overall cost level and to adjust to the current difficult market conditions. Profitability in 2011 was negatively affected by non-recurring costs related to downsizing of operations. The main focus in Denmark is core business, customer relations, risk reduction and profitability improvements. germany Operating revenue for 2011 was NOK 50.5 million (52.5), a reduction of 4 %. EBITA was NOK 0.3 million (2.1). The order backlog ended at NOK 21 million (16). During the year, the German operations has showed improving order intake and backlog and is well positioned for future growth and improved profitability. business areas Data Respons divides sales into three business areas: Solutions, products and services. solutions Operating revenue for 2011 was NOK million (342.7), an increase of 21 %. A substantial part of the overall order intake of NOK 883 million in 2011 was solutions business. The high order intake indicates continued growth in solutions revenue going forward. The company s long term strategy to strengthen total solution capabilities and focus on the total value chain has given Data Respons a unique position. The company s long experience with its own operations in Taiwan is of special importance. Our customers must meet the continued demand for increased performance and more functionality, and at the same time focus on efficiency and cost savings. By entering a strategic partnership where Data Respons builds and delivers customised embedded solutions, our customers can achieve lower cost of ownership, increased efficiency and shorter time to market. Data Respons has a solid position as a complete solutions provider with broad competency and strong customer focus. Solution deliveries secure long-term and strategicallyimportant customer relationships, and provide significant potential for future growth. products Operating revenue for 2011 was NOK 58.3 million (51.4), an increase of 13 %. Data Respons is positioned as the leading channel for embedded computer products in the Nordic region. A large part of the product sourcing is integrated as components in solutions and therefore categorized as solution revenue. services Operating revenue for 2011 was NOK million (312.7). 6 DATA RESPONS ASA ANNUAL REPORT 2011

7 CHAPTER 1: Board of Directors report The services market has continued the positive development, resulting in revenue growth and an increasing order intake during Data Respons continues to build on its leading position in offering customers access to highly experienced specialists with a broad range of expertise from different disciplines within embedded solutions. A strong international competence platform is strategically important in order to develop new solution customers and to stand out as a complete solutions provider in the market. organisation and work force At the close of 2011, the group had 446 employees working at 19 offices in Norway (154), Sweden (202), Denmark (43), Germany (37) and Taiwan (10). The average number of employees at the parent company was 24. The average number of employees in the group was 459, and there were 70 female employees in the group at the end of the year, 12 in middle management. There is currently 1 female in group management. Equal pay for work of equal value, regardless of gender, is emphasised at Data Respons. Salary and terms of employment for comparable positions are the same for women and men. Recruitment, promotion and development of the staff are based on merit and equal opportunity regardless of race, colour, religion, gender, age, national origin, sexual orientation, marital status and disability. Discrimination, bullying or harassment are not accepted at Data Respons. Employees are asked to report incidents of such behaviour to their immediate supervisor or the employee representative. corporate governance Data Respons organisation is structured and managed in accordance with the Norwegian Code of Practice for Corporate Governance. The Board of Directors states that Data Respons has been in compliance with the code throughout The Board of Directors report on corporate governance can be read at the company s website: com/investors. objectives The objectives of the company are to provide ITrelated products and services, own and manage stocks and shares and other activities naturally connected to this. work of the board In 2011 there were 7 directors on the Board, 5 of whom were elected by the general meeting and 2 of whom were elected by the employees. The Board normally meets 10 times a year, and otherwise as needed. In 2011 the Board held a total of 11 meetings. The work of the Board is governed by detailed rules of proce- 7 DATA RESPONS ASA ANNUAL REPORT 2011

8 CHAPTER 1: Board of Directors report During the year there has been a positive development in the company s solutions order intake, combined with better market conditions for services. dure. The Board has an annual programme of work including specific topics and fixed items such as the approval of the annual financial statements, interim financial statements and budgets. The Board is also responsible for overall strategy and for setting long-term goals, as well as important decisions about acquisitions, establishment of new operations and major investments. In 2011 there were 2 men and 5 women on the Board. nomination committee Data Respons has a Nomination Committee. The Nomination Committee is elected by the general meeting and makes proposals to the general meeting regarding the election of shareholder-elected members to the Board. A Nomination Committee for shareholderelected members was appointed at the general meeting in The Committee consists of Haakon Sæter, Andreas B. Lorentzen and Narve Reiten. The Committee s mandate is to nominate candidates for shareholder-elected Board members and propose Directors fees. In addition, Data Respons has an Election Board for the election of employee representatives to the Board of Directors, and consists of three members which are employed at Data Respons. board of directors The Board of Directors of Data Respons is responsible for the group s strategic development, and it shall keep itself informed at all times of the company s financial position, as well as adopt plans and budgets for the business. The Board s role, responsibilities and work methods have been defined thoroughly in the rules of procedure that were adopted in The rules of procedure also define the tasks and duties of the CEO in relation to the Board in greater detail. The composition of the Board of Directors complies with the requirement that the Board be independent from the company management, and independent from major business associates of the company. The Chairman of the Board of Directors is elected by the general meeting. Board members are normally elected for a term of two years. Page 10 of the annual report provides a detailed description of the individual members backgrounds, qualifications and shareholdings. The Board has appointed an Audit Committee which provides assistance to the Board in fulfilling their responsibility to the shareholders, potential shareholders, and investment community relating to corporate accounting, reporting practices of the company, and the quality and integrity of the financial reports of the Company. As part of this process, the external auditors participate in several meetings of the Audit Committee. In carrying out its responsibilities, the Audit Committee should ensure that the corporate accounting and reporting practices of the company are in accordance with all legal requirements and are of the highest quality. The Board has also appointed a Compensation Committee. The Board s Compensation Committee is a subcommittee of the Board of Directors of Data Respons ASA. Its role is to make preparations for the Board s discussions of questions involving compensation. The Compensation Committee is responsible only to the full corporate Board and its authority is limited to making recommendations to the Board. internal control The Board of Directors oversees and evaluates the company s internal control and risk management functions related to financial reporting. The management is responsible for establishing and maintaining adequate internal control of financial reporting. The objective of the internal control of financial reporting is to provide reasonable assurance regarding the reliability of financial reporting and ensure that the preparation of Data Respons financial statements is in accordance with International Financial Reporting Standards. The effectiveness of internal control of financial reporting is evaluated annually by the Board of Directors. The external auditor provides an independent assessment on the effectiveness of internal controls related to financial reporting which is presented to the audit committee and the Board of Directors at least once every year. corporate social responsibility Taking overall responsibility is an important core value at Data Respons. The group aspires to be a responsible corporation in terms of labour standards, human rights and environmental protection. The company has implemented corporate social responsibility policies which are publicly available. The policies cover governance and integrity management, environmental protection, human rights and labour standards and are in accordance with the UN Global Compact Principles. safety, health & environment (she) Data Respons is not regulated by environmental licences or injunctions. The company does not pollute the external environment. Average sick leave over the course of the year was 1.7 %, and none of the group s subsidiaries recorded work related accidents that resulted in personal injury or property damage. The working environment is regarded as good, and improvement measures are implemented continuously. Employees and management have a constructive collaboration, which has a positive impact on our operations. allocation of the result for the year Data Respons ASA (the parent company) reported a profit/(loss) before tax of NOK million (-1.6) in The net profit/(loss) for the year was NOK million (0.1). The Board of Directors proposes that the loss for the year of NOK million is transferred to other reserves, and that no dividends are distributed for The Board of Directors also proposes that NOK 76.7 million of the share premium is utilised to cover negative other equity of NOK After the proposed distribution, remaining share premium amounts to NOK million. As of December 31, 2011 the parent company had equity of NOK million, none of which comprised distributable reserves. outlook The company believes that the long-term outlook for the embedded solutions market is positive. The need for more intelligent products, better infrastructure and enhanced user functionality are driving forces in the market. Advanced and cost effective computer technology facilitates new solutions which is vital for this development. Data Respons is well positioned as a complete solution provider for the in- 8 DATA RESPONS ASA ANNUAL REPORT 2011

9 CHAPTER 1: Board of Directors report dustrial part of this market in the Nordic region and in Germany. The company has customers in a wide range of vertical industries, a good geographical span and a balanced portfolio of large-cap customers. The industrial market for embedded solutions is expected to follow a long-term growth trend, driven by the need for new and cost effective computer solutions for OEM companies, system integrators and vertically integrated suppliers. Data Respons customers have to face shorter time-to-market combined with the need for more intelligent computer technology content in products, equipment and infrastructure. Other important parameters are cost savings, increased efficiency and more functionality. To meet these challenges, experience shows that more and more companies choose to cooperate strategically and close with solid, reputable providers with complete solution capabilities. The company continued the positive development in revenue in 2011, combined with a strong order backlog. The increased uncertainty in the financial markets has not affected the investment activities in the company s customer base negatively. The company is monitoring the development thoroughly and will carry out operational adjustments in case the situation should change. Additionally, the company has taken several initiatives to become more cost effective and profitable going into Improved profitability and long-term growth is Data Respons main focus. The group s growth and profit can fluctuate between quarters. Based on the current demand from our customers, a more efficient organization and a strong order backlog, the company expects further growth and improved profitability and cash flow. declaration on the financial statements We confirm that the financial statements for the year 2011, to the best of our knowledge, have been prepared in accordance with International Financial Reporting Standards (IFRS), gives a true and fair view of the company s and group s consolidated assets, liabilities, financial position and results of operations, and that the annual report includes a fair review of the development, results and position of the company and group, together with a description of the most central risks and uncertainty factors facing the companies. The board of directors of Data Respons ASA Høvik, March 19, 2012 Ole Jørgen Fredriksen chairman of the board Kathryn Moore Baker member of the board Elen Bente Loe member of the board Erik Langaker member of the board Ulla-Britt Fräjdin-Hellqvist member of the board Åsa Grübb-Weinberg employee representative Elisabeth Endrestad employee representative Kenneth Ragnvaldsen CEO 9 DATA RESPONS ASA ANNUAL REPORT 2011

10 CHAPTER 1: Board of Directors report The Board of Directors Based on the current demand from our customers, a more efficient organisation and a record-high order backlog, the company expects growth and profitability. ole jørgen fredriksen chairman of the board Number of shares: Number of options: 0 Fredriksen (born 1950) was elected Chairman of the Board in April Fredriksen has held various key management positions within the computer industry in Europe and US. His main positions today are as Chairman of the Board at Q-Free ASA, Impact Europe Group AB, Cyviz AS and Advertik AS. Fredriksen was a co-founder, CEO and President of ASK ASA for 15 years. He has a Bachelor degree from the Norwegian School of Economics and Business Adminstration, Bergen, Norway. Bente Loe member of the board Shares: 0 Share options: 0 Bente Loe (born 1968) was elected to the Board of Directors in April She is currently a partner at Springfondet, an early stage venture capital company. Loe holds a BSBA and an MBA from University of Denver. Loe currently sits on the board of Appear TV AS, Setred AS and Reactive Metal Particles AS. kathryn baker member of the board Shares: 0 Share options: 0 Baker (born 1964) was elected to the Board in April She is currently a partner at Reiten & Co. Baker holds a Bachelor in Economics from Wellesley College and an MBA from The Amos Tuck School of Business Administration at Dartmouth College. Baker is currently Chairman of the Board of Custom Holding and Ellipse- Klinikken and serves as the Chairman of the Norwegian Private Equity and Venture Capital Association (NVCA). erik langaker member of the board shares: Share options: 0 Langaker (born 1965) was elected to the Board in November Langaker has 20 years of experience in finance, M&A and venture capital from international markets. Langaker has founded/co-founded more than 10 technology companies. He has extensive board experience from companies such as Payex, Viken Fibernett and Talkmore AS. ulla-britt fräjdin-hellqvist member of the board Shares: 0 Share options: 0 Fräjdin-Hellqvist (born 1954) was elected to the Board in November She holds a Master of Science in Engineering Physics from Chalmers, and has 22 years experience from various positions in Volvo PV in both Sweden and internationally. She has held various leading positions in Swedish business life. Fräjdin-Hellqvist now works as an independent contractor and partner. Elisabeth Endrestad EMPLOYEE REPRESENTATIVE Shares: Share options: 0 Endrestad (born 1966) was elected as an employee representative in April She is educated as a civil engineer, and has completed several courses in logistics and human resources management. Endrestad has worked in Data Respons since 1995 and has had various positions within the administration department. She is currently working with Human Resources (HR) at the Høvik office. Åsa Grübb-Weinberg EMPLOYEE REPRESENTATIVE Shares: 0 Share options: 0 Grübb-Weinberg (born 1955) was elected as an employee representative in April She holds a degree in social studies from Stockholm University and has broad experience from various technologybased companies. Grübb-Weinberg has worked in Data Respons since 2006 and is currently Account Manager at the Stockholm office. 10 DATA RESPONS ASA ANNUAL REPORT 2011

11 CHAPTER 2: INVESTOR INFORMATION Data Respons places great importance on providing up-to-date information on its activities and financial development to shareholders and other parties with interests in the capital market. Investor information Data Respons ASA is listed on the Oslo Stock Exchange (Ticker: DAT), and is included in the information technology index. The company has offices in Denmark, Germany, Norway, Sweden and Taiwan. FINANCIAL CALENDAR Presentation of Q Annual General Meeting Presentation of Q Presentation of Q Presentation of Q4 12 SHARE PRICE PERFORMANCE JANUARY 2011 DECEMBER 2011 ANALYST COVERAGE Share information Highest price (NOK) Lowest price (NOK) Price at year end (NOK) Market value (NOK million) Dividend per share - - TRADING AND TRANSACTIONS Number of transactions Average number of transactions per day 2 4 Number of shares traded (million) shareholder structure Number of shareholders Foreign ownership 1.8 % 2.1 % Number of shares owned by Data Respons ASA - - Number of shares outstanding (million) ABG Sundal Collier Aleksander Nilsen aleksander.nilsen@abgsc.no Carnegie Christian Rom csr@carnegie.no Nordea Markets André Holø Adolfsen andre.adolfsen@nordea.com Data Respons believes that it is important to have an open and active dialogue with the stock market, and that all shareholders are treated equally. 11 DATA RESPONS ASA ANNUAL REPORT 2011

12 CHAPTER 2: INVESTOR INFORMATION Growth drivers GROWTH DRIVERS INCREASED USE OF COMPUTER INTELLIGENCE The demand for embedded solutions is driven by an even greater demand for new functionality, increasing complexity and technology content in the products for OEM companies, system integrators and product suppliers. Data Respons has systematically built up a customer base with broad market access, which provides good exposure to the demand for embedded solutions in different market segments. GROWTH IN SOLUTIONS Our customers continuously face demands for new functionality and increased technology content, which entails continual upgrades and product development with shorter time to market. The complexity is increasing. The expertise needed to develop embedded solutions is very specialised, and it is often beyond the scope of the customer s core expertise. This has resulted in many companies choosing to purchase complete solutions. GROWTH IN NEW REGIONS Organic growth is the primary focus of Data Respons. Data Respons has a tried and tested business model that contributes to rapid establishment in new markets. A strong global partnership structure provides access to leading technology and competitive terms. New areas are under continuous evaluation. Local presence is necessary in order to maintain close contact with customers and expand our customer base. GROWTH THROUGH ACQUISITIONS Data Respons constantly focuses on acquisition opportunities that can contribute to strengthening the company s position in the form of expertise, market access and an improved customer structure. This provides a foundation for the development of new solution customers, whether they are existing product or service customers. 12 DATA RESPONS ASA ANNUAL REPORT 2011

13 CHAPTER 2: INVESTOR INFORMATION Key figures key figures NOK income statement Operating revenue Operating expenses EBITDA Depreciation and amortisation Impairment of goodwill Operating profit/loss Profit/loss before tax and non-controlling interest Net profit/loss after tax balance Total assets Equity Cash and cash equivalents key figures Revenue growth 20.2 % -2.7 % % 28.9 % 61.6 % Gross margin 50.6 % 55.8 % 53.8 % 57.1 % 52.6 % EBITDA margin 1.6 % 0.5 % -2.8 % 7.6 % 8.4 % EBIT margin -9.3 % -0.5 % % 6.7 % 7.5 % Net profit margin % -1.6 % % 4.8 % 5.2 % Cash flow from operations Return on equity % -3.4 % % 11.6 % 13.0 % Return on total assets % -0.7 % % 9.2 % 10.9 % Liquidity ratio % % % % % Equity ratio 54.6 % 61.7 % 65.0 % 59.1 % 53.8 % Working capital key figures for shares Earnings per share (EPS), basic (NOK) Cash flow per share from operations (NOK) Dividend per share (NOK) Book equity per share (NOK) Number of shares as of December Average number of shares Average number share transactions per day Share price as of December 31 (NOK) Market capitalisation (NOK million) definitions Return on equity Profit/loss for the year / Average equity Return on total assets EBIT / Average total assets Liquidity ratio Current assets / current liabilities Equity ratio Equity / Total assets Working capital (Current receivables + Inventories) - Current liabilities Earnings per share (EPS) For calculation of EPS, see Note 9 13 DATA RESPONS ASA ANNUAL REPORT 2011

14 CHAPTER 2: INVESTOR INFORMATION Key figures GROUP REVENUE PER COUNTRY KEY FIGURES OPERATING REVENUE (NOK million) 6% 39% 42% 13% Norway Germany Sweden Denmark NOK million Operating revenue EBITA Order backlog Employees DENMARK REVENUE PER COUNTRY KEY FIGURES OPERATING REVENUE (NOK million) 13% NOK million Operating revenue EBITA Order backlog Employees GERMANY REVENUE PER COUNTRY KEY FIGURES OPERATING REVENUE (NOK million) 6% NOK million Operating revenue EBITA Order backlog Employees NORWAY REVENUE PER COUNTRY KEY FIGURES OPERATING REVENUE (NOK million) 42% NOK million Operating revenue EBITA Order backlog Employees SWEDEN REVENUE PER COUNTRY KEY FIGURES OPERATING REVENUE (NOK million) 39% NOK million Operating revenue EBITA Order backlog Employees DATA RESPONS ASA ANNUAL REPORT 2011

15 FINANCIAL STATEMENTS and notes 15 DATA RESPONS ASA ANNUAL REPORT 2011

16 Consolidated statement of comprehensive income Data Respons financial statements for the year 2011 have been prepared in accordance with International Financial Reporting Standards (IFRS). Consolidated statement of comprehensive income GROUP DATA RESPONS ASA NOK 1000 Note Sales revenue Operating revenue Cost of goods sold Payroll expenses 10, Depreciation and amortisation Impairment of goodwill Other operating expenses 3, Operating profit/loss Group contribution and dividends from subsidiaries Other financial income 16, Impairment of shares in subsidiaries 3, Other financial expenses 16, Profit/loss before tax Income tax expense Profit/loss for the year other comprehensive income Currency translation differences Total comprehensive income profit attributable to Equity holders of the company Non-controlling interest comprehensive income attributable to Equity holders of the company Non-controlling interest allocations From/to other equity Earnings per share, basic (NOK) Earnings per share, diluted (NOK) DATA RESPONS ASA ANNUAL REPORT 2011

17 Consolidated statement of financial position Consolidated statement of financial position ASSETS AS OF DECEMBER 31 GROUP DATA RESPONS ASA NOK 1000 Note non-current assets Intangible assets 3, Machinery and equipment 3, Shares in subsidiaries Investments in other shares Deferred tax assets Total non-current assets current assets Inventories 6, Trade receivables 7,8, Other receivables 7, Current financial assets Cash and cash equivalents Total current assets Total assets DATA RESPONS ASA ANNUAL REPORT 2011

18 Consolidated statement of financial position Consolidated statement of financial position EQUITY AND LIABILITIES AS OF DECEMBER 31 GROUP DATA RESPONS ASA NOK 1000 Note equity share capital Issued capital Share premium Total share capital retained earnings Other equity Total retained earnings Non-controlling interest Total equity liabilities non-current liabilities Deferred tax liabilities Pension liabilities Other non-current liabilities Total non-current liabilities current liabilities Interest-bearing loans and borrowings 13, Trade payables Income tax payable Public duties payable Current financial liabilities Other current liabilities Total current liabilities Total liabilities Total equity and liabilities The board of directors of Data Respons ASA Høvik, March 19, 2012 Ole Jørgen Fredriksen chairman of the board Elen Bente Loe member of the board Kathryn Moore Baker member of the board Ulla-Britt Fräjdin Hellqvist member of the board Erik Langaker member of the board Åsa Gunilla Grübb-Weinberg employee representative Elisabeth Endrestad employee representative Kenneth Ragnvaldsen CEO 18 DATA RESPONS ASA ANNUAL REPORT 2011

19 Consolidated equity statement Consolidated equity statement GROUP NOK 1000 Attributable to equity holders of the company Total Equity Note Issued capital Share premium Treasury shares Translation differences Other equity Equity as of January 1, Profit for the year Other comprehensive income for the year Total comprehensive income for the year Employee share option sheme Purchase/sale of treasury shares Issue of share capital Equity as of December 31, Profit for the year Other comprehensive income for the year Total comprehensive income for the year Employee share option sheme Issue of share capital Equity as of December 31, Profit for the year Other comprehensive income for the year Total comprehensive income for the year Employee share option sheme Equity as of December 31, DATA RESPONS ASA NOK 1000 Attributable to equity holders of the company Total Equity Note Issued capital Share premium Treasury shares Translation differences Other equity Equity as of January 1, Profit for the year Total comprehensive income for the year Employee share option sheme Purchase/sale of treasury shares Issue of share capital Equity as of December 31, Profit for the year Total comprehensive income for the year Employee share option sheme Issue of share capital Equity as of December 31, Profit for the year Total comprehensive income for the year Employee share option sheme Equity as of December 31, DATA RESPONS ASA ANNUAL REPORT 2011

20 Consolidated cash flow statement Consolidated cash flow statement GROUP DATA RESPONS ASA NOK 1000 Note cash flow from operating activities Operating profit/loss Income tax paid Depreciation and amortisation Impairment of goodwill Employee share option scheme Change in inventories Change in trade receivables Change in trade payables Change in provisions for pensions Change in other accruals Net cash flow from operating activities* cash flow from investing activities Acquisition of subsidiaries, net of cash acquired Dividends from subsidiaries Group contributions received* Purchase of machinery and equipment Interest received Purchase of financial assets Payments regarding loans to subsidiaries Net cash flow from investing activities cash flow from financing activities Net change in overdraft facilities Interest paid** Sale/purchase of treasury shares Net cash flow from financing activities Net change in cash and cash equivalents Cash and cash equivalents at the start of the period Exchange gains/losses on cash and cash equivalents Cash and cash equivalents at the end of the period * Group contributions received was presented as cash flow from financing activities in previous years. From 2011 the item is presented as investing activities. Comparative figures are changed accordingly for 2010 and 2009 in this presentation. ** Interest paid was presented as investing activities in 2010 and previous periods. From 2011 this item is presented as financing activities. Comparative figures are changed accordingly for 2010 and 2009 in this presentation. 20 DATA RESPONS ASA ANNUAL REPORT 2011

21 Notes Note 1 NOTE 1 accounting principles general information Data Respons ASA is a public limited company registered in Norway. The company s head office is located at Sandviksveien 26, 1363 Høvik, Norway. The group s business operations are described in Note 2. accounting principles The Data Respons group s consolidated financial statements and the company financial statements of Data Respons ASA for the financial year of 2011 have been prepared in accordance with International Financial Reporting Standards (IFRSs) and the interpretations set out by the International Accounting Standards Board, as approved by the European Union. The financial statements are based on the historical cost principle with the exception of financial derivatives. The consolidated financial statements have been prepared using consistent accounting principles for similar transactions and events under otherwise similar circumstances. standards, amendments and interpretations published but not yet implemented There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on January 1, 2011 that have had a material impact on the group s financial statements. The standards and interpretations listed below have been published, but are not yet effective at the date of approval of the financial statements and not early adopted by the group. IFRS 7 Financial Instruments Disclosures (amendment), effective from 2012 / 2013 IFRS 9 Financial Instruments, effective from 2015 IFRS 10 Consolidated financial statements, effective from 2013 IFRS 11 Joint Arrangements, effective from 2013 IFRS 12 Disclosure of Involvement with Other Entities, effective from 2013 IFRS 13 Fair value measurement, effective from 2013 IAS 1 Financial Statement Presentation (amendment), effective from 2013 IAS 12 Income Taxes (amendment), effective from 2012 IAS 19 Employee Benefits (amendment), effective from 2013 IAS 27 Separate Financial Statements (as revised in 2011), effective from 2013 IAS 28 Investments in Associates and Joint Ventures (as revised in 2011), effective from 2013 IAS 32 Financial Instruments - Presentation (amendment), effective from 2014 IAS 19 Employee benefits was amended in June The impact on the group will be as follows: to eliminate the corridor approach and recognize all actuarial gains and losses in OCI as they occur; to immediately recognize all past service costs; and to replace interest costs and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset). The group is yet to assess the full impact of the amendments. As of December 31, 2011 the group has unrecognised actuarial losses of NOK 1.0 million, and the parent company had unrecognised actuarial losses of NOK 0.0 million. IFRS 9 will replace the classification, measurement and recognition of financial assets and financial liabilities in the current IAS 39. Considering the current scope and use of financial instruments, the impact of the changes is not expected to be material. IFRS 10 provides additional guidance to assist in the determination of control where it is difficult to assess. Based on the current group structure, with only fully owned subsidiaries, the impact of the change is not expected to have an effect on the consolidated group financial statements. The changes in other new standards and amendments are not expected to have any material impact on the group s financial statements. functional currency and presentation currency The group presents its financial statements in NOK. This is also the functional currency of the parent company. Subsidiaries with a different functional currency are translated using the closing date rate for balance sheet items and monthly average rates for the income statement. Translation differences are charged against other comprehensive income. When a foreign subsidiary is partially or completely disposed of or sold, translation differences related to the subsidiary are recognised in the income statement. consolidation The consolidated financial statements include Data Respons ASA and companies in which Data Respons ASA has a controlling interest. A controlling interest is normally achieved when the group owns more than 50% of the shares in the company or the Group is in a position to exercise actual control over the company. Non-controlling interests are included in the Group s equity. The consolidated financial statements include the parent company Data Respons ASA and the following subsidiaries: Data Respons Norge AS (100 %) Certified Computer Technology AS (100 %) Digitas AS (100 %) Data Respons AB (Sweden) (100 %) Sylog Sverige AB (Sweden) (100 %) Professional Finder AB (Sweden) (100 %) Lundinova AB (Sweden) (100 %) Data Respons OY (Finland) (100 %) Data Respons A/S (Denmark) (100 %) Data Respons GmbH (Germany) (100 %) Ipcas GmbH (Germany) (100 %) The consolidated financial statements show the overall financial results and the overall financial position when presenting the parent company Data Respons ASA and its controlling interests in other companies as a single financial entity. Companies in which the group has a sole controlling interest (subsidiaries) have been fully consolidated line by line in the consolidated financial statements. The Profit/loss for the year and share of equity attributed to non-controlling interests are presented on separate lines. Intercompany transactions and balances have been eliminated. The consolidated financial statements have been prepared using uniform principles, which means that the subsidiaries follow the same accounting principles as the parent company, and that these principles have been applied consistently over time. Acquired subsidiaries are recognised in the consolidated financial statements based on the historical cost to the parent company. Historical cost includes best estimate on future additional payments based on earn-out agreements. The historical cost is allocated to identifiable assets and liabilities in the subsidiary, which are recorded in the consolidated financial statements at fair value at the time of acquisition. Acquisition-related costs are expensed as incurred. Identifiable assets are defined as both tangible fixed assets and intangible assets, excluding goodwill. Any excess value or shortfall in value beyond that which can be attributed to identifiable assets and liabilities is recognised in the balance sheet as goodwill. Excess values in the consolidated financial statements are depreciated on a straight-line basis over the anticipated economic life of the acquired assets, less any residual value. Goodwill and excess values attributed to intangible assets with an indeterminable useful life are not depreciated, but are tested for impairment in accordance with IFRS. classification and valuation of balance sheet items Current assets and current liabilities comprise of items that fall due within one year of the balance sheet date, as well as items related to the operating cycle. Other items are classified as non-current assets or non-current liabilities. Financial instruments are classified and measured in accordance 21 DATA RESPONS ASA ANNUAL REPORT 2011

22 Notes Note 1 with IAS 39 Financial Instruments; Recognition and Measurement. For the group it is primarily loans and receivables that are relevant categories. Financial assets with fixed or determinable cash flows that are not listed in an active market are classified as loans and receivables. The group will on occasion use derivatives to hedge against fluctuations in currency exchange rates. Derivatives not designated as hedging instruments according to IFRS are recognised at fair value with changes against other financial income/expenses. Derivatives designated as fair value hedges are recognised at fair value in the statement of financial position. The corresponding change in value of the hedged item is also recognised in the statement of financial position. The net effect of the two is charged against other financial income/ expenses. receivables Accounts receivable and other receivables are recognised in the balance sheet at nominal value, less provisions for estimated losses. Provisions for losses are made on the basis of individual assessment of the individual receivables, as well as past experience. machinery and equipment Machinery and equipment is recognised in the balance sheet and depreciated on a straight-line basis over the estimated useful life less any residual value. Direct maintenance of machinery and equipment is expensed as other operating expenses, while enhancements or improvements that increase the capacity are added to the cost price and depreciated in line with the asset. Depreciation periods and profiles and residual values are assessed annually. intangible assets Intangible assets consist of identifiable intangible assets. Intangible assets are recognised in the balance sheet if it is probable that the expected future financial benefits attributable to the asset will pass to the company and the asset s historical cost can be measured separately and in a reliable manner. Intangible assets with a limited useful life are recognised at historical cost, less accumulated depreciation and impairment. Depreciation is charged on a straight-line basis over the estimated useful life. The depreciation period and method are reviewed annually. Intangible assets with an indeterminable useful life are not depreciated, but are tested annually for impairment at the balance sheet date, or more frequently if there is an indication of impairment. goodwill The difference between the historical cost at the time of acquisition and the fair value of net identifiable assets at the time of acquisition are classified as goodwill. Goodwill is recognised in the balance sheet at historical cost, less any accumulated impairments. Goodwill is not depreciated, but is tested annually for impairment at the balance sheet date, or more frequently if there is an indication of impairment. In cases where negative goodwill is identified in connection with business combinations, the purchase price allocation is reassessed before any negative goodwill is recognised in income. research and development Expenses related to research activities are recognised in the income statement when they are incurred. Expenses relating to development activities are recognised in the balance sheet if these relate to an identifiable product that is technically and commercially feasible and the group has adequate resources to complete the development. Expenses that are recognised in the balance sheet include materials expenses, direct payroll expenses and other directly attributable expenses. Capitalised development expenses are recognised in the balance sheet at historical cost, less any accumulated depreciation and write-downs. Capitalised development expenses are depreciated over the estimated useful life of the asset. Intangible assets under development, however, are not depreciated and are tested for impairment annually or more frequently if there is an indication of impairment. valuation of investments in subsidiaries Subsidiaries are valued in accordance with the historical cost method in the parent company s financial statements. Investments are valued at the historical cost of the shares unless a write-down of the shares has been necessary, in which case they are written down to fair value. provisions Provisions are made in the financial statements where the Group has a liability (legal or self-imposed) as a result of a past incident, if it is probable that a financial settlement will be made as a result of this liability, and if the amount of such a settlement can be measured reliably. If the impact is significant, the provisions are calculated by discounting the estimated future cash flows by a discount rate before tax that reflects the market s pricing of the current value of money and, where relevant, risks specifically linked to the liability. Provisions for restructuring are included if the group has approved a detailed and formal restructuring plan, and the restructuring has either started or been announced. Provisions for loss-making contracts are included when the group s estimated revenue from a contract is lower than the estimated expenses that will be incurred to fulfil the contractual obligations. revenue recognition Revenue is recognised when it is probable that transactions will generate future financial benefits that will pass to the company, and the value of such benefits can be estimated reliably. Sales revenue is recognised net of value added tax and discounts. The group has revenue from three different categories: products Revenue from the sale of goods is recognised when delivery has been made and most of the risk and return potential has been transferred. services Revenue from the sale of services is recognised according to the stage of completion. The stage of completion is measured as accrued hours in relation to total estimated hours. Estimated loss on contracts will be recognised in the income statement in its entirety in the period when it has been identified. solutions Revenue from the sale of solutions is a combination of the sale of development services and the subsequent delivery of products. The recognition of revenue from solutions is dependent on the pricing model selected. In cases where the customer pays separately for development work and the products, and pricing is established independently, revenue is recognised in accordance with the principles applicable to services and products described above. If the customer only pays for the finished product, the company, in cases where there is a contractual delivery, recognises revenue and capitalises development work in line with the degree of completion. This is subsequently expensed in line with the delivery of the products. Interest income is recognised as it is accrued. Dividends are recognised as income when they have been approved by the general meeting of the distributing company. inventories Purchased inventory is valued at the lower of historical cost (using the FIFO principle) or net realisable value. Write-downs are made for any inventory that is assumed to be obsolete. currency transactions in foreign currency Transactions in foreign currencies are translated at the rate in effect on the date of the transaction. Monetary items in foreign currencies are translated to Norwegian kroner (NOK) using the rate in effect at the balance sheet date. Exchange rate fluctuations are recognised in the income statement on an ongoing basis during the accounting period. 22 DATA RESPONS ASA ANNUAL REPORT 2011

23 Notes Note 1 foreign operations The assets and liabilities of foreign operations, including goodwill, are translated into Norwegian kroner (NOK) using the exchange rate in effect at the balance sheet date. Revenue and expenses relating to foreign operations are translated into Norwegian kroner (NOK) using monthly average exchange rates. Translation differences resulting from the translation of net investments in foreign operations are specified as currency translation differences under other comprehensive income. government grants Government grants are recognised in the financial statements where it is reasonably certain that the company will fulfil the terms of the grants, and that the grants will be received. Operating subsidies are accounted for systematically over the period that the subsidies are received. Grants are recorded in the financial statements as a deduction in the expenses they are meant to cover. pensions Pension expenses and pension liabilities are calculated on a linear earning basis in accordance with assumptions regarding the discount rate; future adjustment of wages, pensions and social security benefits; future return on pension assets; as well as actuarial assumptions regarding mortality, voluntary retirement, etc. The pension assets are valued at fair value less the net pension liabilities in the balance sheet. Changes in pension liabilities due to changes in pension plans are allocated over the estimated remaining earning period. The same applies to actuarial gains or losses (estimated discrepancies) exceeding 10 % of the higher of the pension liabilities or pension assets (corridor). Employer s social security contributions are charged as an expense based on the pension premium paid for insured (group) pension schemes, and are accrued in accordance with the change in the pension liabilities for uninsured pensions. Defined contribution pension schemes are expensed as they are due. employee share option scheme Employee share options are calculated at the fair value at the time they are granted and accrued on a linear basis over the vesting period until the exercise date. The employer s social security contributions linked to vested options are accrued correspondingly over the life-span of the option. income tax Income tax expense in the income statement comprises both income tax payable for the period and changes in deferred tax. Deferred tax is calculated at the current tax rate on the basis of temporary differences between the financial accounting and tax-related values, and tax loss carry forward at the end of the financial year. Negative and positive temporary differences that reverse or may reverse during the same period are offset and the tax effect of the net amount is calculated. The tax loss carry forward is recognised in the balance sheet as a deferred tax asset if it is considered adequately probable that the losses can be utilised in the future. cash and cash flow statement The cash flow statement has been prepared in accordance with the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term liquid investments that can be converted immediately and without any significant exchange rate risk to a known cash amount, and with maturity date less than three months from the purchase date. segments The group is organised into operating segments based on the underlying operations as these are reported to and monitored by the group management. The different geographical areas form the operating segments and the financial information is retrieved and produced based on geographical operating segments. contingent liabilities and assets Contingent liabilities are not recognised unless these arise from, and are assessed as a result of business combinations. Material contingent liabilities are disclosed unless the probability of the liability materialising is remote. Contingent assets are not recognised in the annual financial statements. events after the balance sheet date New information received after the balance sheet date relating to the company s financial position at the balance sheet date has been taken into consideration in preparing the annual financial statements. Events occurring after the balance sheet date that do not affect the company s financial position at the balance sheet date, but that will affect the company s financial position in the future are disclosed in if these are material. use of estimates The management has used estimates and assumptions that have affected assets, liabilities, income, expenses and information on potential liabilities. This applies in particular to the recognition of revenue related to long-term manufacturing projects, development projects, capitalised development expenses, pension liabilities and the valuation of goodwill. Accounting estimates may change as a result of future events. Estimates and their underlying assumptions are assessed continuously. Changes to accounting estimates are included in the financial statements for the period in which the change occurs. If the changes also apply to future periods, the impact is spread over the current and future periods. estimated impairment of goodwill The group tests annually whether goodwill has suffered any impairment. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates (see Note 3). revenue recognition The group uses the percentage-of completion method in accounting for its fixed-price contracts to deliver certain solutions projects. Use of the percentage-of completion method requires the group to estimate the services performed to date as a proportion of the total services to be performed. pension benefits The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. All significant defined benefit plans in the group are related to Norwegian employees. The group relies on recommended assumptions as presented by the Norwegian Accounting Standards Board for calculation of Norwegian pension liabilities. 23 DATA RESPONS ASA ANNUAL REPORT 2011

24 Notes Note 2 NOTE 2 operating segments Data Respons risk and return profile is largely based on the localisation of its customers, who are in different markets. The group s operations are therefore based on the geographic identification of the companies, which also corresponds with management reporting. All segments delivers solutions, products and services to its local market. Transactions and transfers between the group s segments are carried out on ordinary commercial terms, corresponding to the terms used for sexternal parties. The group has one major customer that accounts for more than ten percent of the group s revenue in The customer accounted for a total of NOK million in revenue and belongs to the Norwegian operating segment. operating segments 2011 NOK 1000 Norway Sweden Denmark Germany Unallocated/ eliminations* Group External operating revenue Internal operating revenue Operating revenue Operating expenses Depreciation Impairment of goodwill Operating profit/loss Interest income Interest expense Other financial items Profit/loss before tax Income tax expense Profit/loss for the year Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Total assets Total liabilities DATA RESPONS ASA ANNUAL REPORT 2011

25 Notes Note 2 operating segments 2010 NOK 1000 Norway Sweden Denmark Germany Unallocated/ eliminations* External operating revenue Internal operating revenue Operating revenue Operating expenses Depreciation Operating profit/loss Interest income Interest expense Other financial items Profit/loss before tax Income tax expense Profit/loss for the year Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Total assets Total liabilities Group operating segments 2009 NOK 1000 Norway Sweden Denmark Germany Unallocated/ eliminations* Group External operating revenue Internal operating revenue Operating revenue Operating expenses Depreciation Impairment of goodwill Operating profit/loss Interest income Interest expense Other financial items Profit/loss before tax Income tax expense Profit/loss for the year Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities * The item unallocated/eliminations includes non-allocated group expenses (ASA) and eliminations of intercompany revenue and expenses. In addition, the item includes nonallocated Total assets and liabilities related to the group (ASA), deferred tax 105 assets/liabilities, 222 goodwill, as well as eliminations of intercompany balances Total liabilities * The item unallocated/eliminations includes non-allocated group expenses and cash flow (ASA) and eliminations of intercompany revenue, expenses and cash flow. In addition, the item includes not allocated assets and liabilities related to the group (ASA), deferred tax assets/liabilities, goodwill, as well as eliminations of intercompany balances. 25 DATA RESPONS ASA ANNUAL REPORT 2011

26 Notes Note 2 Revenue is reported to mangement in three main categories: Solutions, products and services. Revenue recognition principles for the three categories of revenue are described in Note 1. In the solutions category, Data Respons develops custom solutions by combining engineering services with standard computer products. Product revenue is related to deliveries of standard embedded computer products, while services revenue relates to consultancy services for a range of technology related development projects. NOK 1000 revenue 2011 Norway Sweden Denmark Germany Unallocated/ eliminations* Solutions revenue Products revenue Services revenue Total other current liabilities Group NOK 1000 revenue 2010 Norway Sweden Denmark Germany Unallocated/ eliminations* Solutions revenue Products revenue Services revenue Total other current liabilities Group NOK 1000 revenue 2009 Norway Sweden Denmark Germany Unallocated/ eliminations* Solutions revenue Products revenue Services revenue Total other current liabilities Group 26 DATA RESPONS ASA ANNUAL REPORT 2011

27 Notes Note 3 NOTE 3 Intangible assets, machinery and equipment GROUP DATA RESPONS ASA NOK 1000 Goodwill Other intangible assets Total intangible assets Machinery and equipment Machinery and equipment Cost or valuation as of January 1, Additions Disposals Translation differences Cost or valuation as of December 31, Accum. depr. and impairm. as of January 1, Depreciation for the year Disposals Translation differences Accum. depr. and impairm. as of December 31, Net book value as of December 31, Cost or valuation as of January 1, Additions Disposals Translation differences Cost or valuation as of December 31, Accum. depr. and impairm. as of January 1, Depreciation for the year Impairment for the year Disposals Translation differences Accum. depr. and impairm. as of December 31, Net book value as of December 31, Both the parent company and group use straight-line depreciation for all machinery and equipment. The estimated economic life of machinery and equipment is 3 to 5 years. Intangible assets are depreciated over the life of the asset, which is estimated to be from 2.5 to 10 years. Expensed lease rentals in the group (NOK 1000) Rental of premises in Norway Rental of premises outside Norway Operational leasing of IT equipment Operational leasing of vehicles The group does not have any purchase options on the properties. In Norway the lease for the head office at Høvik ends at June 30, 2015 with an option for 5 years extention, while the terms of lease for the foreign units vary from a lease requiring 9 months notice to a lease with an expiry date of April 30, The leases will continue on unchanged terms. Leasing contracts on vehicles have a duration of 36 months. 27 DATA RESPONS ASA ANNUAL REPORT 2011

28 Notes Note 3 intangible assets Other intangible assets consist of capitalised development expenses, as well as intangible assets recognised at fair value upon the acquisition of companies. In 2011, no development project expenses were capitalised. changes in goodwill 2011 There were no acquisitions in All goodwill is recorded in local currency, and as a result, changes in currency exchange rates will affect the value of goodwill. Compared to the currency rate at the acquisition date, goodwill was adjusted upwards by NOK at the end of 2011, compared to an upwards adjustment of NOK at the end of impairment of goodwill per december 31, 2011 The group s impairment test showed a need for NOK 87.3 million impairment of goodwill, distributed to NOK 53.3 million for Data Respons A/S (Denmark), NOK 18.2 million for Data Respons AB (Sweden), NOK 5.8 million for Lundinova AB (Sweden) and NOK 10.1 million for Ipcas GmbH (Germany). impairment test of goodwill Goodwill recognised through the acquisition of companies and units is allocated to the individual unit if the cash flows are still identifiable. In cases where units have been merged and operations are integrated, it is difficult to isolate the cash flows. In these cases the combined goodwill will be assessed for the merged unit. Goodwill is allocated as follows: (NOK 1000) Data Respons Norge AS Data Respons AB (SE) Sylog Sverige AB (SE) Lundinova AB (SE) Data Respons A/S (DK) Ipcas GmbH (DE) Total The recoverable amount for the cash flow-generating units is calculated based on the value the asset will generate for the business operations. Cash forecasts based on budgets approved by the Board of directors for 2012 with a projection for a five-year period based on the assumptions below. Cash flows beyond the budgeted period are extrapolated using estimated growth rates for the individual units. Future EBIT margin and cash flow is based on the management s best estimate and judgment. The most import assumptions for calculation of the recoverable amount are as follows: discount rate: A calculated WACC of 11.0 % after tax has been used as the discount rate for all units. CGUs in the group are based in the Nordic / Northern European region, and regional differences are not estimated to make a significant impact on the applied WACC rate at the balance sheet date. The corresponding WACC before tax is 15,3 %. The WACC before tax is calculated on the basis of the applied WACC after tax and using a 28 % tax rate. revenue growth: Historically the Group has achieved an organic (proforma) growth of approximately 20 %, and management believe that the long-term outlook for the embedded solutions market is prosperous. However, in these uncertain times it is reasonable to expect a lower growth rate, and to reflect the uncertain conditions the yearly growth rate has been set at 0-10 % in the five-year period. extrapolated growth rate: The growth rate beyond five years has been set at 0 % for all units. ebit margin: The group has used EBIT margins that reflect management s best estimate of earnings potential in the period. EBIT margins applied in the calculation of value-in-use range from 1 % to 15 %, dependant on past financial performance and expected profit margins for each unit. sensitivities: For goodwill related to Data Respons Norge AS and Sylog Sverige AB, no indications of impairment losses have been identified in The recoverable amounts of the units exceed their carrying amounts by significant margins. A sensitivity analysis have been performed for Data Respons Norge AS and Sylog Sverige AB, in order to determine if a reasonable change in key assumptions would cause the units carrying amounts to exceed their recoverable amounts. A reduction in the estimated growth rate by 5 percentage points, a reduction in the estimated EBIT margin by 1 percentage points or an increase in WACC after tax by 1 percentage points would not lead to impairment losses in either of the two units. Goodwill related to Data Respons AB and Ipcas GmbH has been impaired in December At the balance sheet date, the carrying value of each unit is equal to the unit s recoverable value. Any changes in key assumptions in the calculation of recoverable amount would lead to changes in the recognised impairment. For Data Respons AB, an increase in WACC after tax by 1 percentage point would lead to an additional impairment of NOK 4.0 million, a reduction of the growth rate by 5 percentage points would lead to an additional impairment of NOK 5.3 million and a reduction in the EBIT margin by 1 percentage point would lead to impairment of all remaining goodwill related to the unit, NOK 10.4 million. For Ipcas GmbH, an increase in WACC after tax by 1 percentage point would lead to an additional impairment of NOK 2.0 million, a reduction of the growth rate by 5 percentage points would lead to an additional impairment of NOK 3.4 million and a reduction in the EBIT margin by 1 percentage point would lead to an additional impairment of NOK 1.5 million. All goodwill related to Data Respons A/S and Lundinova AB has been impaired during DATA RESPONS ASA ANNUAL REPORT 2011

29 Notes Note 4 NOTE 4 subsidiaries and other investments GROUP Company Date of acquisition Registered office Ownership and voting interest Data Respons Norge AS Bærum 100 % Certified Computer Tehcnology AS Bærum 100 % Data Respons AB * Kista (SE) 100 % Data Respons A/S Herlev (DK) 100 % Data Respons OY Espo (FI) 100 % Data Respons GmbH Karlsruhe (DE) 100 % Digitas AS** Bærum 100 % Sylog Sverige AB Kista (SE) 100 % Professional Finder AB Kista (SE) 100 % Lundinova AB Lund (SE) 100 % Ipcas GmbH Erlangen (DE) 100 % * Data Respons Syrén AB merged with Data Respons AB with effect from January 1, 2011 with Data Respons AB as the acquiring company. ** Centrex AS changed its name to Digitas AS on March 9, The investments are carried using the historical cost method in the parent company s financial statements. DATA RESPONS ASA Company Currency Issued capital Shareholding Book value (NOK 1000) Data Respons Norge AS NOK % Certified Computer Technolgy AS NOK % - Data Respons AB (SE) SEK % Data Respons OY (FI) EUR % Data Respons A/S (DK) DKK % - Data Respons GmbH (DE) EUR % Digitas AS NOK % - Sylog Sverige AB (SE) SEK % Lundinova AB (SE) SEK % 484 Ipcas GmbH (DE) EUR % Total The impairment test performed as of December 31, 2011 resulted in an impairment of NOK million of book value in the relevant subsidiaries. The impairment amounted to NOK 90.7 million for Data Respons A/S (Denmark), NOK 39.0 million for Data Respons AB (Sweden), NOK 7.8 million for Lundinova AB (Sweden) and NOK 5.3 million for Ipcas GmbH (Germany). The impairment test for book value of subsidiaries in the Data Respons ASA company accounts were based on the same assumptions as used in the impairment test of goodwill in the group accounts. Refer to Note 3 for further specification. 29 DATA RESPONS ASA ANNUAL REPORT 2011

30 Notes Note 5-6 NOTE 5 business combinations business acquisitions There has been no acquisitions in 2011, 2010 or NOTE 6 inventories goods purchased for resale GROUP DATA RESPONS ASA NOK Historical cost Written down to fair value General provisions for obsolescence Book value Value of inventory pledged as collateral DATA RESPONS ASA ANNUAL REPORT 2011

31 Notes Note 7-8 NOTE 7 trade and other receivables GROUP DATA RESPONS ASA NOK Trade receivables Provisions for impairment of receivables Trade receivables, net Accrued revenue Prepayments Other current receivables Total other receivables Total receivables Provisions as of 1 January Realised losses Provisions for the period Provisions as of December Losses on trade receivables are classified as other operating expenses in the income statement. Maximum credit risk is represented by the row Total receivables. aging analysis of Trade receivables (NOK 1000) Carrying amount Not due Number of days past due date Trade receivables as of December 31, Trade receivables as of December 31, Trade receivables as of December 31, NOTE 8 intercompany balances DATA RESPONS ASA NOK 1000 Current receivables Current liabilities Data Respons Norge AS* Data Respons AB Sylog Sverige AB Lundinova AB Data Respons A/S Data Respons GmbH Total *Digitas AS merged with Data Respons Norge AS with effect from January 1, The comparative figures have been adjusted accordingly. Intercompany balances are mainly due to a short term loan provided to Data Respons AB of NOK 12.8 million and deliveries of group management services from Data Respons ASA to the subsidiaries. Sales revenue for Data Respons ASA consists mainly of group management fee. 31 DATA RESPONS ASA ANNUAL REPORT 2011

32 Notes Note 9 NOTE 9 SHARE capital, shareholders, earnings per share The registered share capital of Data Respons ASA consisted of shares with a par value of NOK 0.50 as of December 31, Each share carries one vote. A total of 4.9 million shares were traded on the Oslo Stock Exchange in 2011, a decrease from 22.7 million shares in At the end of the year Data Respons ASA had 841 Norwegian shareholders and 31 foreign shareholders. The foreign shareholders owned 1.8 % of the shares. During 2011 no treasury shares were bought or sold. The company did not own any treasury shares at the end of the year. There were no new share issues during LIst of 20 largest shareholders as of december 31, 2011 Shareholder Ordinary shares Proportion of ownership CUSTOM HOLDING AS ,10 % MP PENSJON PK ,98 % DYVI CAPITAL AS ,56 % BRAGANZA AS ,21 % FOUGNER INVEST AS ,69 % VARNER INVEST AS ,11 % HAAKON MORTEN SÆTER ,62 % DNB NOR SMB VPF ,09 % SILVERCOIN INDUSTRIES AS ,04 % STOREBRAND VEKST ,89 % BERNT AS ,71 % STOREBRAND NORGE I ,69 % LOLIGO AS ,66 % VERDIPAPIRF.STOREB.NORGE INSTITUS ,64 % P-INVEST AS ,44 % STOREBRAND LIVSFORSIKRING AS ,29 % SKAGEN VEKST ,24 % RO INVEST AS ,16 % BIRK INVESTMENT AS ,09 % LEIF HÜBERT ,04 % Total ,24 % other ,76 % Total number of shares ,00 % power of attorney to issue shares and purchase treasury shares Passed Type Year issued Maximum share limit Shares issued/ purchased 2011 Remaining number of shares Duration Capital increase Until Purchase of treasury shares Until DATA RESPONS ASA ANNUAL REPORT 2011

33 Notes Note 9 The Board has been granted power of attorney to increase the company s share capital by a maximum of NOK through the issue of maximum new shares, each with a par value of NOK The authorisation is valid until the annual general assembly in 2012 and can be used by the Board in connection with acquisitions of new companies as part of the company s strategy or cash issues. The company s shareholders have waived their pre-emptive subscription rights in accordance with Section 10-5, cf. Section 10-4, of the Norwegian Public Limited Companies Act. The board may decide that the share deposit shall take the form of assets other than cash or rights to incur particular obligations for the company pursuant to Section 10-2 of the Norwegian Public Limited Liability Companies Act. The Board has been granted power of attorney to purchase up to shares with an equivalent nominal value of NOK , in accordance with the Norwegian Public Limited Companies Act Section 9-4. The amount which may be paid per share is to be minimum NOK 1.00 and maximum NOK The Board is free to choose the method by which the purchase or sale is executed. The authorisation is valid until the annual general meeting in The purpose of the authorisation is to give the company the facility to implement the buy-back of shares with subsequent cancellation, in order to optimise the company s capital structure. Furthermore, the company wishes to be able to use such authorisation to purchase and sell treasury shares in connection with complete or partial settlement for acquired companies. The power of attorney can only be used if the company has distributable equity. There is no distributable equity in the company as of December 31, earnings per share The earnings per share ratio is calculated by dividing the Profit/loss for the year attributable to the company s shareholders by a time-weighted average of outstanding ordinary shares throughout the year, less the company s treasury shares. The diluted earnings per share ratio is based on the same calculation as above, however, it also takes into account potential shares that have been outstanding during the period and will have a diluting effect, i.e. reduce the earnings per share for the ordinary shares. The company has only one category of potential shares that can result in dilution: share options. Potential ordinary shares are treated as dilutive only if their conversion to ordinary shares would decrease profit per share or increase loss per share from continuing operations attributable to ordinary equity holders Profit/loss for the year attributable to the equity holders of the company (NOK 1000) Weighted average number of outstanding shares (1000) Effect of dilution: -Employee share option scheme Weighted average number of outstanding shares, diluted (1000) Earnings per share, basic Earnings per share, diluted calculation of time-weighted shares Date Number of shares* Number of days Weighted number of shares No distribution of dividends has been proposed for the 2011 financial year. reduction of share premium At December 31, 2011 the parent company had a share premium of NOK million and other equity amounted to NOK million. The board of directors proposes that share premium is reduced in order to covered the uncovered losses in the parent company, according with the Norwegian Public Limited Companies Act Section DATA RESPONS ASA ANNUAL REPORT 2011

34 Notes Note 10 NOTE 10 PENSIONS The parent company is required to operate a company pension scheme pursuant to the Mandatory Occupational Pension Act, and operates a pension scheme that meets this requirement. This scheme covered a total of 13 people in As of December 1, 2007 the parent company and Data Respons Norge AS changed from a defined benefit pension scheme to a defined contribution pension scheme, but kept the disability part as a defined benefit scheme. The group as a whole has a defined benefit pension scheme that covers 151 people in total. This relates mainly to the disability part. The liabilities are covered through an insurance company. The calculations are performed by an actuary and are based on the IFRS standard. The annual pension expenses are included under payroll expenses, and they consist of changes in the liabilities and pension funds, as well as contributions to the collective pension scheme. In addition to the aforementioned schemes in Norway, the group s subsidiaries have, with one minor exception, defined contribution pension schemes, and the expenses associated with these schemes are included under payroll expenses in the income statement. The expenses broken down into defined contribution and defined benefit schemes are specified in Note 15. GROUP DATA RESPONS ASA NOK the pension expense is calculated as follows: Net present value of current year s accrued pension benefits Interest cost on accrued pension liabilities Expected return on pension assets Amortisation of actuarial gains/losses Pension expenses for the year pension liabilities and pension assets: Estimated defined benefit obligation Estimated value of pension assets Net estimated pension liabilities Unrecognised actuarial gains/losses Net pension liabilities changes in the liabilities: Net pension liabilities as of January Recognised pension expenses Premium payments Net pension liabilities as of December The following assumptions have been used for the calculation of the pension expenses and net pension liabilities: Discount rate 3.30 % 3.20 % 4.40 % Return on pension funds 4.80 % 4.60 % 5.60 % Future salary increases 4.00 % 4.00 % 4.25 % Annual basic amount adjustment 3.75 % 3.75 % 4.00 % Future pension increases 0.70 % 0.50 % 2.75 % Percentage distribution of pension assets by investment category: Equities 10.4 % 15.6 % 3.8 % Bonds 15.2 % 16.6 % 29.9 % Money market 21.7 % 13.2 % 14.0 % Long-term bonds 33.4 % 32.5 % 28.8 % Real estate 18.0 % 16.1 % 16.8 % Other 1.2 % 6.0 % 6.7 % The actuarial assumptions are based on normal assumptions used by the insurance industry with regard to demographic factors: Table K DATA RESPONS ASA ANNUAL REPORT 2011

35 Notes Note 11 NOTE 11 income tax GROUP DATA RESPONS ASA Summary of temporary differences (NOK 1000) Receivables Other current assets Provisions for contingent liabilities Pensions Work in progress Group contributions* Total Tax loss carryforward Total positive/(negative) temporary differences Deferred tax asset at current tax rate Of which, deferred tax assets not recognised Deferred tax assets in the balance sheet Deferred tax liability at current tax rate Deferred tax liability in the balance sheet * In accordance with IFRS, group contributions are entered as income in the parent company the year after the allocation for tax purposes in the subsidiaries. The deferred tax assets in the balance sheet relate primarily to the tax loss carryforward in the Norwegian companies. These companies have, with the exception of a challenging 2009, shown healthy profits, and it is expected that it will be possible to utilise the tax loss carryforward. Unrecognised deferred tax assets relate to the tax loss carryforward in Denmark. The tax loss can be carried forward indefinitely. GROUP DATA RESPONS ASA Income tax expense comprises (NOK 1000) Income tax payable in Norway Income tax payable outside Norway Total income tax payable Change in deferred tax in Norway Change in deferred tax outside Norway Total change in deferred tax Unrecognised change in deferred tax Total income tax expense/(revenue) DATA RESPONS ASA ANNUAL REPORT 2011

36 Notes Note GROUP DATA RESPONS ASA Calculation of tax base for the year (NOK 1000) Profit/loss before tax % tax tax effect of: Permanent differences Change in not-recognised deferred tax Adjustment from previous years Differences in tax rates Income tax expense (revenue) for the year Effective tax rate -12 % -45 % 7 % -1 % 105 % -29 % NOTE 12 other current liabilities GROUP DATA RESPONS ASA NOK Prepayments from customers Accrued wages/bonuses/holiday pay Accrued expenses Other current liabilities* Total other current liabilities * Other current liabilities consists of additional payments according to earn-out agreements that are due within a year. See Note 13 for specification. 36 DATA RESPONS ASA ANNUAL REPORT 2011

37 Notes Note NOTE 13 other provisions for liabilities NOK 1000 GROUP Other provisions Total DATA RESPONS ASA Other provisions Provisions as of January 1, Utilised during the year Provisions as of December 31, Total Other provisions In connection with acquisition of companies, an earn-out agreement is often entered into, where the previous owners receive additional payments based on the performance of the acquired company in a specified time period after the acquisition. The additional payments will be made in cash or in shares in Data Respons ASA based on market rate. Earn-out obligations from acquisitions were settled during the second quarter of 2011, and there are noe remaining obligations as of December 31, GROUP DATA RESPONS ASA NOK mortgages and guarantees Debt secured by mortgage Guarantees book value of secured assets used as collateral Machinery and equipment Trade receivables Inventories Total A guarantee of NOK has been provided in connection with lease agreements. In addition, a guarantee of DKK has been provided in connection with fulfilment of a customer contract in Denmark. Guarantees and overdraft facilities are secured by a lien on inventory, machinery and equipment and trade receivables in Data Respons Norge AS. A total lien of NOK 40 million has been placed on inventories, a total lien of NOK 7.5 million on its machinery and equipment and a total lien of NOK 70 million has been placed on trade receivables. statement of financial support Data Respons ASA has provided a statement of financial support on behalf of Data Respons A/S. The statement confirms that Data Respons ASA, until December 31, 2012, will provide financial support to the subsidiary of up to DKK 5 million if the subsidiary is not able to pay its liabilities as they are due. NOTE 14 related party transactions The Board of directors, group management and other key employees are required to report any potential related party transactions. Other than ordinary business transactions between group companies there have been no related party transactions in All transactions within the group are based on ordinary commercial terms using the arm s length principle. For the parent company, transactions with group companies consists mainly of fees for group management services. See Note 15 for information on the remuneration of group management and Board of Directors, as well as Note 8 for balances between Data Respons ASA and other group companies. 37 DATA RESPONS ASA ANNUAL REPORT 2011

38 Notes Note 15 NOTE 15 payroll expenses, employees, remuneration and loans GROUP DATA RESPONS ASA Payroll expenses (NOK 1000) Wages and salaries Social security tax Pension expenses, defined benefit scheme Pension expenses, defined contribution scheme Other benefits Total The average number of employees during the financial year was 24 in the parent company. The average number of employees in the group was 459, and there were 446 employees at the end of the year. There were 70 female employees in the group, 12 of whom were middle managers. SHARES, OPTIONS AND REMUNERATION TO THE CEO, KEY EMPLOYEES, BOARD OF DIRECTORS AND NOMINATion COMMITTEE Salaries and fees Pensions Other benefits in kind Total remuneration No. of shares No. of options Kenneth Ragnvaldsen, CEO Rune Wahl, CFO Susan Hagerty, EVP Sales & Marketing Ole Jørgen Fredriksen, Chairman of the Board Elen Bente Loe, Board member Kathryn Moore Baker, Board member* Ulla-Britt Fräjdin Hellqvist, Board member Erik Langaker, Board member Steinar Hoen, former Board member Silvija Seres, former Board member Elisabeth Endrestad, Board member, employee representative Åsa Grübb Weinberg, Board member, employee representative Haakon Sæter, Nomination committee member Narve Reiten, Nomination committee member Andreas Berdal Lorentzen, Nomination committee member * Kathryn Moore Baker is Chairman of the Board at Custom Holding. In accordance with IFRS 2, the fair value of options granted to employees is accrued over the vesting period and in 2011 a total of NOK was expensed related to options granted to the CEO and key employees, NOK per option. On April 29, 2011 the Annual General Meeting decided that the remuneration of the Board of Directors should be a fixed salary of NOK , and for respectively the chairman of the board, shareholder elected board members, and employee representatives. Based on the current composition of the Board of Directors this amounts to a total of NOK in renumeration. No loans or guarantees have been provided to the Board of Directors, key employees, other employees or their related parties. There are no shareholder agreements. 38 DATA RESPONS ASA ANNUAL REPORT 2011

39 Notes Note 15 BOARD S GUIDELINES AND MAIN PRINCIPLES FOR THE STIPULATION OF SALARIES AND OTHER REMUNERATION TO KEY EMPLOYEES In accordance with the provisions of the Public Limited Companies Act, the Board of Directors has prepared the following declaration of guidelines and main principles for the stipulation of salaries and other remuneration for key employees. The object of designing a compensation package for the CEO and other key employees is to provide a competitive package that contains incentives to strive for profitable growth and increase the creation of value for the shareholders within the scope of the company s adopted values and strategies. The individual manager shall be paid a fixed basic salary in line with market salaries for corresponding positions in comparable companies in Norway. A variable salary shall be paid in addition to the fixed salary. The variable salary is dependent on achieving profitability improvement and growth targets for the group. For the CEO and the other key employees the variable salary will be a maximum of 40 % of the fixed base salary. The company has a share option scheme for group management and managers in the group s subsidiaries in accordance with the approved framework at the annual general meeting The share option scheme was established to give the company s management incentives to strive to create value for the shareholders. The Board of Directors is in general positive to performance related arrangements which are linked to value creation for shareholders or the company s earnings performance over time. The CEO and group management is covered by the company s pension scheme on the same terms as other employees. This pension scheme is described in Note 10. The CEO is entitled to 12 months salary after termination or amendment of his position/employment. Other members of group management have a mutual notice period of up to six months and no special arrangements. employee share option scheme On April 22, 2010 the Annual General Meeting of Data Respons ASA approved a share option program for 11 employees in top management positions with a total scope of options. The options will be issued in 3 equal parts over a 3 year period and can only be exercised in 3 years. The strike price will be set at market price the start of each vesting period for the 1/3 issued. In May 2010 the strike price for the first vesting period was set to NOK In May 2011 the strike price for the second vesting period was set to NOK The first options were issued in May The next options will be issued in May 2012, and the last options under this agreement will be issued in 2013, totalling options. Movements in the number of outstanding share options and the associated weighted average exercise prices are as follows: Average Exercise price 2011 Options Average Exercise price Options Average Exercise price Options NOK NOK NOK As of January Granted Forfeited Exercised Expired As of December The fair value of the options granted to employees has been calculated using the Black & Scholes valuation model for options. The most important input data included the share price of NOK 8.49 when granted, estimated exercise price of NOK 8.27 for all 3 years, estimated volatility of %, % and % based on the share prices over a period of 1, 2, and 3 years leading up to the issue date, respectively, risk-free interest rate of %, and a term of 1, 2 and 3 years, respectively. The cost is calculated based on the total of options to be issued and will be accrued over the vesting period with deductions for the estimated number of forfeited options. In 2011, a total of NOK were expensed for the option programme. remuneration to the auditor GROUP DATA RESPONS ASA NOK Auditing services Other certification services Tax advice Other non-auditing services Remunerations to the auditor are presented net of VAT. 39 DATA RESPONS ASA ANNUAL REPORT 2011

40 Notes Note NOTE 16 financial items GROUP DATA RESPONS ASA NOK financial income Interest received from Group companies Interest income Other financial income Total other financial income financial expenses Interest expenses Other financial expenses Total other financial expenses NOTE 17 cash and cash equivalents GROUP DATA RESPONS ASA NOK Cash and bank deposits of which restricted Unrestricted cash and cash equivalents Unutilised overdraft facilities Unutilised other credit facilities Cash reserve The Data Respons group has established a corporate account system in which Data Respons ASA is the corporate account holder, while the other group companies are subaccount holders. The bank can set off any withdrawals or deposits against each other, so that the net position represents the balance between the bank and Data Respons ASA. As of December 31, 2011 the net position in the corporate account system was NOK million. The overdraft limit for the corporate cash pool system is NOK 40 million, leaving NOK 26.4 million as available overdraft as of December 31, The Data Respons group also has available NOK 40 million in credit facilities, whereof NOK 15 million were utilised as of December 31, Available credit facilities amount to NOK 25 million. The NOK 40 million credit facility is available to the company until March 10, The total unutilised cash reserve for the group at December 31, 2011 is NOK 51.4 million. There are financial covenants which may restrict the use of the credit facilities. The equity-to-asset ratio should be minimum 40 % for the group. As of December 31, 2011 the ratio was 55 %. Furthermore, there is a covenant requirement linked to EBITDA where the net interest bearing debt divided by a 12 months rolling consolidated EBITDA should not exceed 3.0. As of December 31, 2011 the ratio was DATA RESPONS ASA ANNUAL REPORT 2011

41 Notes Note NOTE 18 other operating expenses GROUP DATA RESPONS ASA NOK Expenses related to premises and equipment External services Marketing expenses Other operating expenses Total NOTE 19 Financial Risk Management The group s activities expose it to a variety of financial risks, including price risk, interest rate risk, currency risk, credit risk and liquidity risk. Overall these risks are regarded as low. Risk management is performed by the group s central finance department under the guidelines set out by the Board of Directors. The main principle is to minimise exposure to financial risk, and the group holds no financial assets or liabilities for speculative purposes. There have been no significant changes in the group s objectives, policies or processes for managing capital during the reporting period. market price risk As of December 31, 2011 all material financial assets and liabilities are classified as loans or receivables under IAS 39, and their value is not subject to any market price risk. credit risk The group s exposure to non-payment of contractual obligations is reflected by outstanding trade receivables and accrued revenue specified in note 7. Identified default risks for individual customers are reflected in bad debt allowances. The group s customers largely consist of large and medium-sized companies with good solvency, and the customer base is diversified into different vertical market segment. Neither of the group s operating segments had any significant concentration of credit risk. Credit checks are performed on new customers. Historically, bad debt losses have been low, and although the current economic conditions will increase the risk of non-payment, the group does not expect to see any major increase in losses. liquidity risk and capital management The primary objective of the group s capital management is to maintain a healthy capital ratio to support the group s continued operations and potential expansion. The group will primarily finance the expansion through cash generated by the operational activities and equity. To cover temporary funding needs, the group has secured a credit facility of NOK 80 million. There are financial covenants which may restrict the use of the credit facilities, see note 17 for specifications regarding cash and credit facilities. The group has days in credit terms from the main suppliers. Surplus cash holdings will be kept in interest-bearing bank accounts with reputable banks. As of December 31, 2011 the group has NOK 4.9 million in cash and NOK 24.1 million in interest-bearing debt and consider the debt ratio as appropriate for the group s development. currency risk The group has operations in 4 different countries with 4 different currencies and is as such exposed to currency fluctuations when translating into the group currency NOK. Exposure from individual subsidiaries varies according to the nature of their business. Consultancy operations abroad generate a currency exposure for the group on the net profit only, as both revenue and expenses are in the same local currency. Hedging has been deemed unnecessary. For product sales the exposure is higher, as parts are purchased from different suppliers across the globe and predominately invoiced in USD or EUR. With most of our major customers, the group has entered into an agreement whereby material fluctuations in price of components due to currency, lead to a corresponding adjustment of the selling price. The group then achieves a natural hedge on a significant part of its embedded products and solutions sales, and further hedging is deemed unnecessary. In those instances where it is not possible to enter such an agreement with the customer, currency hedges on large deliveries of components will be considered. interest rate risk The group primarily finances its operations and acquisitions through equity and cash generated from operational activities, and has no investments in long-term interest-bearing financial assets. Consequently the exposure to interest rate fluctuation is low and hedging is deemed unnecessary. The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant: NOK 1000 Increase/ decrease in basic points Effect on profit before tax DATA RESPONS ASA ANNUAL REPORT 2011

42 Notes Note NOTE 20 research and development The group does not have material costs related to R&D activities, and no intangible assets have been recognised in the balance sheet related to R&D activities in NOTE 21 GOVERNMENT GRANTS Data Respons has one research project that is approved as an R&D project covered by the SkatteFUNN scheme in accordance with Section of the Taxation Act. NOK has been recognised in the income statement as a reduction in payroll expenses and included in the balance sheet under other receivables. No other government grants have been awarded in NOTE 22 events after the balance sheet date There have been no major events between the balance sheet date and the approval of the annual accounts for DATA RESPONS ASA ANNUAL REPORT 2011

43 Auditor s report Auditor s report 43 DATA RESPONS ASA ANNUAL REPORT 2011

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